Monday, January 18, 2010
The term of Brazil's President, Luiz Inácio Lula da Silva, concludes this year. During President Lula's tenure, Brazil enjoyed stable monetary policy and strong economic growth. However, President Lula is likewise known for growing the size of Brazil's government, for example, by adding over 300k government jobs. This translates into a 4.8% increase in the government payroll when adjusted for working-age population growth.
This is a criticism of Lula's administration - growing the size of the government (here, as measured by its payroll), and stifling some prospects for long-run economic growth.
Accordingly, let's see how previous U.S. Presidents grew the U.S. government payroll: is there a party trend? The general idea is, that the Democratic Party seeks a larger role for government as a mechanism to increase economic welfare than does the Republican Party (generally). A priori, I expect to see more robust government payroll growth during Democratic administrations.
The chart illustrates the level change in the total government payroll by Presidency since 1953 (the data are not seasonally adjusted and reported here). There is no noticeable correlation between party and the government payroll, although LBJ and Clinton, Democrats, did grow government jobs by the widest margin, 2.6m and 2.3m, respectively.
State and local government jobs are included in the measure of "government", while a better link to party affiliation is the federal payroll. Furthermore, the population - and thus total payroll - grew as well. So, in focusing solely on the federal payroll in percentage gains (in order to remove effects of term length), and adjusting for population growth, there appears to be a stronger correlation between the current administration's party affiliation and government jobs growth.
The top 3 federal job-creators were LBJ, JFK, and Obama, Democrats, while 4 out of the top 5 top federal job-slashers were Nixon, Bush, Bush, and Ford, Republicans. Interestingly, Clinton ranks first in cutting the federal payroll; it fell by almost 10% when the population grew by roughly the same amount - in adjusted terms, that's -18% fewer federal jobs.
This analysis, of course, does not account for recessions, budgets, or external factors that would differentiate payroll growth across periods. However, there is a correlation, as in Brazil, between party affiliation and the growth of the federal payroll.