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On the Issues: How Clinton and Trump’s Economic Plans Stack Up
As Election Day draws near, voters will be going to the polls with a list of priority issues they care most about, and perhaps the biggest one of all – reminiscent of the past two presidential elections – is the economy.
Donald Trump and Hillary Clinton have spoken often on the economy throughout the campaign and both have offered visions for how their plan will provide greater prosperity and more jobs for Americans. What are each candidates’ specific plans for the economy and when put under the microscope, how do economists rate them?
When reviewing Trump’s “Economic Vision” in the Positions section of his website, the Republican candidate says that “all economic policy must be geared towards making it easier to hire, invest, build, grow and produce in America – creating a level playing field for our workers and businesses in global competition, and creating jobs here, not overseas.”
On Sept. 15, Trump released more details of his economic plan claiming his vision would create 25 million new jobs while averaging 3.5 percent growth. While he laid out more specifics, the plan remained essentially the same with four key reforms central to Trump’s claim of boosting the economy: tax reform, regulatory reform, trade reform, energy reform. Trump’s website also lists the repeal of the Affordable Care Act and infrastructure spending as secondary reforms that would help boost the economy, but does not detail specifics for implementing either.
In the speech on Sept. 15, Trump maintained his plan would be deficit neutral if “our plan exceeds the 3.5 percent 10-year growth average.” If growth does not hit that threshold, it is unclear if other factors would help it maintain deficit neutrality or if a lower than 3.5 percent growth would increase the deficit.
Hillary Clinton’s website offers 18 separate initiatives in her “Economy and jobs” section, which detail specific areas such as taxes, housing, and manufacturing, but also more vague generalizations like, “An economy that works for everyone,” and “Small business.” Clinton’s overall message delivered through numerous stump speeches latches on to the populist notion of an “economy that works for everyone, not just those at the top.”
Clinton’s economic vision relies first on raising income taxes on the wealthiest Americans, as well as to raise taxes on corporations. While raising taxes might cause some to be alarmed, the Tax Policy Center found that 90 percent of the tax hike would affect only the top five percent of earners. Her plan would generate $1.1 trillion in additional government revenue over 10 years, which would then be used for other initiatives in Clinton’s plan, such as education, manufacturing, and infrastructure spending.
Like Trump, Clinton has focused a good portion of her campaign on manufacturing, i.e. making more things here in America rather than importing from cheap labor overseas. Clinton lists a $10 billion manufacturing initiative (“Make it in America”) where she hopes businesses will not shift jobs or profits overseas (into tax havens) in exchange for federal investments to grow their business domestically.
Another large focus of Clinton’s economic approach is devoted to “Fixing America’s infrastructure,” where she says, “In my first 100 days as president, I will work with both parties to pass a comprehensive plan to create the next generation of good jobs. Now the heart of my plan will be the biggest investment in American infrastructure in decades, including establishing an infrastructure bank that will bring private sector dollars off the sidelines and put them to work there.”
That plan is a $275 billion, five-year investment fixing roads, bridges, and more, while putting “Americans to work in the process.”
Trump says the word “infrastructure” just once in his economy section on his website where he briefly mentions it when speaking about the ongoing water crisis in Flint, Michigan. There is no other mention of a specific infrastructure plan, however, in an interview with Fox Business Network on August 2, Trump said he plans to double Clinton’s spending on infrastructure spending. It’s an odd proposal from Trump, let alone a Republican, as President Obama and Democrats have been pushing for more infrastructure spending for years, but are often blocked by Republicans in Congress who see that initiative as too costly. If Trump does follow through if he wins the White House, this may be one area where he and Democrats could work together.
While both candidates’ proposals claim to be exactly what America needs, economists and leading researchers have begun to examine each plan with sometimes surprising results. Attempting to remove any bias, it’s best to review nonpartisan sources to see what they have to say about each position. But briefly, let’s review the status of the economy over the last few years.
Trump has claimed for many years that President Obama’s economic vision has hurt America. Trump also repeatedly claims the “real” unemployment level is much higher (he says it could be 42%) than what is reported, though Trump’s claim has been roundly debunked.
The current unemployment rate is 4.9 as reported in September by the U.S. Bureau of Labor Statistics. Since President Obama took office, the country has gained 15.1 million new jobs and has created jobs in 78 straight months (as of August 2016), which is a record. But as NPR notes, it’s tough for Obama, or any president for that matter, to claim his policies as the sole reason for that job growth.
Additionally, since tax policy is often so closely aligned with the deficit and unemployment in economic reviews, it should be noted that Obama has increased taxes through his presidency, mostly tacking on additional taxes for the top 1% of wealthiest Americans, who, according to CNN Money, have seen their tax bills go up by about 6 percent. As some believe higher taxes hurts job growth, these numbers show the opposite has been true during the Obama presidency.
So would that trend continue into the next administration? What do economists think of the current candidates’ economic plans?
The Tax Foundation and Tax Policy Center found that Trump’s plan would reduce federal revenues significantly while increasing the deficit between $4.4 trillion to $9.5 trillion over the next decade based on their estimates. The right-leaning Tax Foundation does claim that Trump’s plan could increase full-time employment, but that’s an assumption based on businesses investing in new jobs with their lower tax burden rather than save it (or move it overseas into tax havens). Both organizations show that Clinton’s proposals would increase tax revenues and thus help lower the deficit between $498 billion to $1.1 trillion over the next decade. Clinton says this surplus would be used for manufacturing, infrastructure, and education.
Economic groups have parsed the candidates’ proposals and claims, finding more often than not that Trump’s plans could hurt overall growth.
Moody’s Analytics, a Wall Street ratings agency concluded that a Trump presidency could increase the national deficit by $1.6 trillion over 10 years.
The Economist‘s global forecasting group said Trump’s proposals could hinder growth by as much as 1.5% globally.
The Peterson Institute for International Economics, a trade-focused think tank, said Trump’s plan would cost the U.S. jobs, estimating as many as 4.8 million jobs lost.
Oxford University’s Oxford Economics research firm believes Trump’s plan could remove a total $1 trillion from the U.S. economy.
These findings may sound harsh, but not surprising considering most economists aren’t enthusiastic about Trump’s overall plan as based on a recent survey that found Trump was actually their third choice for president after Libertarian candidate Gary Johnson.
From Fortune:
“[A survey by the National Association of Business Economists] showed that 55% of its survey respondents prefer Clinton for president, versus 15% who favor Libertarian Candidate Gary Johnson. Trump actually came in third, at 14%, just less than the 15% who said they didn’t know or have no opinion who should be president.”
While the presidential election is hardly a referendum on just one issue, millions of Americans across the country say the economy is their top concern. All the candidates have made their proposals and claim to know what will work best to fix our sluggish economy, but based on research and the analysis of leading experts in economics, the majority of experts believe Clinton has the edge when it comes to greater American prosperity.
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