Tags: Dorfman | Republican | government | economy

Jeffrey Dorfman: Split Government Might Bode Well for Economy

By    |   Monday, 10 November 2014 11:45 AM

The combination of a Democratic president and a Republican Congress just might work out swimmingly for the economy, says Jeffrey Dorfman, an economics professor at the University of Georgia.

He looked at economic growth rates from 1947 through 2014, with all the iterations for party control of the White House and Congress.

The strongest growth took place under a Democratic president-Democrat Congress: an average of 4.3 percent per year, he writes in an article for Forbes. But the second best scenario has been a Democrat president-Republican Congress: 3.7 percent growth.

"According to these statistics, things should be looking up," Dorfman says. "We are moving from a configuration that has produced the lowest average growth rate at only 2.4 percent to one with the second best performance."

The idea is that a unified Congress can pass legislation and compromise with the president in a way that a divided Congress can't.

"The model for such behavior is, of course, Bill Clinton working with Newt Gingrich and the Republicans after they gained control of Congress" in 1995, Dorfman writes.

"If President Obama does not work with a Republican Congress, the prospects for economic growth in the next two years are much less certain," he adds.

"The Clinton-Gingrich partnership succeeded because they cooperated on issues that both ideologies saw as constructive while reining in the worst impulses of the other side."

The election results could be good for stocks too.

From Dec. 31 1900, to Oct. 31 2014, the S&P 500 index gained an average of 8.6 percent a year during the 12 years we have had a Democratic president and a unified GOP congress, according to Standard & Poor's Equity Research data cited by MarketWatch.

That trails only the annual increase for the four years during which we've had a Democratic president and a split Congress: 13 percent.

The S&P 500 averaged an advance of 7 percent over the 114-year period as a whole.

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The combination of a Democratic president and a Republican Congress just might work out swimmingly for the economy, says Jeffrey Dorfman, an economics professor at the University of Georgia.
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2014-45-10
Monday, 10 November 2014 11:45 AM
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