DIFFERENCE IN ECONOMIC POLICY BETWEEN REPUBLICANS AND DEMOCRATS IN THE USA

1. A New Foreign Economic Policy for the United States // http://www.iie.com/publications/chapters_preview/3802/1iie3802.pdf.
2. Alan S. Blinder and Mark W. Watson Presidents and the Economy: A Forensic Investigation, Woodrow Wilson School and Department of Economics Princeton University, November, 2013.
3. America in the Twentieth Century: A Study of the United States Since 1917 – D. K. Adams – Google Books. Books.google.co.uk. Retrieved on 2013-07-15 // http://books.google.co.uk/books?id=n2c4AAAAIAAJ&pg=PA197&dq=liberal republicans LBJ cabinet&hl=en&sa=X&ei=71fnUJ33AOo4gS58oHwCA&ved=0CEUQ6AEwAw#v=onepage&q=liberal republicans LBJ cabinet&f=false
4. Arnold, N. Scott (2009). Imposing values: an essay on liberalism and regulation. Florence: Oxford University Press. p. 3. ISBN 0-495-50112-3 ...

Introduction 3
1. The history and ideology of Democratic Party 5
2. The history and ideology of Republican Party 12
3. Economic policy of Democrats and Republicans 18
Conclusion 29
Literature 31

Economic development generally refers to the sustained, concerted actions of policy makers and communities that promote the standard of living and economic health of a specific area. Economic development can also be referred to as the quantitative and qualitative changes in the economy. Such actions can involve multiple areas including development of human capital, critical infrastructure, regional competitiveness, environmental sustainability, social inclusion, health, safety, literacy, and other initiatives. Economic development differs from economic growth. Whereas economic development is a policy intervention endeavor with aims of economic and social well-being of people, economic growth is a phenomenon of market productivity.
The two major political parties in the United States, the Republicans and the Democrats believe in different ideologies. However, it is the choice of the citizens during a Presidential election, which matters in giving power to a specific party. A Democrat and a Republican differ in many ways, especially in their philosophy, ideas, worldview and politics. A Democrat is considered to be generally liberal whereas a Republican is known to be conservative.
The Republican holds economic equity on top than any other thing. They believe that all answers lay with the people rather than with the government. The Republican wants less governmental interference and strongly believes in property rights rather than believing in welfare rights.
Democrat looks towards equality under a federal government and a Republican looks towards people looking after themselves. A Democrat stands for government-supported programs like healthcare and giving government subsidies to business, schools and hospitals, which means levying more taxes. A Republican wants decisions to be made at the state level with less government involvement.
A Democrat wants the right to legislate equality and a Republican want the right to earn equality. A Democrat’s stance will always be to enhance his position with special interest groups and a Republican always chooses a stance that he believes to be correct.
So nobody needs an introduction about the two prime political parties of the United States-the Republican party and the Democratic party. Each of the two parties has its own beliefs and political theories. Before analyzing what differentiates Republicans from the Democrats in economic policy, let's take a brief look at these two parties.

A leading economic theory advocated by modern Republicans is supply side economics. Some fiscal policies influenced by this theory were popularly known as Reaganomics, a term popularized during the Presidential administrations of Ronald Reagan. This theory holds that reduced income tax rates increase GDP growth and thereby generate the same or more revenue for the government from the smaller tax on the extra growth.4 This belief is reflected, in part, by the party's long-term advocacy of tax cuts. Many Republicans consider the income tax system to be inherently inefficient and oppose graduated tax rates, which they believe are unfairly targeted at those who create jobs and wealth5. They believe private spending is usually more efficient than government spending. Republicans oppose the estate tax.6
Most Republicans agree there should be a «safety net» to assist the less fortunate; however, they tend to believe the private sector is more effective in helping the poor than government is; as a result, Republicans support giving government grants to faith-based and other private charitable organizations to supplant welfare spending. Members of the GOP also believe that limits on eligibility and benefits must be in place to ensure the safety net is not abused1. Republicans introduced and strongly supported the welfare reform of 1996, which was signed into law by Democratic President Clinton, and which limited eligibility for welfare, successfully leading to many former welfare recipients finding jobs.2
The party opposes a government-run single-payer health care system, believing such a system constitutes socialized medicine, and is in favor of a personal or employer-based system of insurance, supplemented by Medicare for the elderly and Medicaid, which covers approximately 40% of the poor3. The GOP has a mixed record of supporting the historically popular Social Security, Medicare and Medicaid programs. Congressional Republicans and the Bush administration supported a reduction in Medicaid's growth rate; however, congressional Republicans expanded Medicare, supporting a new drug plan for seniors starting in 2006.4
In 2011, House Republicans overwhelmingly voted for a proposal named The Path to Prosperity and for major changes to Medicare, Medicaid, and the 2010 Health Care Legislation5. Many Republicans support increased health insurance portability, laws promoting coverage of pre-existing medical conditions, a cap on malpractice lawsuits, the implementation of a streamlined electronic medical records system, an emphasis on preventative care rather than emergency room care, and tax benefits aimed at making health insurance more affordable for the uninsured and targeted to promote universal access. They generally oppose government funding for elective abortions.6
Republicans are generally opposed by labor union management and members, and have supported various legislation on the state and federal levels, including right to work legislation and the Taft-Hartley Act, which gives workers the right not to participate in unions, as opposed to a closed shop, which prohibits workers from choosing not to join unions in workplaces.1 Some Republicans are opposed to increases in the minimum wage, believing that such increases hurt many businesses by forcing them to cut jobs and services, export jobs overseas, and raise the prices of goods to compensate for the decrease in profit.2
The GOP is usually seen as the traditionally pro-business party and it garners major support from a wide variety of industries from the financial sector to small businesses. Republicans are about 50 percent more likely to be self-employed, and are more likely to work in management.3
A survey cited by the Washington Post in 2012 stated that 61 percent of small business owners planned to vote for then-Republican Presidential Candidate Mitt Romney. Small business became a major theme of the 2012 Republican National Convention. For example, South Dakota Senator John Thune discussed his grandfather’s hardware store and New Hampshire Senator Kelly Ayotte referred to her husband’s landscaping company.4
Republicans believe free enterprise has brought economic growth and innovations that have made this country great. Government should help stimulate a business environment where people are free to use their talents.5
Democrats believe that the economy is too complicated for individuals to navigate alone. They believe that business decisions should be guided by government officials and in the best interest of labor unions.6
Republicans work tirelessly to cut government spending and to eliminate government waste1. Republicans believe individuals should control both their own and their government’s pocketbook – the people should authorize all tax increases.2
Democrats believe that government knows what is best for individuals3. They argue that federal bureaucrats better understand the needs of a community than a locally elected council and the federal government should define the tax burden necessary to meet its obligations, because this is too complicated for individuals to understand.4
So democrats are stereotyped as liberals and Republicans as conservatives.
Common Liberal beliefs:
Womens rights (pro-choice).
Environmental issues like global warming are important.
Same sex marriage.
Taxes to fix the economy.5
Common Conservative beliefs:
Pro-life (no abortion).
Cut taxes to fix the economy.
No special rights to interest groups.6
Republicans:
less federal government involvement. Republicans are strong supporters of the tenth amendment which gives rights to the states as opposed to Congress;
capitalism- free economic market not run or regulated by the government;
freedom is the most important aspect of America;
republicans want to uphold America as a republic, hence the name.7
Democrats:
more federal government involvement. Democrats do not generally like the tenth amendment and want the federal government to have more power;
socialism- not a free economic market. Democrats, like in other things, want the government to regulate the market;
equality is usually the most important thing to Democrats;
Democrats want to change America into a democracy, hence the name.1
Regarding economy, the Republicans believe in economic growth by free enterprise and want people to use their own innovative ideas and talents; whereas the Democrats believe that economy is too tough for individuals to handle2. According to them, business decisions can be better guided by the government officials. In general, the Republicans do not support welfare programs; whereas the Democrats support welfare programs for the people.3
According to the Republicans, property rights should be given to each and every individual. By this, they mean that a person has full right to use and safeguard his/her property without the interference of the government4. In this regard, the Democrats believe that implementing regulations concerning the use of private property is the ideal state of being. Thus, huge taxes are being imposed for the betterment of people, who belong to the less privileged group.5
The U.S. economy has performed better when the President of the United States is a Democrat rather than a Republican, almost regardless of how one measures performance. For many measures, including real GDP growth (on which we concentrate), the performance gap is both large and statistically significant, despite the fact that postwar history includes only 16 presidential terms.6
The U.S. economy has been on the forefront of Americans’ minds for several years, and the state of the economy played a pivotal role in the 2012 election season1. The major parties tackled economic issues from different perspectives, highlighting the divergence between Democrats and Republicans.2
Economic calamity begets radical politics. America's worst financial panic and recession since the 1930s gave birth to the Tea Party and Occupy Wall Street movements. Now Occupy seems to be fizzling out, but in Week 2 of a government shutdown, it is looking more likely that Tea Party Republicans could plunge the nation gratuitously into a new economic emergency.3
The GOP's surrender to fiscal anarchism is bad for the country. But it does give President Obama and his party an opportunity to seize the high ground on jobs and economic growth – the issue uppermost in Americans' minds. For that to happen, however, Democrats will need to abandon their ritual business-bashing, embrace the productive forces in U.S. society and honor companies that are investing in America's future4.
Why? Because the nation's job drought is really an investment drought. With gridlock in Washington and financial troubles at the state and local level, real government spending on productive assets from highways and bridges to computer equipment is down by half compared with the average level of the 2000s.5
Private sector investment is doing better but still falls well short of what the country needs to generate «breadwinner» jobs and raise middle-class wages. Although corporate profits have rebounded lustily, many companies are still hoarding cash – about $2 trillion worth – or spending it on stock buy-backs. U.S. business investment, outside of housing, is still 20% below its long-term trend.6
But many companies are investing at home, and they deserve recognition. For the second year, the Progressive Policy Institute has ranked the top 25 companies making the biggest bets on America's economic future. All told, these Investment Heroes spent nearly $150 billion last year on new plants, buildings and equipment1. The number could be higher because public information does not include critical investments in research and human capital.2
Heading the list of major investors again in 2013 is AT&T, followed by Verizon, Exxon, Chevron, Intel and Walmart. Altogether, they helped to plow almost $75 billion into the deployment of high-speed broadband, natural gas and oil production, and new retail and corporate facilities.3
The high ranking of broadband providers, four in the top 10, is instructive. AT&T, Verizon and Comcast poured more than $40 billion into building out their high-speed networks in 20124. Enabled by big private investments in broadband (fixed and mobile), Internet search and content providers, mobile phone operators, device makers and social networks are competing to be the doorkeepers of Americans' online experiences. This «data-driven economy» is the leading edge of innovation and growth in the USA.5
This innovation ecosystem is a prolific source of new jobs. For example, an app explosion since the first smartphone came to market in 2007 has created 750,000 jobs. And we're on the cusp of the «Internet of Everything» where ubiquitous sensors and wireless connectivity will greatly expand data collected about physical and economic activities of all kinds. That innovation promises to deepen the impact of the information revolution across the economy.6
Energy is another success story that emerges from our rankings. The eight energy companies on this year's list invested $56 billion in 20121. This reflects in part the shale gas and oil boom that is creating well-paying production jobs here and lowering costs for U.S. manufacturers.2
Also making an appearance on the Investment Heroes list are automakers Ford and General Motors, and retail giants Walmart and Target.
Democrats are often critical of business, but it's important that they don't become as reflexively anti-business as Republicans are anti-government. If businesses don't succeed, workers won't, either. Enlarging America's capacity to innovate and compete is essential if Democrats are to achieve their traditional goals of equalizing and expanding opportunity, creating channels for upward mobility and breaking up entrenched economic power.3
Besides, the moderate and independent voters Democrats need to sustain winning electoral coalitions know that the complexities of economic life can't be made to fit within a simple-minded «government vs. markets» frame4. Not having a dog in this ideological fight, they sense intuitively that our country can't win with one hand tied behind its back – that it will take a more dynamic private sector and a more strategic public sector to create the conditions for America's economic comeback.5
What they don't know is whether Democrats are willing and able to tackle the challenge of creating new wealth with the same passion they bring to spreading it around. Keeping powerful economic actors honest is in Democrats' DNA. But it's equally important to accentuate the positive by honoring enterprises investing in our nation's economic success.6
Conclusion
Democrats are generally more liberal. They believe in a larger federal government, and often implement tax plans to try to help the less privileged. They tend to believe the government must look for the greater good above the individual person in terms of well-fare and do what is necessary to make the populace more «equal». They assert that the values our country holds must evolve over time, and, therefore, tend to support such controversial choices as Pro Choice and gay marriage.
Republicans are generally more conservative. They believe that the answers do not lay with the government generally, but rather with the people. They want less government interference and tend to believe more strongly in property rights and less strongly in well-fare rights, holding economic equity above equality. Many republicans are religious and tend to hold to the morals characterizing the Founding Fathers, which results in general disproval of abortions and, for some, gay marriage.
To sum it up, Democrats lean toward equality under a large federal goverment. Republicans lean towards people looking after themselves and their neighbors under small federal government and strong state governments.
Democrats want everyone to be a little happy. Spending billions to create jobs may prolong the recession, it may have prolonged the Great Depression, but since more people are employed, it means less good for more people. Mostly everyone is a little bit happy.
Republicans want to end the Recession ASAP, which means tax cuts and no government spending. And while this doesn't help the unemployed in the short term, they will be employed (hopefully) soon. However, in the meantime, they are out of luck. Most of the country is happier than the previous, but more people are unhappy as well.
In other words: Democrats are seeking the bare level of comfort for the most amount of people, while Republicans are seeking the highest level of comfort for the majority of the people.
Republicans believe in small government, individual responsibility for social issues, and that people should keep the money they earn. Democrats believe that man may fundamentally be perfected. As a result, this requires larger government and higher taxes (someone else's money) to pay for it all.
Economic management is a key feature that distinguishes the two parties. Democrats often support economic reforms through government spending on things like infrastructure while Republicans tend to support economic reform through reduced taxes and government spending, leaving more money in consumers' pockets.
Literature
1. A New Foreign Economic Policy for the United States // http://www.iie.com/publications/chapters_preview/3802/1iie3802.pdf.
2. Alan S. Blinder and Mark W. Watson Presidents and the Economy: A Forensic Investigation, Woodrow Wilson School and Department of Economics Princeton University, November, 2013.
3. America in the Twentieth Century: A Study of the United States Since 1917 – D. K. Adams – Google Books. Books.google.co.uk. Retrieved on 2013-07-15 // http://books.google.co.uk/books?id=n2c4AAAAIAAJ&pg=PA197&dq=liberal+republicans+LBJ+cabinet&hl=en&sa=X&ei=71fnUJ33AOo4gS58oHwCA&ved=0CEUQ6AEwAw#v=onepage&q=liberal%20republicans%20LBJ%20cabinet&f=false
4. Arnold, N. Scott (2009). Imposing values: an essay on liberalism and regulation. Florence: Oxford University Press. p. 3. ISBN 0-495-50112-3.
5. Brian R. Farmer. American political ideologies: an introduction to the major systems of thought in the 21st century. Jefferson, North Carolina, USA: McFarland & Company, 2006.