The economy's winners and losers

By John Maggs

updated 5:12 p.m. ET Oct. 13, 2006

WASHINGTON - One way to determine how good the economy has been under George W. Bush is to compare it with the economy during a similar period of time for the two most recent two-term presidents -- Bill Clinton and Ronald Reagan.

Reagan endured the worst recession since the Great Depression, yet that was balanced with one of the biggest growth spurts of the postwar period. Clinton reigned during the longest economic boom of the 20th century, but its best years came after mid-1998, the equivalent of mid-2006 in this presidency. Unlike Bush, Clinton didn't have a recession, but the slow economic growth during his first two years was similar to the mild recession and early recovery that Bush saw in 2001 and 2002.

Under Reagan, unemployment averaged 8.2 percent from 1981 to mid-1986, compared with 5.7 percent under Clinton in the first five and a half years of his presidency, and 5.3 percent under Bush. Inflation was also much higher for Reagan, and when it is removed from the equation, gross domestic product grew 17.4 percent under Reagan, 20.6 percent under Clinton, and 15.3 percent under Bush. Even with a long and terrible recession in 1981 and 1982, the first five and a half years of Reagan's presidency delivered more growth than Bush's has to date. The comparable period under Clinton generated a third more growth.

Income has also lagged under Bush, and this is crucial because polling experts say that sluggish growth in income is a key cause of an anti-incumbent mood in elections. By delving into income, one can see who the winners and losers have been in the Bush presidency. The details tend to support Bush critics who say that most working people have gotten a smaller piece of the pie. In general under Bush, being a shareholder or a business owner has been better than being a worker. Being a retiree has also been better than being a worker and, surprisingly for a conservative president, being a government worker has been better than being a private-sector employee.

After adjusting for inflation and including the big tax cuts that have essentially kept taxes at their 2000 level, disposable personal income rose 14.1 percent under Bush, 20.4 percent under Clinton, and 22.7 under Reagan. On a per capita basis, the disparity is even greater: Growth has been 8.5 percent under Bush versus 13.2 percent under Clinton and 17 percent under Reagan.

The news on income isn't good for Republicans. Bush's results are worse than those for any other two-term president since World War II except Dwight Eisenhower. Worse than under Richard Nixon, a period that was not a very good time for the economy. During four horrendous years for the economy, income grew faster under Jimmy Carter than it has since 2001. The only recent president who had a worse record on income growth was -- George H.W. Bush.

More interesting, though, is how that growth has been distributed. Corporate profits have doubled under Bush -- they grew 104.4 percent, to be precise -- compared with 57.2 percent during Clinton's first five and a half years (before the really spectacular profits of the late 1990s) and 43.3 percent under Reagan. Some corporate profits are retained and invested, but the bulk are distributed disproportionately to the wealthy through dividends and boosted stock values. More than one-quarter of the increase in GDP under Bush came from corporate profits, compared with 13.7 percent of GDP growth under Clinton, and 7.1 percent under Reagan. Meanwhile, tax revenue from corporate profits is about the same as it was during the Reagan years.

Another way to look at this is to compare corporate profits and pay for private workers -- most of the labor force. While corporate profits were doubling, wages and salaries to workers grew 21.9 percent under Bush. This compares with wage and salary growth of 44.7 percent under Clinton and 42.2 percent under Reagan.

Corporate profits grew by $813 billion under Bush, not much less than the total of all raises earned by private workers ($912 billion). By contrast, workers got a much larger slice of the pie under Reagan and Clinton. Under Clinton, pay raises were about four times as much as profits, while under Reagan, workers got five times as much.

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