September 27, 2004

STILL EARLY INNINGS (via Michael Herdegen):

Taking stock of GOP's revolution (John Aloysius Farrell, September 26, 2004, Denver Post)

With pomp and celebration, Republicans here are marking the 10th anniversary of the "Gingrich Revolution." [...]

What hath Newt wrought? When citing their accomplishments, the Republicans can claim just credit for reforming America's welfare system.

GOP congressional leaders joined with moderate Democrats and put a welfare reform bill on Bill Clinton's desk that fulfilled his campaign pledge to "end welfare as we know it" and gave him no choice but to sign it.

The new law's work requirements kicked in during the dot-com boom - an opportune moment of low unemployment and high economic growth. All sorts of social indicators soon signaled success. The poverty rate dipped, as did the percentage of teenage mothers and the number of children living in poverty.

An underappreciated skill of governing is recognizing when a wink is as good as a shove. The Republicans can claim credit for nudging along some favorable trends that, for largely demographic and sociological reasons, have continued to improve on their watch.

Crime is down, including violent crime. The rate of home ownership is at a record high. The mean net worth of American families was $245,000 in 1995 and $395,000 in 2001.

The Bush tax cuts may have shifted more of the overall federal tax burden from the wealthy to the middle class, but the Republican-controlled Congress also expanded the Earned Income Tax Credit, raised the child tax credit and created a new 10 percent tax bracket that gives a break to the working poor.

Indeed, there are several positive trends in post-revolution America that don't fit the political stereotypes of Republicans as heartless, greedy polluters.

Hunger is down in America. Our air is cleaner. The death rate from AIDS fell from 16.3 per 100,000 in 1995 to 5.2 per 100,000 in 2000.

The immigrant dream is alive: The percentage of American children who speak another language at home has risen from 14.1 to 16.7.

And how's this for a sign of a strong social fabric? Under Republican rule, the number of interracial married couples has continued its climb - to 1.7 million in 2002. And African-Americans made significant gains in educational attainment and college degrees.

The GOP's economic record, it must be said, is middling. The party of business has presided over less-than-stellar growth, even with Republican Alan Greenspan chairing the Federal Reserve Board. Thanks mainly to the recession of 2001, the growth in gross domestic product since 1994 (an average of 5.16 percent) has not matched that of the preceding 10 years (6.9 percent) or the 10 years before that (10.2 percent).

If Mr. Gingrich was the shover, Mr. Bush is the winker par excellence.

Posted by Orrin Judd at September 27, 2004 1:02 PM

The article states:

"the growth in gross domestic product since 1994 (an average of 5.16 percent) has not matched that of the preceding 10 years (6.9 percent) or the 10 years before that (10.2 percent)."

These numbers make no sense to me. Can anybody explain them? Are they saying?

1994-2004 5.16%
1984-1994 6.90%
1974-1984 10.20%

So we had the best growth during the 70's stagflation? Is this nominal, annual growth?

Posted by: Bret at September 27, 2004 1:22 PM

Bret: those look like nominal growth rates to me. For current-dollar and chained-2000-dollar estimates, you can go to the Bureau of Economic Analysis ( and look for "Historical Gross Domestic Product estimates." Here's a link to the Excel format :
Gross Domestic Product, Percent Change from Preceding Period. Averaging the annual chained-2000-dollar estimates from 1975 through 1984, I get 3.1% average; for 1985 through 1994, 3.0%; and for 1995 - 2003, 3.2%. Current dollar estimates are 1975 - 1984, 10.2%; 1984-1994, 6.0%; and 1995-2003, 5.0%. Looks like whoever wrote this used current dollar (essentially, nominal dollar, not corrected for inflation) estimates. To sanity-check which series you want to use I'd suggest comparing estimates from recession years 1991 (current dollar growth 3.2%, chained-2000-dollar growth -0.2%) and 2001 (3.2% vs 0.8%.) Chained-dollar indexes are BEA's preferred method of correcting for inflation (Here's a pdf if you're interested in how they work.) Hope this helps.

Posted by: joe shropshire at September 27, 2004 2:24 PM

I have no idea what Farrell is trying to say. As near as I can determine, the ten year average of GDP growth is as follows:

            US      Devd Wrld   Wrld w/o US
75-84   3.05      2.75            2.93

85-94   2.93      2.80            2.99

95-04   3.37      2.52            2.71

Posted by: David Cohen at September 27, 2004 2:24 PM

Hey, Joe beats me to it. I don't know if Joe is right about Farrell looking at nominal growth rates (i.e., inflation gets treated as real growth, making Carter look like the best of presidents). If so, that's a gigantic mistake calling everything else into question. And that's the best case scenario.

Posted by: David Cohen at September 27, 2004 2:30 PM

David: that's the way it looked to me also. Basically, 2.5 - 3.5% is a believable range for a decade's average real GDP growth. If you see numbers much outside that range the article in question is probably not adjusting for inflation.

Posted by: joe shropshire at September 27, 2004 3:00 PM

Joe and David:

Thanks. Based on year input I've sent the following email to the author (I've used a geometric average instead of arithmetic so my numbers are slightly different from yours):


Dear Sir:

I have some questions regarding your article "Taking stock of GOP's revolution" from the September 26, 2004 issue of The Denver Post. In it you write:

"the growth in gross domestic product since 1994 (an average of 5.16 percent) has not matched that of the preceding 10 years (6.9 percent) or the 10 years before that (10.2 percent)."

If I'm interpreting this correctly, the following table is equivalent:

Period GDP Growth
------ ----------
1974-1983 10.20%
1984-1993 6.90%
1994-2004 5.16%

Yet when I look at the Bureau of Economic Analysis' ( "Historical Gross Domestic Product estimates." ( the numbers in the above table seem to correspond to NOMINAL growth, not REAL growth. The REAL growth averages for the periods would be:

Period GDP Growth
------ ----------
1974-1983 2.26%
1984-1993 3.33%
1994-2003 3.27%

Were you using nominal growth and, if so, don't you think that using that measure instead of real growth significantly distorts the picture because nominal growth is boosted tremendously by inflation which was very high in the 1970s and has been much lower the past ten years?



I'll post his response (if any) at I'll also post it here if the response is quick.

Posted by: Bret at September 27, 2004 4:42 PM

Well he replied:

"A very good point Bret. Thanks for writing. jack"

Well, that was a waste of time. Oh, well...

Posted by: Bret at September 27, 2004 5:17 PM

Not a waste of time at all, Bret. Consider it part of your continuing education: now you know how much the Denver Post cares about getting its facts straight. Thanks for following up with the author.

Posted by: joe shropshire at September 27, 2004 6:12 PM