Mike & Co. —
The legislative machinery necessary to enact a CR — representing as much progress on the FY17 budget as Congress can make and keep the government running after Friday, the last day of FY16 — has been set in motion. Adjournment is imminent. We’ll go over the final CR then.
But the week’s epic political event was Monday night. Economic policy featured prominently in the first Presidential debate of 2016. HRC was comfortably in command throughout.
The candidates defended and expounded on their economic policies, tax plans and solutions for job creation and economic development. Below, an inventory of the major economic policy issues discussed by the candidates, featuring both known and new pieces of rhetoric and policy.
Jobs/Trump: Nostalgia and Vagueness
The crux of Trump’s plan for increasing the number of jobs in the country relies on a potent mixture of nostalgia and vagueness. For nostalgia, he begins by tapping into the glory days of America’s manufacturing past, lamenting the loss of jobs to Mexico and the US’s role as a“Piggy Bank to rebuild China.” This position plays on Americans’ fear that the loss of manufacturing jobs over the previous decades has harmed its economic strength on the world stage, striking a strong chord with his white working class demographic in key swing states: Pennsylvania, Ohio, etc.
Trump’s solution offered little beyond a promise to “bring the jobs back.” In the debate he claimed that the outsourcing of these jobs came from “poorly” negotiated trade deals (NAFTA, CAFTA), and proposed to renegotiate them to give America a better deal. However, he failed to give specifics on how they will be renegotiated.
Ironically, despite blaming the rest of the world for the US’s economic problems, Trump does not seem afraid of outsourcing when it is to his benefit, as he has repeatedly, and illegally, solicited foreign leaders for campaign contributions.
On job creation, Trump also proposed improving tax competitiveness, and trickle-down economic principles, including dropping the corporate tax rate to 15 percent. His other proposals included bringing back money that is currently held overseas and investing it in the inner cities and other areas. Trump claimed that there is $5 trillion dollars hidden outside the U.S. and lowering taxes would attract this money back into the U.S. He argued that infrastructure, including plants, airports and roads were suffering and called the US a “third-world country.”
Jobs/Clinton: Targeted Middle Class and Youth
Clinton strategy, in contrast, looked towards the future, focusing primarily on promoting growth through the younger generation and middle class. Clinton framed her job creation plan as based around investment in key sectors and building a “fairer economy” through investing in infrastructure, advanced manufacturing, innovation and technology, small business and clean energy and improving socio-economic conditions including raise to the minimum wage, paid family leave, closing the wage gap and encouraging profit-sharing business models and debt free college
Taxes/Trump: Slash Like Mad
Trump announced during the debates that his tax cuts were the biggest since Reagan, a false claim not challenged by fact checkers. Trump’s tax policy is unabashedly trickle-down economic theory, relying on big business to save the economy. His revised plan would lower federal revenue by at least $4.8 trillion dollars over a decade. Analysts estimate that his proposal to individual income and payroll taxes would cost $2.1 trillion; his plans to cut corporate taxes would cost $2.4 trillion; and his plan to repeal the estate tax would cost $300 billion.
Though every income group would receive an overall tax cut under Trump’s plan, the biggest winners would be in the top 1 percent (5.1 percent average), while some families in the low- and middle-income bracket would actually see an increase from 10 to 12 percent.
Furthermore, repealing the estate tax as he plans to do would net the Trump clan over $5 billion, reinforcing Trump’s richest-takes all system and betraying Trump’s real intentions in tax reform.
Trump said that even more importantly than lowering taxes, his plan would cut business stifling regulations, which business leaders have told him is even more important. He added to his released plan by specifically saying he was removing the carried interest provision, citing that this would benefit small business and allow business to expand.
Taxes/Clinton: Fair Share
Keeping with her released plans, HRC stated that her tax plan would raise taxes on the richest portion of the population, as they have been the recipient of the majority of the wealth gained since the recession. She stated that there are many millionaires who support her plan and have called for a higher tax rate on the top earners to “pay their fair share.” She advocated the implementation of the a multi-millionaire “Fair Share Surcharge” and to close down the loopholes of the “private tax system.”
In what was considered a critical comment during the debate, HRC underscored the issue of the rich not paying their fair share of taxes when Trump was boxed into boasting that not paying taxes “makes me smart.” Taxpayers can be excused for thinking Trump is suggesting they are stupid.
HRC further presented her tax plan as one that rewards work, not financial transactions, and was focused on the middle class. HRC said experts have estimated that her tax plan would lead to 3.5 million new jobs and her proposed tax reform measures are estimated to raise revenue by $1.55 trillion.
Spending, Debt and Deficit/Trump: Slash, Rinse, Repeat
Trump plan aims to cut taxes and cut spending but his cuts in spending would not remotely offset the revenue loss from his cut in taxes, and would increase debt over the next decade by $5.3 trillion. Along the lines of taxes, Trump proposes to slash government programs. His proposed cuts will reduce net spending by $1.2 trillion dollars. The chief target of his proposed slashes are programs like Affordable Care Act and Medicaid, which will reduce spending by $3.2 trillion. He does intend to increase his spending on defense, veterans, and Medicare by $2 trillion.
Spending, Debt and Deficit/Clinton: Striking a Balance
HRC’s plan counts on an increase in taxes and spending. Her tax reform would increase revenue by $1.55 trillion, leading to increased spending in college education ($500 billion), paid family leave ($300 billion), infrastructure ($300 billion) and additional health care spending.
Her proposal would increase debt by $200 billion, one 26th the amount Trump’s would. Clinton spoke out repeatedly against Trump’s tax plan as the exact same thinking that brought about the 2008-2009 crisis. Trickle-down has proven that it does not work, and returning to the system would do nothing but undo the work that has been done, sending the country back into recession. HRC projected optimism about the recovery and said that the United States must focus on middle class and broad-based inclusive development development as the key to improving the economy.
The Fed/Trump: Republicanize the Fed
Trump continued railing against Fed Chairwoman Janet Yellen during the debate Monday, emphasizing a claim he’s made a couple times before. He claims that the board is under political pressure from President Obama to keep interest rates low to hide “a big, fat, ugly bubble” that is underwriting the economy. He accused Janet Yellen and the Fed of keeping interest rates down to raise approval for the Obama administration and Secretary Clinton, and accused the Fed of not doing its job. Notably, Trump chided Chinese devaluation and perceived inaction by President Obama in his fourth sentence on Monday night; the issue hardly deserves that type of prioritization in the minds of the American people.
The Fed/Clinton: Steady as She Goes
HRC stayed silent on the issue of interest rates, political influence at the Fed, or Chinese devaluation throughout the debate. In future debates, she should look to punish Trump for his position on the Fed by calling out his flip flops on the issue and noting he once called himself a “low interest rate person.” She should also note that Mr. Trump seems to believe the Federal Reserve is just another piece in his political game.
Hillary said she would strongly consider following but not commit to precedent set and reappoint the Fed chairwoman Janet Yellen. HRC also stressed that she will leave it to her and her Board to decide when it’s time to raise interest rates.
On economic growth, Clinton and Trump have different perceptions of reality, largely a result of their relationship with President Obama. Clinton claims that the economy is growing strong, but that there is still a long way to go. She claims her plan will generate 10 million jobs over the next four years. On Monday, Clinton said her plan largely relies on higher education and specifically making it easier to graduate debt-free This position could be strengthened by emphasizing retraining of the working class individuals Trump is complaining are losing their jobs to globalization.
Trump did not have much to say about how his plan will contribute to growth. Instead, he focused on claiming that the growth in GDP and drops in unemployment are not based on underlying positive shifts in the economy, but are instead the result of interest rates that have been kept too low. He said that the recovery has been the weakest ever seen, and that artificially low interest rates have created a bubble to make it appear that progress has been made.
Trump is betting against the U.S. economy. This isn’t new; he said he rooted for the stock market to collapse in 2008 so he could buy the property on the cheap, or as he called it “good business.” He argued that the only way to fully get out of the recession was to end Free Trade negotiations and cut corporate taxes to make the United States competitive with China and Mexico.