Inside Sources, September 29, 2016
South Jersey Courier-Post, September 29, 2016
This election will offer voters a clear choice on economic policy. Hillary Clinton has put forward proposals that will continue and extend many of the policies that President Barack Obama has put in place. By contrast, Donald Trump would look to bring back the sort of policies that were in place under George W. Bush in a wide range of areas.
Before laying out the policies, it is worth briefly laying out the facts on where the economy is right now, since this seems to be a matter in dispute between the candidates.
When Obama took office, the economy was in a free fall, losing more than 700,000 jobs a month. At the time, leading political figures from both parties were warning of a second Great Depression. This meant that Obama was coming into office with a huge hole to fill before the economy could move forward.
The stimulus and other measures pushed by Obama did in fact turn the economy around, but the recovery was much slower than most economists predicted. Part of the reason was that the hole was very deep. Another factor was that when the Republicans took over Congress in 2010 they insisted on sharp cuts to the budget, which had the effect of slowing economic growth and job creation.
Nonetheless, in recent years the economy has been creating jobs rapidly, generating almost 8 million jobs in the last three years. In the last couple of years we have begun to see stronger wage growth as well. In addition, as a result of the Affordable Care Act, the number of uninsured fell sharply, standing at 9 percent of the population in 2015, the lowest figure on record.
It is also worth pointing out that the rate of health cost inflation slowed under Obama. While many people are paying more money out of pocket, often because employers are passing on more costs, total health care costs would be more than 20 percent higher if we had stayed on the pre-Obama trend.
This background is important since, in most areas, Clinton would continue and extend policies put in place by Obama, while Trump would reverse them. Starting with taxes, Obama restored the Bill Clinton-era tax rates on high income people. Hillary Clinton has proposed modest further increases in tax rates on the highest income households.
By contrast, Trump has proposed large tax cuts that would disproportionately benefit the richest people in the country. He would go back to the Bush-era tax rates on the very wealthy. This would reduce the taxes on the richest 1 percent by an average of more than $120,000 a year and the richest 0.1 percent by more than $700,000 a year.
He would also eliminate the estate tax, a tax that affects less than 0.2 percent of estates. In addition, he would cut the top corporate income tax rate from 35 percent to 15 percent. Trump’s tax cuts are projected to add $4 trillion to the debt over the next decade.
Clinton wants to keep and extend the Affordable Care Act. She has indicated she wants to make the subsidies in the health care exchanges more generous and give people the option of joining a Medicare-type public plan. She also wants to reduce the cost of prescription drugs by allowing imported drugs and also for Medicare to negotiate lower drug prices.
Trump has said he wants to repeal the ACA as one of his first acts as president. He says that he will replace it, but has not given any specifics.
Trump has also made a big point of saying that he wants to increase U.S. oil, coal and gas production by reducing regulation. It is worth noting that domestic oil and gas production both increased by more than 20 percent under Obama. Coal production is down, but largely because it can’t compete with cheaper alternatives.
Trump has also been eager to claim that he doesn’t believe in global warming and will do nothing to stop it. Clinton accepts the scientific consensus that global warming is a serious threat and will attempt to curb greenhouse gas emissions.
Trump has also complained that the Federal Reserve Board is keeping interest rates too low, implying that he would appoint people who would raise rates and slow the economy. Clinton would presumably appoint people who are more committed to supporting growth and job creation.
On these, and other, areas the candidates have sharply differing views on the best direction for economic policy.