US & World Economies US Economy Democratic Presidents and Their Impact on the U.S. Economy From Woodrow Wilson to Barack Obama By Kimberly Amadeo Kimberly Amadeo Kimberly Amadeo is an expert on U.S. and world economies and investing, with over 20 years of experience in economic analysis and business strategy. She is the President of the economic website World Money Watch. As a writer for The Balance, Kimberly provides insight on the state of the present-day economy, as well as past events that have had a lasting impact. learn about our editorial policies Updated on May 9, 2021 Reviewed by Charles Potters Reviewed by Charles Potters Charles is a nationally recognized capital markets specialist and educator with over 30 years of experience developing in-depth training programs for burgeoning financial professionals. Charles has taught at a number of institutions including Goldman Sachs, Morgan Stanley, Societe Generale, and many more. learn about our financial review board Share Tweet Pin Email In This Article View All In This Article Woodrow Wilson (1913-1921) Franklin D. Roosevelt (1933-1945) Harry Truman (1945-1953) John F. Kennedy (1961-1963) Lyndon B. Johnson (1963-1969) Jimmy Carter (1977-1981) Bill Clinton (1993-2000) Barack Obama (2009-2017) Photo: Michael Reynolds-Pool/Getty Images Since World War I, there have been eight Democratic presidents. Democrats are known to prefer government spending over tax cuts, especially for the wealthy, as a way to boost the economy. One exception is often for defense, where many Democrats are considered weaker than Republicans, although some Democratic presidents such as Lyndon B. Johnson did invest heavily in national security. The general impression is that Democrats don't worry as much about balancing the budget as Republicans do, although recent Republican administrations, and notably that of Donald Trump, greatly increased America's national debt and deficit under his watch. At the same time, the last time the U.S. ran a budget surplus was under Bill Clinton, a Democratic president. Often, the economic policies of Democratic presidents are dictated by the situations they preside over. Most of them, for example, were forced to employ expansionary fiscal policy to pull the country out of a recession or depression. Many also had to increase defense spending due to overseas conflicts or wars. The chart below outlines the change in real gross domestic product (GDP) during a few Democratic president's terms (highlighted in gray), according to the U.S. Bureau of Economic Analysis. Here's an analysis of the eight Democratic presidents since World War I, their economic policies, and how much they followed their party's policies. Woodrow Wilson (1913-1921) President Woodrow Wilson signed the Federal Reserve Act in 1913, establishing the nation's central bank. He added a central board to balance the bankers’ regional structure. Congress wanted the Fed to have 12 regional banks to represent America's diverse regions. The compromise means that people are confused as to who owns the Fed to this day. Wilson signed the Underwood-Simmons Tariff Act in 1913. It reduced tariffs on manufactured goods and raw materials. This lowered costs for consumers. To compensate for the loss in revenue, it also created a graduated federal income tax. Most workers at that time made too little to get hit with the tax. The reduction in tariffs did not immediately reduce the cost of imports. World War I broke out the following year, reducing European production. In 1914, Wilson instructed Congress to create the Clayton Anti-Trust Act. It expanded on the Sherman Act to limit monopolies' power. At around the same time, the Federal Trade Commission was established to enforce these laws.. Note Germany sank the British ocean liner Lusitania in 1915. Wilson warned any further attacks would cause the U.S. to enter World War I. Wilson declared war on April 6, 1917, after Germany attacked U.S. merchant ships. In 1916, Wilson signed three acts while gearing up for the war. First, the Adamson Act created the eight-hour workday for railroad workers. Wilson wanted to avoid a strike by the railroad unions while the country was gearing up for World War I. That set the standard for Ford Motor Company to do the same 10 years later. The Federal Farm Loan Act set up government loans to farmers to develop and expand their farms. He also signed the Keating-Owen Act. It banned articles produced by child labor from being sold in interstate commerce. The Supreme Court declared it unconstitutional two years later. Germany surrendered in 1918. Wilson brokered the Treaty of Versailles in 1919, which called for the establishment of the League of Nations. The Republicans in Congress defeated it. He received a Nobel Prize for his efforts to promote peace. Note Wilson vetoed the Volstead Act, which enforced the 18th Amendment prohibiting alcohol in 1919. Congress overrode his veto, launching Prohibition. Wilson advocated for the 19th Amendment giving women the right to vote in 1920. President Wilson was the second-largest contributor to the debt percentage-wise. He added $21 billion to the national debt, which was a 722% increase during his time in office. That was because of World War I. During his presidency, the Second Liberty Bond Act gave Congress the right to adopt the national debt ceiling. Franklin D. Roosevelt (1933-1945) Franklin D. Roosevelt was sworn in at the height of the Great Depression. He had won the election by promising a New Deal to end it. He introduced Keynesian economic theory, which said government spending could help end a recession. FDR rallied Americans around government spending. The Works Progress Administration employed 8.5 million people to build public works. The Civil Works Administration created 4 million construction jobs. He created new agencies to safeguard investments, create jobs, and provide social safeguards. They included Social Security, the Securities and Exchange Commission (SEC), and the Federal Deposit Insurance Corporation. He also passed the U.S. minimum wage and child labor laws. Note The New Deal helped the country recover from the Depression by the early 1930s. Under pressure from Congress, FDR cut spending to try and balance the budget. Despite fiscal conservatism, the economy fell into a recession again in 1937. In 1939, Hitler invaded Poland. FDR started gearing up to enter the war. He began the draft in 1940. In 1941, Japan attacked Pearl Harbor. FDR increased the defense budget, adding billions to the debt to pay for World War II. By 1945, Roosevelt had added $236 billion to the debt, a 1,048% increase over the $23 billion debt at the end of Hoover's last budget, in fiscal year 1933. Percentage-wise, FDR added the most U.S. debt by a president. Harry Truman (1945-1953) Harry Truman took America from isolationism to global leadership. He took office on April 12, 1945, because FDR died. Germany surrendered on May 8. Japan surrendered on Aug. 14, 1945, ending World War II. Many felt Truman forced Japan's surrender when he dropped atom bombs on Hiroshima on August 6 and Nagasaki on August 9. Others felt the bombing was unnecessary since Japan was ready to surrender. The Air Force had bombed Tokyo and most other major industrial cities. The Navy had blockaded Japan's imports of oil and other vital materials. Truman's Chief of Staff, William Leahy, wrote, "By the beginning of September, Japan was almost completely defeated through a practically complete sea and air blockade." But Truman felt the atom bomb was absolutely necessary. Note Truman supported the formation of the United Nations in 1945 and the North Atlantic Treaty Organization (NATO) in 1949. In 1947, he outlined The Truman Doctrine to contain the threat of communism. He pledged the United States to assist any democracy attacked by authoritarian forces. The Doctrine shifted U.S. foreign policy from isolationist to the global policeman. He vetoed the Taft-Hartley Act of 1947, which would have weakened unions. It also required union leaders to swear they were not communists. It allowed the president to stop strikes if they endangered national safety. Note In 1947, Truman supported Secretary of State George Marshall's plan to rebuild Europe. The Marshall Plan pledged $12 billion in food, machinery, and foreign direct investment. The 1947 National Security Act consolidated the Army and Navy into the Defense Department. It created the Air Force, the National Security Council, and the CIA. In 1948, Truman airlifted food and fuel in West Berlin after the Soviets blockaded the city between June 24, 1948, and May 12, 1949. He recognized the country of Israel after it declared statehood in May 1948. He said it was a matter of justice for the Jewish people. Truman outlined the Fair Deal on Jan. 5, 1949. It called for national health insurance and raising the minimum wage. It also proposed the Fair Employment Practices Act to make illegal any religious and racial discrimination in hiring. Congress rejected certain aspects of the proposal, but passed the rest of the Fair Deal. In 1950, Truman added a cost of living adjustment to Social Security payments. North Korea invaded South Korea in June 1950. General MacArthur led the UN forces that pushed North Korea back to the 38th parallel. That border held when the ceasefire was negotiated in 1953. Note Truman decided not to run for a third term, even though he could have. The 22nd Amendment, ratified in 1951, limited presidents to two terms but did not apply to Truman because his first term was to fulfill FDR's third term.. The Immigration and Nationality Act of 1952 continued quotas for immigrants based upon country of origin. It allowed Asians to immigrate after the War. It prioritized family reunification and desired skills. Truman vetoed the Act because it had lower quotas for Asians, which he felt was discriminatory. But the Act passed anyway. Truman added $7 billion to the national debt, a 3% increase from the $259 billion debt at the end of FDR’s last budget in 1945. John F. Kennedy (1961-1963) John F. Kennedy directed federal agencies to accelerate their budgeted spending to end the 1960 recession. He created a food stamp program and expanded the United States Employment Service. He increased the minimum wage, improved Social Security benefits, and passed an urban renewal package. JFK asked the Federal Reserve to keep interest rates low by using its open market operations to buy U.S. Treasury notes. In December 1962, JFK proposed additional education and research spending. He suggested cutting the top income tax rate from 91% to 65%. He endorsed deficit spending until businesses began hiring again. Note Kennedy's primary military concern was preventing the expansion of communism. In February 1961, Kennedy authorized the Bay of Pigs invasion to overthrow the communist leader Fidel Castro. In June 1961, he met with Soviet leader Nikita Khrushchev, who threatened to cut off U.S. access to Berlin. JFK increased military spending by adding intercontinental ballistic missile forces. On Aug. 13, 1961, the Soviets erected the Berlin Wall. In October 1962, Kennedy blockaded Cuba after finding out that the Soviets were building nuclear missile sites. The USSR removed the sites. In 1963, JFK increased U.S. military advisers in Vietnam to more than 16,000. That gave U.S. support to the November 1963 military coup. On Oct. 24, 1963, Kennedy signed the Maternal and Child Health and Mental Retardation Planning Amendment to the Social Security Act. It provided funding to states to improve their programs. On Oct. 31, 1963, he signed the Mental Retardation Facilities and Community Mental Health Centers Construction Act. It funded community mental health centers to provide better care than mental hospitals. But there were consequences to this deinstitutionalization. Note Kennedy was one of the four presidents who donated his salary. Kennedy added $16 billion to the national debt by 1963, an 5.8% increase from the $289 billion debt at the end of Eisenhower's last budget in 1961. His deficit spending ended the recession and contributed to an expansion that lasted until 1970. Lyndon B. Johnson (1963-1969) Lyndon B. Johnson was sworn in on Nov. 22, 1963, after John F. Kennedy was assassinated. After completing the final year of JFK's term, he was elected in 1964 with 61% of the votes. This electoral mandate allowed him to expand the federal government's role and avoid any recessions. The Fed used contractionary monetary policy to cool growth and prevent inflation. LBJ created Medicare, Medicaid, and urban renewal initiatives. He championed equal rights for all to vote, ride buses, and go to school. LBJ escalated the Vietnam War but could not win it. He signed the Revenue Act of 1964 to lower the top income rate from 91% to 70%. It reduced the corporate tax rate from 52% to 48%. It created the minimum standard deduction. According to the Tax Foundation, the cuts spurred the economy enough that revenue increased 33%. Note In 1964, LBJ created the Great Society. It changed the definition of the American Dream from one of opportunity to one that guaranteed well-being. LBJ's Great Society increased spending on education and health care. Medicare covered hospitalization for seniors and Medicaid provided health care for those living below the poverty level. It created the National Endowment for the Arts, Public Broadcasting Services, and drivers’ education. LBJ created new programs to address crime and delinquency, as well as beautification and conservation. The Department of Housing and Urban Development built public housing and redeveloped slums. In 1965, LBJ sent over 100,000 combat troops to Vietnam. By 1968, he increased the defense budget to support 500,000 troops. The increased government spending added $42 billion, or 13%, to the national debt by 1968. Jimmy Carter (1977-1981) Jimmy Carter's presidency was overshadowed by the stagflation created by Richard Nixon. Stagflation combines economic contraction with double-digit inflation. Carter worked hard to combat the continuing economic woes of inflation and unemployment. He added more than 10 million jobs. But, it wasn't enough to combat the effects of double-digit inflation and the Fed's efforts to end it. Carter created the Department of Education and bolstered Social Security. He established a national energy policy that deregulated oil prices to spur domestic production. He also deregulated the trucking and airline industries. He expanded the national park system. In 2002, he received the Nobel Peace Prize for his work in the 1978 Camp David Accord. He established full diplomatic relations with China and negotiated the SALT II nuclear limitation treaty with the Soviets. On Nov. 4, 1979, Iranian students took 66 Americans hostage at the U.S. Embassy in Tehran. Although Carter's administration negotiated a release in December 1981, it was too late to save Carter's presidency. Bill Clinton (1993-2000) Bill Clinton's economic policies fostered a decade of prosperity. He added 18.7 million new jobs, more than any other president. Homeownership was 67.7%, the highest rate ever recorded at that time. The poverty rate dropped to 11.3%. He signed the North American Free Trade Agreement (NAFTA). It boosted growth by eliminating tariffs between the U.S., Canada, and Mexico. Note Clinton created a budget surplus of almost $70 billion. He did this with the Omnibus Budget Reconciliation Act of 1993. It raised taxes on the wealthy. He also cut spending by reforming welfare. Clinton did not achieve health care reform. But he did get the Health Insurance Portability and Accountability Act (HIPAA) and the Children’s Health Insurance Program (CHIP) passed. HIPAA improved the portability of insurance and coverage for those with pre-existing conditions. CHIP subsidizes health insurance for children in families that earn too much to qualify for Medicaid. Barack Obama (2009-2017) Barack Obama entered office during the 2008 financial crisis. He fought it with the American Recovery and Reinvestment Act (ARRA). It added over $830 billion to the debt by cutting taxes, extending unemployment benefits, and funding public works projects. He bailed out the U.S. auto industry in March 2009. That saved jobs and forced the companies to become more fuel-efficient. Note On Oct. 9, 2009, Obama won the Nobel Peace Prize for his work in international diplomacy. On March 23, 2010, Obama signed the Affordable Care Act. It required everyone to have health insurance or pay a tax. That provided a steady stream of premiums from enough healthy people to pay for the millions of people with pre-existing conditions who were no longer denied insurance. Obamacare expanded Medicaid. That allowed more people to get preventive care instead of using hospital emergency rooms as their primary care physicians. As a result, it slowed the rise of health care costs. In July 2010, the Dodd-Frank Wall Street Reform Act improved regulation of certain areas that led to the financial crisis. The Consumer Financial Protection Agency (CFPA) reduced harmful practices of credit cards and mortgages. The Financial Stability Oversight Council regulated hedge funds and banks that became too big to fail. The "Volcker Rule" banned banks from risking losses with their depositors' money. Dodd-Frank directed the SEC and the Commodity Futures Trading Commission to regulate derivatives. On May 1, 2011, Navy SEALs eliminated Osama bin Laden, the leader of the 9/11 attacks. Later that year, Obama ended the Iraq War. Three years later, he sent troops back under renewed threats from the Islamic State. In 2014, Obama wound down the war in Afghanistan. In 2015, Obama brokered a nuclear peace agreement with Iran. Later that year, the administration negotiated the Trans-Pacific Partnership. He negotiated the Transatlantic Trade and Investment Partnership between the U.S. and the European Union. Note On Dec. 12, 2015, Obama finalized the International Climate Agreement to stop climate change. 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