Dueling economic plans

For those who would welcome a genuine debate about national problems and proposed solutions, the current state of the presidential race can only be described as disheartening. It’s as though some political equivalent of Gresham’s Law (“bad money drives out good”) was at work, with character flaws and controversial remarks overshadowing all else. When a presidential race rages out of control, Wesley Pruden, Washington Times, 8/11/16.

The clown vs. the crook, the vulgarian vs. the witch, both stained worthies that neither party wants. One is a big talker who can’t keep his mouth shut and his tongue at ease, the other driven by greed, lies and avarice, ever on the scout for loose valuables. Has the republic ever had such a choice?

There seemed to be a ray of hope last week, when Donald Trump made what was billed as a major economic speech and Hillary Clinton responded three days later, but this exchange of views proved rather disappointing. Neither candidate offered much new thinking, both spent an inordinate amount of time attacking the other, and nothing of substance was said about the biggest skeleton in the economic closet.

A. Substance – Is America headed in the right direction when it comes to the economy, or is a major course change needed? The candidates painted very different pictures.

#In his speech to the Detroit Economic Club, Trump spoke of slow growth, falling labor force participation rate, and outsourcing of American manufacturing operations to China, Mexico, etc. – all attributed to policies supported by his opponent. Time for an America First economic plan, transcript,
8/8/16.

. . . the city of Detroit is the living, breathing example of my opponent’s failed economic agenda. Every policy that has failed this city, and so many others, is a policy supported by Hillary Clinton.

The basic steps to recovery were tax reform (major rate cuts and simplification), regulatory reform (repeal and replace GovCare, etc.), energy reform (enhanced freedom to develop energy resources), and trade reform (renegotiate NAFTA, block the TPP). Stay tuned for specific policies, to the extent they had not already been made available.

Today, I will outline my economic vision. In the coming weeks, we will be offering more detail on all of these policies, and the ones we have already rolled out can be viewed on my campaign website.

#In her speech at a plant of Futuramic Tool & Engineering in Warren Michigan, Clinton acknowledged “very real economic challenges,” but the issues she addressed had more to do with the status and compensation of workers than with the dynamics of the US economy. The overarching goal was to ensure that “every American willing to work hard should be able to find a job that provides dignity, pride and decent pay that can support a family.” No surprise, her opponent hadn’t offered “any credible solutions.” Transcript,
8/11/16.

Those challenges emerged long before the Great Recession, and they have persisted through our recovery. There is too much inequality, too little upward mobility. It is just too hard to get ahead today.

The solutions were basically a matter of “common sense.” They would have been implemented already, but for congressional gridlock stemming from the efforts of powerful special interests and “the tendency to put ideology ahead of political progress.”

Clinton rattled off a laundry list of ideas, which bore little resemblance with the Trump agenda except in the trade area. Here’s a partial list: Big new infrastructure program including broadband for all Americans. Higher minimum wage, paid family leave, subsidized childcare, gender pay equity – GovCare expanded to offer a public option in all states - college made tuition-free for middle class Americans and debt-free for everyone, tax incentives for high-quality union training programs. Higher taxes for businesses and the affluent – eased regulations for small businesses and entrepreneurs (“new national initiative to cut red tape at every level,” no details provided) – accelerated drive to phase out fossil fuel energy (“let’s build a cleaner, more resilient power grid with enough renewable energy to power every home in our country”). As president, she would stop any trade deal that “kills jobs or holds down wages,” including the TPP, and ramp up enforcement of existing trade deals.

#Some of the candidates’ ideas were more clearly expressed than they had been before, particularly on Trump’s side, but the overall matchup didn’t change a great deal.

Clinton’s mantra about “everyone” being able to succeed may sound good on the stump, but Trump’s focus on equality of opportunity harmonizes with how real world economies actually work. Hillary’s magical thinking on the economy, Logan Albright, conservativereview.com, 8/12/16.

There’s precious little evidence that more taxing, spending and regulating will promote economic prosperity – it certainly hasn’t done so in the past 8 years. And although we haven’t been disposed to endorse the Trump economic plan, it comes closer to SAFE’s agenda than does Clinton’s plan. Revving up the economy,
6/13/16.

Clinton’s plan is more or less the polar opposite of SAFE’s agenda (approve the Keystone pipeline, prohibit regulation of carbon emissions, repeal the minimum wage, etc.). Less is more: a 10-step plan to reboot the economy 9/2/13.

Trump’s plan is a mixed bag. His tax cut plan appears irresponsible (
12/7/15) [it’s now being reworked, and the changes will reportedly slash revenue losses], and we rated his trade policies as “unacceptable” (3/21/16). Slashing regulations could be constructive, but he hasn’t provided much in the way of specifics.

B. Brickbats – Trump’s speech was studded with attacks on his opponent. He associated her policy preferences with the decline of Detroit, job losses in upstate New York while she was representing that state in the Senate, and alleged policy failures of the administration on a national level. He quoted Bernie Sanders about Clinton’s “bad judgment,” which had supposedly led to international reverses having no direct connection to the economic situation. He also claimed that Clinton had supported a series of unfavorable trade deals, including NAFTA, signed by her husband as president, and the TPP. (Although Clinton has disavowed the TPP of late, some of the negotiations took place while she was heading the State Department.)

Re energy policies, Trump awarded Clinton co-ownership of the administration’s assault on fossil fuels – although she had not been directly involved in this effort. And he ended by dismissing her as “a nominee from yesterday,” with nothing new to offer.

The other party has reached backwards into the past to choose a nominee from yesterday – who offers only the rhetoric of yesterday, and the policies of yesterday. There will be no change under Hillary Clinton – only four more years of Obama. But we are going to look boldly into the future.

In its totality, this assault struck us as overkill, but Clinton handily outdid it in her speech.

She portrayed her opponent as out of touch. He was here in Michigan recently, “and it was like he was in a different place.” He “describes America as an embarrassment,” and “doesn’t seem to understand” the concerns of working Americans, let alone offering “any credible solutions.”

His ideas were all wet. Unnamed experts were cited that “Trump’s agenda will pull our economy back into recession,” while Clinton’s agenda would create lots of new jobs. And how could her opponent oppose gender pay equity and hiking the minimum wage, which would not only benefit the persons in question but boost the overall economy by giving them more money to spend?

Trump had a track record of stiffing small business people who couldn’t afford to stand up to him, a situation to which she could relate. Clinton went on to describe her father’s business (custom printing of fabrics) and how Mr. Rodham was customarily paid when he delivered the goods. “I can’t imagine what would have happened to my father and his business if he had gotten a contract from Trump.”

Trump’s aversion to international trade deals was based on “[f]ear that we can’t compete with the rest of the world even when the rules are fair. Fear that our country has no choice but to hide behind walls.” And if he was so anxious to promote US-based manufacturing, why were so many Trump products made in other countries?

Far from being “on the side of the little guy,” Trump’s regulatory proposals would “rip up the basic rules that hold corporations accountable . . . scrap regulations that stop polluters . . . roll back the tough rules we have imposed on the financial industry . . . even abolish the Consumer Financial Protection Bureau.” His tax plan “would explode the national debt” as a result of giving “trillions in tax cuts to big corporations, millionaires, and Wall Street money managers.” And, abolition of the estate tax would save the Trump family $4 billion in taxes if “you believe that he’s as wealthy as he says.”

Bottom line, Clinton was “running for President to build an economy that works for everyone, not just those at the top.” And based on what we know from the Trump campaign, he wants America to work for him and his friends, at the expense of everyone else.”

Instead of offering something new, Trump was peddling “a more extreme version of the failed theory of trickle-down economics, with his own addition of outlandish Trumpian ideas that even Republicans reject.”

Now we appreciate that “politics ain’t beanbag,” as the saying goes, and perhaps the foregoing rhetoric doesn’t match this catchy rallying cry from the presidential election of 1884 (Gov. Grover Cleveland of New York, Democrat, versus James G. Blaine of Maine, Republican).
Wesley Pruden, op cit.

Blaine, Blaine, James G. Blaine, the continental liar from the state of Maine.

Still, attacks like the ones in these speeches do more to antagonize than to educate or persuade. One would think the major party nominees for the highest office in the land could spend more time explaining the purported merits of their own ideas.

C. Glaring omission – As SAFE has warned many times, the current pattern of chronic federal deficits and steadily rising debt is unsustainable. Barring corrective action, there will be a fiscal meltdown at some point – which could have disastrous effects. Don’t forget the fiscal problem, 7/28/14.

We believe the solution is to cut spending, not raise taxes, but if taxes are increased the proceeds should be used for deficit reduction rather than new spending programs. Fiscal responsibility, SAFE newsletter,
Fall 2015.

Both of the candidates are aware of the fiscal problem, of course, so how do they propose to deal with it in their economic plans? Oops, looks like their main idea is to ignore this problem in hopes that it will go away – as most of the nation’s political leaders have been doing for years.

Among the unfavorable economic results attributed to “Obama-Clinton” policies in Trump’s speech is “a doubling of the national debt,” which is basically what will have happened under the current administration by the time January rolls around.

This is what I want to do for our country – I want to jump start America. Now let’s look at what the Obama-Clinton policies have done nationally. Their policies produced 1.2% growth, the weakest so-called recovery since the Great Depression, and a doubling of the national debt.

OK, problem acknowledged (and blamed on the other side), but what are the proposed solutions? There certainly isn’t a commitment to aggressively cut spending and balance the budget in the speech, nor have we noted Trump make such a commitment – aside from airy assertions about unspecified spending cuts and paying off the $19 trillion debt - on other occasions.

Granted that tax cuts and scaled back regulations should promote faster economic growth, it’s not reasonable to believe that such measures could solve the fiscal problem without serious spending discipline. And as though conceding this point, Trump has just floated the idea of borrowing while rates are low. Trump reverses on federal debt: “This is the time to borrow,” Joseph Lawler, Washington Examiner,
8/11/16.

"Normally, you would say you want to reduce your debt, and I would like to reduce debt too," Trump said, before explaining that "the problem is you have a military problem, you have an infrastructure problem — a tremendous infrastructure problem, and you have other problems. And also, the asset is your rates are so low."

Clinton’s speech was silent about the fiscal problem, with one exception. As previously noted, she claimed that Trump’s tax proposals would “explode the national debt.”

This was a valid comment on Trump’s original tax plan, which the Tax Foundation estimated would increase the deficit over the next 10 years by about $10 trillion on a dynamic scoring basis. The plan is being reworked, however, and version 2.0 will likely be more realistic. Adviser [Stephen Moore]: Trump tax plan will cut revenue hit by two-thirds, Joseph Lawler, Washington Examiner,
7/20/16.

Clinton said nothing about deficits or debt increases over the past eight years, nor did she offer a plan to solve the fiscal problem in the future. True, major tax increases for businesses and the affluent are envisioned, but she is also proposing a slew of special tax breaks, spending commitments, and mandated new burdens on businesses. Overall, her economic plan would stifle the economy and perpetuate the fiscal problem. Insanity once more: The Hillary Clinton economic plan, Larry Kudlow, realclearpolitics.com,
8/13/16.

By repeating Obama’s policies, how does [Clinton] expect the economy to do any better than it did during Obama’s presidency? She doesn’t. Clinton’s goal is not economic growth, but reducing inequality and social injustice in the name of “fairness.” But she never tells us what “fair” means, although we know it’s code for higher taxes and larger government.

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At best, the Trump economic plan would deliver “half a loaf.” The Clinton plan offers “none.” But there is still time for either or both of the candidates to come up with a set of ideas that makes more sense. Forever hopeful, we urge both sides to do just that.

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