If Hillary becomes president will she turn the economy over to her husband, or strike her own path?
Posted May 25, 2016
The problem with Hillary Clinton, the pundits say, is that she lacks a clear economic message.
Donald Trump wants to make America great again. He’ll build a wall, impose steep tariffs and cut taxes for everybody.
Bernie Sanders wants to start a political revolution. He’ll break up the banks, force billionaires to pay higher taxes and make college free.
Hillary Clinton? A lot harder to say.
When NPR asked David Axelrod to explain Clinton’s economic policy in one sentence he said Clinton doesn’t want to do anything in one sentence.
“That’s the problem, right? She wants to do things in paragraphs and pages. This has always been a problem in that she is incredibly fluent in policy, she embraces good policy ideas, but she has a hard time weaving them into a coherent narrative that cuts through.”
This week, though, Clinton broke from character and did offer an economic policy solution that is both simple and straightforward: turn it over to her husband.
The former president, she told voters in Kentucky, would be “in charge of revitalizing the economy.”
“Because, you know, he knows how to do it. Especially in places like coal country and inner cities and other parts of our country that have really been left out.”
Clinton immediately took flak for the comment — what kind of message would it send if the first female president of the United States turned what is perhaps the most important job of the president over to her husband?
All of which brings up an important question: What would Hillary Clinton’s economic plan actually look like?
As Gail Collins of the New York Times pointed out, it’s tough to say with any certainty. “She’s pledged to do more to crack down on Wall Street, but she hasn’t really said whether the deregulation during her husband’s administration was a mistake. She’s disagreed — briefly — with Obama on matters like immigration, trade and Arctic drilling, but the details are very hard to pin down.”
Would Clinton follow the centrist path of her husband, who repealed Glass-Steagall, deregulated the telecom industry and passed welfare reform? Or will the populist candidacy of Bernie Sanders push her even further to the left of Obama, who raised taxes on the country’s highest earners for the first time since the late '90s, pushed through Obamacare and signed the Dodd-Frank Wall Street Reform Act?
Clinton has suggested she’ll do both, to some extent, hewing to a centrist path while trying to keep her base happy, which is hungry for Wall Street reform.
What Clinton won’t do, no matter how much Sanders pushes her, is break up the country’s largest banks, notes The Street. Instead, she’d focus on tighter regulation of hedge funds and what she has called a “shadow banking” system.
Her tax reform policies are also much more modest than either of her rivals, according to The Street: she’d close tax loopholes, raise taxes on capital gains and levy a 4 percent surcharge on people earning more than $5 million, which would generate about $150 billion in revenue over 10 years. As NPR recently noted, most of Clinton’s tax policies will affect a small number of Americans: those who make more than $5 million a year, the rich who take advantage of certain tax breaks and people who make over $1 million. (As an example, her surcharge proposal would affect 34,000 people.)
She’s also said she’d push for a nationwide $12-an-hour minimum wage and more or less continue the free trade policies of her husband and Obama, which is starkly different than the proposals of Trump (heavy tariffs) and Sanders (who wants to scrap free trade deals with Canada and Mexico).
So what impact would Clinton’s plan have? According to an analysis by the Tax Foundation, tax revenue would go up by $498 billion over the next decade, but would also cause a dip in economic output, resulting in net revenues of $191 billion.
There are also fears that Clinton’s tax plan (which mostly focuses on the super rich) will decrease investment and cause economic stagnation, according to The Street.
“Her proposal would have a devastating effect on capital formation. She is absolutely out to lunch,” Arthur Laffer, a Reagan administration supply-side economist, told the New York Post.
But Greg McBride, a financial analyst with Bankrate.com, told the Post he disagrees, saying that while raising investment taxes will generate more revenue for the government it “won’t do much to change investor behavior,” a sentiment shared by Warren Buffet.
While Clinton’s economic policy is much more detailed and specific than Trump’s or Sander’s, the Economist asserts they’re too feeble:
“A typical Clinton speech on the economy contains some reflections on the tornadoes of globalisation and automation that have torn up opportunities for less-skilled workers, then culminates in a proposal to introduce a minuscule, two-year tax credit for companies to encourage profit-sharing schemes. This risks repeating the worst parts of 1990s Clintonomics, which added a slew of micro-measures to America’s over-complicated and inefficient tax code.”
So far, Clinton has offered an economic policy plan that doesn’t look all that different from her predecessors, Collins writes.
If Hillary can’t describe her economic plan in one sentence, Collins can: Continuity You Can Believe In.