Tags: Fact | Fiction | Campaign | Trail

Fact and Fiction Along the Campaign Trail

By    |   Friday, 06 January 2012 10:42 AM

People ask me what political party is better — or worse — for investors.

I am an independent voter and a professional investor who has made money during all different presidential administrations, including the current administration.

To me, it’s all about being able to distinguish between fact and fiction. My documented 25 percent annual compounded return in my worldwide newsletter The Dividend Machine is proof of my abilities.

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Many pro Republicans love to praise Ronald Reagan and the Democrats love to praise Bill Clinton.

Conversely, Jimmy Carter and George W. Bush are usually derided.

However, here are five misstatements which need to be cleared up.

1) Which president had a higher unemployment rate in their first four years: Carter or Reagan?

A: Carter's worst year was his last year, with a 7.1 unemployment rate. Four years later, Reagan had unemployment of 7.5 percent.

2) Which president had a higher unemployment rate in his first term: Clinton or Bush?

A: In Clinton’s first term, unemployment averaged 6 percent. In Bush’s first four years, it averaged 5.125 percent.

3) Did George W. Bush's tax cuts cause the deficits that occurred after Clinton left office and force tax receipts to plunge?

A: In fact tax receipts after the Bush tax cut and for eight years of Bush’s term were higher than tax receipts under the eight years of Clinton presidency. The deficit went up higher under Bush because of the millions of senior citizens who qualified for Social Security and Medicare, which make up a large part of federal spending. Tax cuts during terms by John F. Kennedy and Reagan also yielded higher tax receipts in the four years after the tax cuts were phased in. So it is safe to assume tax receipts go up, not down, after tax cuts are phased in.

4) President Barack Obama inherited a bad economy from Bush and that is why the unemployment rate is so high now four years later.

A: In fact, Reagan inherited a 7.1 percent unemployment rate from Carter. After Reagan's second year, it was 9.7 percent. However in the last 2 years of his first term, the unemployment rate was 7.5 percent. Unemployment was 5.8 percent in the year before Obama took over. Unemployment jumped to 9.6 percent after the first two years of his term. However, even if the unemployment rate is 8 percent at the end of Obama's first term, which appears unlikely, it would be a 38 percent increase after four years. The fact is Reagan did a much better job of lowering unemployment than Obama has so far.

5) Clinton, and not the Republican Congress, deserves credit for the low unemployment during his term.

A: In Bill Clinton's first two years under a Democratic Congress, unemployment rates were 6.9 percent and 6.1 percent. In the six years the Republican Congress were in charge, the average unemployment rate was 4.75 percent. In fact, during the 12 years the Republican Congress was in charge for the first time in 40 years (six years under Clinton and six years under Bush), unemployment didn’t rise above 6 percent.

I'm not devoted to any one party. With all due respect, I feel most politicians of both parties are incompetent and tone deaf.

About the Author: Bill Spetrino
Bill Spetrino is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of the Dividend Machine. Discover more by Clicking Here Now.

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