Democratic Economic Policies Overview

Do They Work?

Couple at bank
Democrats believe that helping low and moderate income families is the best way to boost the economy. Photo: BURGER/Getty Images

Democrats promote economic policies that benefit low- and middle-income families. Democrats believe reducing income inequality is the best way to foster economic growth. That's because low-income families spend any extra money on food, medicine and shelter. That increases more demand than policies that benefit businesses. 

Democrats define the American Dream as the right to education, a good job, decent housing and health care.

 President Roosevelt first outlined the Economic Bill of Rights in his 1944 State of the Union address.  President Truman's Fair Deal proposed specific legislation to support this expanded vision of the Dream.  In 2010, the Democrats expanded the Dream to include health care with the Affordable Care Act.

Education

Democrats believe that every child should have the opportunity to high-quality education. That's the pathway to economic growth for the individual and the country. When President Roosevelt signed the G.I. Bill of Rights, he guaranteed the government would pay for education for all veterans. The Truman Commission Report proposed federal subsidies for higher education. That laid the groundwork for the community college system. President Johnson signed the Elementary and Secondary Education Act to provide federal funds to schools in low-income areas. A little-known provision of the Affordable Care Act eliminated Sallie Mae, making student loans more affordable.

(Source: "Education," Democrats.org.)

Health Care

Democrats believe the government should make health care affordable. President Clinton supported the Health Security Act of 1993. "Hillarycare" was a managed competition strategy. The federal government would control doctor bills and insurance premiums.

Health insurance companies would compete within this framework. First Lady Hillary Clinton failed to get it passed by Congress.

But the Clintons achieved two other health care reform measures. The Health Insurance Portability and Accountability Act of 1996 was one. It allows employees to keep their company-sponsored health insurance plan for 18 months after they lost their jobs. The Children's Health Insurance Program was theh other. It provides subsidized health insurance for children in families that earn too much to qualify for Medicaid. 

President Obama’s 2010 Patient Protection & Affordable Care Act seeks to lower the cost of health care. It requires everyone to have insurance or pay a penalty. That provides health insurance companies with revenue to cover those with pre-existing conditions. Preventive care reduces expensive emergency room visits.

Taxes

Democrats believe in a progressive taxation structure. That means higher taxes on investments, large businesses and high-income families. They prefer higher taxes on capital gains and dividends to balance the budget. That's why they are often called "tax and spend" by Republicans.

President Clinton raised taxes with the Omnibus Budget Reconciliation Act of 1993.

It raised the top income tax rate from 28 percent to 36 percent. It increased the top corporate income tax from 34 percent to 36 percent. It taxed Social Security benefits for high-income earners and raised the gas tax by $.043 per gallon. To ease income inequality, it created the earned income tax credit for incomes under $30,000.

Obamacare raised taxes on high incomes and investments. Obama also signed an $858 billion tax cut that extended the Bush tax cuts and unemployment benefits through 2011. It cut payroll taxes by 2 percent and extended a college tuition tax credit. It also included $55 billion in industry-specific tax cuts. But it revived the inheritance tax that had lapsed for a year. 

Regulation

Democrats advocate regulations to protect consumers. It's why they are perceived as less business-friendly than Republicans.

President Wilson pushed for the Clayton Anti-Trust Act.

FDR signed the Glass-Steagall Act of 1933. It prevented banks from using depositors' funds to invest in the stock market and other high-risk activities.

Democrats passed the Dodd-Frank Wall Street Reform Act in 2010. It regulates the financial markets and protects consumers. Its eight components make it less likely the 2008 financial crisis could recur. Now President Trump is trying to loosen its regulations.

Social Welfare

Democrats spend more on social programs and welfare. FDR created the Social Security Trust Fund and Administration. This provided income to the elderly, the blind, the disabled and children in low-income families. LBJ created Medicare, Medicaid and urban renewal initiatives. He championed civil rights and the War on Poverty. LBJ’s Great Society created the National Endowment for the Arts, Public Broadcasting Services and drivers’ education. It also developed new programs to address crime as well as conservation.

Democrats also spend on public infrastructure. During the Great Depression, FDR rallied Americans to support massive government spending. In his first 100 days in office, he increased the debt by $4 billion to create 16 new agencies and laws. A big piece was the Works Progress Administration. It employed 8.5 million people to build bridges, roads, public buildings, parks and airports. It paid artists to create 2,566 murals and 17,744 pieces of sculpture to decorate the public works. The Public Works Administration built San Francisco's Golden Gate Bridge and New York City's Triborough Bridge. The Civil Works Administration created four million construction jobs. The Tennessee Valley Authority Act built power stations in the poorest area in the nation.

Democrats support conservation and efforts to stop global warming.  FDR created the Civilian Conservation Corps to plant forests, build flood barriers and maintain roads. The Soil Conservation & Domestic Allotment Act counteracted the Dust Bowl. It paid farmers to plant soil-building crops.

Democrats advocate equality. Truman supported the 19th Amendment that gave women the right to vote. He supported the Fair Deal that raised the minimum wage and prohibited hiring discrimination. 

National Security

Republicans accuse Democrats of being soft on defense. That may be because three Democratic presidents received Nobel Peace Prizes. Otherwise, that assertion is not supported by the facts. President Wilson entered World War I and received a Nobel Peace Prize for brokering the Treaty of Versailles. President Roosevelt began gearing up for World War II even before Pearl Harbor.

President Truman ended World War II by dropping two nuclear bombs on Japan. He oversaw the Korean War. The Truman Doctrine pledged the United States to assist any democracy attacked by authoritarian forces. The Doctrine shifted U.S. foreign policy from isolationist to global policeman. 

President Kennedy supported the Bay of Pigs invasion. He blockaded Cuba to end the Missile Crisis. He also supported the military coup in Vietnam. President Johnson expanded the Vietnam War. He was defeated within his party by pacifist Eugene McCarthy. That's when the "soft on defense" accusation began.

President Jimmy Carter received the Nobel Peace Prize for his work on the 1978 Camp David Accord. He also negotiated the SALT II nuclear limitation treaty with the U.S.S.R. He was seen as weak on defense because he took too long to resolve the Iran hostage crisis.

President Obama received the Nobel Peace Prize for his efforts to end the Iraq War. At the same time, his military spending totaled between $700 billion to $800 billion a year. That's much more than Republican President George W. Bush, who spent between $400 billion to $650 billion. 

The Debt

Democrats offset deficit spending with tax increases. President Obama contributed $7.9 trillion to the national debt, the largest dollar amount. He couldn't raise taxes because of the Great Recession. FDR increased the debt by 1,048 percent, the most percent-wise. He had to fight the Great Depression and World War II.  President Wilson was the second-largest contributor to the debt percent-wise. His large deficit resulted from World War I. 

On the other hand, President Clinton signed the Omnibus Budget Reconciliation Act of 1993. It created a $63 billion budget surplus by raising taxes on the wealthy. He had no recessions or wars during his presidency.

Trade

Democrats want to make sure trade agreements protect American workers. They traditionally support fair trade more than protectionism. But outsourcing has made them shift against many trade agreements in recent years.

President Wilson signed the Underwood-Simmons Act in 1913. It reduced tariffs on manufactured goods and raw materials. In 1993, President Clinton signed NAFTA into law. It's the world's largest trade agreement. Obama signed four bilateral agreements during his administration: ColombiaKoreaPanama and Peru.

Does It Work?

Bill Clinton's economic policies fostered a decade of prosperity. He created more jobs than any other president. Home ownership was 67.7 percent, the highest rate ever recorded. The poverty rate dropped to 11.8 percent.

President Roosevelt's policies ended the Great Depression by spending on job creation programs. He created Social Security, the U.S. minimum wage and child labor laws. The Federal Deposit Insurance Corporation prevents bank runs by insuring deposits. 

President Obama's policies ended the Great Recession with the Economic Stimulus Act.  It spent $224 billion in extended unemployment benefits, education and health care. It created jobs by allocating $275 billion in federal contracts, grants and loans. It cut taxes by $288 billion. Obamacare slowed the growth of health care costs