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For many Americans headed to the polls today, the economy -- and what the next president will do to help or hurt its progress -- is at the forefront of their mind.

According to an exclusive (but unscientific) poll conducted by DailyFinance and The Motley Fool, most respondents were convinced that Romney would be better for the country economically:


When asked "Who will ignite an economic boom?" Mitt Romney nabbed 66% of the votes and President Obama got 34%.

The voting for the question, "Who will doom your portfolio?" followed exactly the same line: 66% of voters chose Obama and 34% chose Romney.

So the majority opinion is clear. But does history back it up? Put another way, do Republican presidents bring the best growth and Democratic candidates bring stagnation?

Surprisingly, no. Not even close.

Baby, You're No Good for Me

Just look at recent years. George W. Bush was about as pro-business a Republican we've ever had in office. Yet stocks dropped 25.1% during his presidency.

He was followed by hardcore Democrat Barack Obama. During his presidency, the stock market has nearly doubled, adding some $7.3 trillion in market cap according to Bloomberg Businessweek as of mid-October.

 

Similar patterns hold true even going back to 1929. According to The Economist, stock returns for Democratic presidencies have averaged 10.8% versus just 2.7% for Republican presidents.

And it's more than just stock market returns that suffer during Republican presidencies. According to research done by Motley Fool analyst Morgan Housel and economist Robert Shiller, the worst president for stock returns, corporate profit growth, real GDP growth, inflation, and unemployment was a Republican! (Poor ol' Herbert Hoover.)

This seems like a stark contrast to each party's core tenet: Republicans look kindly on unfettered and minimally taxed free-market capitalism, while Democrats insist on higher taxes to pay for more robust government services, and stronger regulations to protect consumers and the environment.

The Illusion of Patterns

Part of the problem is that it's in our human nature to look for -- and find -- patterns, even when there aren't any.

Wilshire Analytics' managing director Bob Waid commented Fortune magazine on why this is the case with election and stock return data to, saying "There's no pattern here -- it's just random. If these were causal relationships, you would see a different pattern."

Another reason for the discrepancy is that a president can only do so much. His progress and blame must be shared with Congress (which sometimes works in opposition to his own goals.)

What's more, a new president typically inherits his predecessor's problems or enjoys the success his predecessor set him up for. Unless a second term is won, most presidents simply aren't in office long enough to see the long-term success or failure of their decisions.

Of course, each president hopes for economic success and stock market gains. And each president has industries they'll try to boost up. Meaning regardless of whether Obama or Romney wins the election, certain stocks in a few key sectors will do quite well.

So don't forget to get out and vote today -- even if we won't enjoy fruits of the winner's labors for another four years.

This article was written by Motley Fool analyst Adam J. Wiederman. Click here to read Adam's free report revealing stocks that could skyrocket after the election results are announcFor many Americans headed to the polls today, the economy -- and what the next president will do to help or hurt its progress -- is at the forefront of their mind.

According to an exclusive (but unscientific) poll conducted by DailyFinance and The Motley Fool, most respondents were convinced that Romney would be better for the country economically:


When asked "Who will ignite an economic boom?" Mitt Romney nabbed 66% of the votes and President Obama got 34%.

The voting for the question, "Who will doom your portfolio?" followed exactly the same line: 66% of voters chose Obama and 34% chose Romney.

So the majority opinion is clear. But does history back it up? Put another way, do Republican presidents bring the best growth and Democratic candidates bring stagnation?

Surprisingly, no. Not even close.

Baby, You're No Good for Me

Just look at recent years. George W. Bush was about as pro-business a Republican we've ever had in office. Yet stocks dropped 25.1% during his presidency.

He was followed by hardcore Democrat Barack Obama. During his presidency, the stock market has nearly doubled, adding some $7.3 trillion in market cap according to Bloomberg Businessweek as of mid-October.

 

 Similar patterns hold true even going back to 1929. According to The Economist, stock returns for Democratic presidencies have averaged 10.8% versus just 2.7% for Republican presidents.

And it's more than just stock market returns that suffer during Republican presidencies. According to research done by Motley Fool analyst Morgan Housel and economist Robert Shiller, the worst president for stock returns, corporate profit growth, real GDP growth, inflation, and unemployment was a Republican! (Poor ol' Herbert Hoover.)

This seems like a stark contrast to each party's core tenet: Republicans look kindly on unfettered and minimally taxed free-market capitalism, while Democrats insist on higher taxes to pay for more robust government services, and stronger regulations to protect consumers and the environment.

The Illusion of Patterns

Part of the problem is that it's in our human nature to look for -- and find -- patterns, even when there aren't any.

Wilshire Analytics' managing director Bob Waid commented Fortune magazine on why this is the case with election and stock return data to, saying "There's no pattern here -- it's just random. If these were causal relationships, you would see a different pattern."

Another reason for the discrepancy is that a president can only do so much. His progress and blame must be shared with Congress (which sometimes works in opposition to his own goals.)

What's more, a new president typically inherits his predecessor's problems or enjoys the success his predecessor set him up for. Unless a second term is won, most presidents simply aren't in office long enough to see the long-term success or failure of their decisions.

Of course, each president hopes for economic success and stock market gains. And each president has industries they'll try to boost up. Meaning regardless of whether Obama or Romney wins the election, certain stocks in a few key sectors will do quite well.

So don't forget to get out and vote today -- even if we won't enjoy fruits of the winner's labors for another four years.

This article was written by Motley Fool analyst Adam J. Wiederman. Click here to read Adam's free report revealing stocks that could skyrocket after the election results are announced. ed.

GO AHEAD AND VOTE FOR ME! JUST SQUEEZE THE WHEEZE!  PUT A BOZO INTO OFFICE!


THE NEW COIN OF THE REALM...."I'll TELL YOU ANYTHING YOU WANT TO HEAR! TRUST ME..I'M MR. FLIP/FLOP MAN!"
(Value of coin = no cents)


"BIG BIRD HAS GOT TO GO!  THAT WILL SOLVE EVERYTHING!".....  "AND QUIT ASKING FOR THOSE TAX RETURNS!"
"FINALLY,  TO THOSE IN THE 47%....I WILL NOT BE YOUR PRESIDENT...YOU ALL ARE NOT WORTH MY CONSIDERATION!  (....Filthy little people)"
"OH, AND I'M COMPLETELY WRONG ABOUT THAT!......"


"This outcome of this election will determine whether the rich, aided by the Republicans, will increase their ability to dictate the policies and lawmaking of the Federal Government, thus advancing plutocratic government. This would enable them to continue to become wealthier at the expense of the middle class. To win, the rich are continuing to bankroll the election campaigns of Republican candidates, who, in return, are expected to reward them with huge tax reductions and relaxed business and environmental governmental regulations.

Ever since the Reagan years, there has been a tremendous transfer of income and wealth from the middle class to the wealthiest class.The statistics are well known. From 1980 to 2010, the average income of the bottom 90 percent of income earners has essentially remained the same, while for the top 1 percent, it has almost tripled. Looked at another way, from 1973 to 2011, worker productivity increased by 80 percent, whereas their wages rose only 4 percent. This situation is outrageous and is largely responsible for the current job crisis, because the market for goods and services has been depressed by insufficient middle class income. (See New York Times article,"Costs Seen in Income Inequality"). Elevating their incomes would increase demand and lead to the creation of enough new jobs to alleviate the job crisis.

In addition to favorable governmental treatment, the rich have been benefiting from two major business practices. First, business owners and executives have become wealthy by paying themselves inordinately outlandish salaries, bonuses and stock options, and offsetting these excesses by reducing the wages of their employees, mostly members of the middle class.

Secondly, businesses have been, in effect, taxing consumers who buy their products and services by adding a substantial percentage to prices, known as a profit margin. These profits generate the dividends paid to their stockholders, who are predominately the rich, since they own the majority of the stocks. Additionally, these dividends substantially increase the value of those stocks, so that trading them on the stock market creates even more wealth. Incidentally, these dividends and trading profits are taxed at a much lower rate than wages are taxed.

Another source of immense wealth for the already wealthy results from manipulations of the financial system, aided by Wall Street institutions. Such manipulations become even more lucrative from the relaxation of government regulations, promoted by the Republicans, allowing the occurrence of shady transactions. A momentous consequence of this was the housing disaster.

It is pretty obvious why the rich are investing hundreds of millions of their own money to elect Republicans and to defeat Obama. These are investments from which they expect to amass enormous returns by exercising control over government financial policies. One example is a billionaire casino owner, who has pledged to give up to $100 million to defeat Barack Obama, since he stands to gain $2 billion in tax savings if the Republicans win.

The Republicans blame Obama for the poor state of the present economy, whereas, in reality, they are the culprits. The Republicans have had only one objective during the past almost four years, i.e. to defeat Obama. From the day Obama took office, they have publicly vowed to prevent him from being successful. They have obstructed all legislation proposed by Obama that would have improved the economy, because a better economy would help him to win the election. They, then, blame lack of progress in job creation on Obama's policies, whereas it is their hindrance and the deficient income of the middle class that is responsible for it. And, to make matters worse, they have been responsible for the loss of hundreds of thousands of State public employee jobs, including policeman, fireman and teachers, which has seriously hurt our economic recovery.

To attract voters, while masking their true allegiance, the Republicans are pretending that, if elected, they will improve the nation's economy, grow jobs and reduce debt. Their sponsors, the rich, don't need an increase in U.S. employment to maintain their levels of income and wealth. Most of the companies they manage and own conduct their businesses globally, and are not dependent on the U.S. economy. During the Recession, the rich haven't suffered a bit.

This deception is confirmed by the fact that they have failed to present any credible plans for accomplishing what they have been proposing. They are also using their divisive positions on contraception, abortion and gay marriage to appeal to certain voters. They are endeavoring to persuade voters with these tactics and to buy the elections with misleading TV and other media ads paid for by the rich. This kind of advertising is comparable to what businesses do, when running a sales campaign, to induce customers to buy their products.

Romney is using such deceptive practices to win the presidency. His stances on the various issues have been designed to fool the voters. That explains why the positions he took during the Republican primaries to win that contest have been adjusted to win this election. Furthermore, he has no detailed plans for accomplishing most of the proposals he has been peddling. One outstanding example is his $5 trillion tax cut. He claims that the cost would be offset by eliminating certain tax deductions, but he refuses to specify what they would be. If they actually do turn out to be fictitious, the alternative would be a tax hike on middle class taxpayers.

The deliberations during the current election campaign have for the most part ignored the aforementioned dangerous threat to the country's future from a Republican victory. Instead, the discussions have predominantly dealt with the qualifications of the candidates and their positions on the economy and social issues. The Republicans are using their manufactured views on these issues to obscure their actual mission, which is to repay their benefactors with tax reductions and relaxed government regulations.

The Republicans can only win by fooling the voters into believing that they really care about their welfare and will actually create jobs, when their true objective is to serve the rich and promote plutocratic government, and this fact must be stressed in the political debates taking place during this election.

The voters need to be made aware that a vote for Romney and the Republicans is really a vote for the rich and that a Republican victory would lead to greater control of the government by the Rich and a further squeeze on the middle class. Thus, based on this awareness, if they vote their own interest, this will not happen."       Author: Richard Hoffman - Huffington Post











The United States is famous for its ability to innovate. Aspiring fiscal conservatives around the world thus might be interested in learning four tricks that American politicians commonly use when promising to cut taxes while simultaneously reducing budget deficits.

These are hard promises to keep, for the simple reason that a budget deficit equals government spending minus tax revenue.

But, each of the four tricks has been refined over three decades. Indeed, they first acquired their colorful names in the early years of Ronald Reagan’s presidency: the “magic asterisk,” the “rosy econoscenario,” the Laffer hypothesis, and the “starve the beast” scenario.

As shop-worn as these tricks are, voters and journalists still fall for them, so they remain useful tools for anyone posing as a fiscal conservative.

The first term was coined by Reagan’s budget director, David Stockman. Originally, it was an act of desperation, because the numbers in the 1981 budget plan did not add up. “We invented the ‘magic asterisk,’” Stockman wrote in The Triumph of Politics in 1986. “If we couldn’t find the savings in time – and we couldn’t – we would issue an IOU. We would call it ‘Future savings to be identified.’”

Ever since, the magic asterisk has become a familiar American device. Recent examples include the recommendation of the Simpson-Bowles commission – tasked in 2010 with charting a fiscal-consolidation path – to cut real spending growth by precise amounts, without saying where the cuts would be made. US presidential candidate Mitt Romney’s spending plans contain the same conjuring trick. So, too, his plan to eliminate enough tax expenditures to offset the $5 trillion in revenue lost from cutting marginal tax rates by 20%, while refusing to say which tax loopholes he would close.

As Election Day nears, the pressure on a candidate to be more specific grows. The conjurer thus resorts to the rosy scenario: since he cannot find enough tax loopholes to eliminate, he must claim that what he meant by closing the revenue gap was that stronger economic growth will bring in the additional revenue.

Here, Murray Weidenbaum, the chairman of Reagan’s first Council of Economic Advisers, deserves the credit for inventing what he called “perhaps my most lasting legacy.” In its early years, the Reagan administration forecast 5% income growth (twice the long-run average), in order to imply in its projections a boost to revenues big enough to make up for its many tax cuts. Since then, candidates of both major US political parties have relied on rosy scenarios.

Indeed, overly buoyant, official growth forecasts are a fact of life in almost all of a sample of 33 countries, contributing to overly optimistic budget forecasts. European governments are particularly biased. From 1991 to 2010, for example, Italy forecast growth rates at the three-year horizon that were, on average, 2.3 percentage points above what was actually achieved.

In the Republican primaries last year, candidate Tim Pawlenty assumed a 5% growth rate to make his own plan work. He was all but laughed out of the race. Romney probably cannot get away with this sleight-of-hand, either. The press asks, “Why should we believe that the growth rate will magically accelerate just because you become president? Where will this GDP come from? It sounds like pulling a rabbit out of a hat.”

Right on cue, it is time for the famous Laffer hypothesis – the proposition, identified with the economist Arthur Laffer and “supply-side economics,” that reductions in tax rates are like magic beans: they so stimulate economic growth that total tax revenue (the tax rate times income) goes up rather than down.

One might think that the Romney campaign would not resurrect so discredited a trick. After all, two of his main economic advisers, Glenn Hubbard and Greg Mankiw, have both authored textbooks in which they argue that the Laffer hypothesis is incorrect as a description of US tax rates. Mankiw’s book, in its first edition, even called proponents of the hypothesis “charlatans.”

Each Republican presidential candidate since Reagan has had good economic advisers who disavow the Laffer hypothesis. Yet, time and again, the president (or candidate), his vice president (or running mate), and his political aides eventually rely on Laffer’s flawed argument. And they, not academic economists, formulate policy. Hubbard and Mankiw advised former President George W. Bush in his first term, when he cut taxes and transformed a record surplus into a record deficit.

The final trick, “starve the beast,” typically comes later, if and when the president has enacted his tax cuts and discovers that smoke and mirrors do not trump reality. He cannot find enough spending to cut (the magic asterisk has disappeared up the conjurer’s sleeve); the acceleration in GDP is nowhere to be seen (the rosy scenario having vanished); and tax revenues have not grown (no rabbit in the Laffer hat).

The audience is now told that losing tax revenue and widening the budget deficit was the plan all along. The performer explains that the deficit is all the fault of congress for not cutting spending and that the only way to tame the beast is to raise the budget deficit because “Congress can’t spend money it doesn’t have.” This trick never works either, of course. Congress can, in fact, spend money it doesn’t have, especially if the president has been quietly sending it budgets that call for just that.

By the time the crowd realizes that it has been conned, the magician has already pulled off the greatest trick of all: yet another audience that came to see the deficit shrink leaves the theater with the deficit bigger than before.

Author: Jeffrery Frankel - Harvard University School of Government



NOW GO OUT AND VOTE ONE AND ALL!

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