More fiscally responsible: Democrat or Republican presidents?

Abstract

Evidence is reviewed that national economic performance generally has been better under Democrat presidents. It is likely, but not necessarily true, however, that better economic performance is related to greater fiscal responsibility. A brief history of federal budget deficits and the gross federal debt for the last seven decades is followed by discussion of why federal budget deficits matter. A simple model is estimated where the shares of federal budget deficits in gross domestic products over the 72-year period from 1950 to 2021 are regressed on the civilian unemployment rate, indicating the state of the economy, and controlling for whether a Democrat or Republican is president and for years the U.S. was engaged in war. An Index of Fiscal Discipline is then regressed on the growth rate in real gross domestic product, again controlling for the party in the White House and war years. The results show that Democrat presidents have been significantly more fiscally responsible.