Although third parties— think the Libertarian and Green platforms— may steal away some votes, it seems almost certain that either Republican Donald Trump, or Democrat Hillary Clinton, will take on the role of Commander-in-Chief early next year.
Voters seem to be most strongly considering the economy for this upcoming election cycle, which is why a fairly thorough examination of the economic agendas of the two primary candidates is vital. This becomes an even further pressing issue considering how the two candidates’ plans diverge.
This post will look at how the economy would likely look under Trump or Clinton.
The Economy Under Donald Trump
Early during his campaign, Donald Trump went on record to say that he believed America’s economic landscape was fairly weak. He believed that the America of present was, and still is, in a bubble, and admittedly didn’t want to be in office before it burst.
In an April interview with the Washington Post, however, Trump changed his tune somewhat. He expressed that while he still believed we were headed into a recession, he had supreme confidence in his ability as a fabled businessman to right the course.
Many voters share Trump’s confidence in his abilities, which is largely why he garnered more support amongst working class voters than other Republican candidates. In the general field, Trump and Clinton are deadlocked in terms of public opinion on key economic issues, according to a CNBC poll conducted in April.
It should be noted that other polls show the property mogul to be leading on economic issues.
Here is a recap of the economic policies that Trump has suggested during the campaign trail:
- Repealing Obamacare, while formulating a replacement plan
- Renegotiating or leaving the North American Free Trade Agreement (NAFTA)
- Imposing tariffs as high as 35 percent
- Making Mexico pay for a wall to keep out illegal immigrants
- Overhauling the tax code
- Making sure hedge funds pay their fair share in taxes
- Keeping the budget deficit manageable, while growing the economy
While these have been Trump’s positions on the campaign trail, it is important to note that many of these policy ideas may shift in the coming months, much less when Trump would actually take office. Trump has already backtracked on some of his policy proposals, and it is likely that he will continue to do so, in order to enhance his electability.
Perhaps an even more important idea is that Trump’s policies would not necessarily have great support amongst members of Congress, which would be necessary for them to pass. At present, Republicans control both the Senate and House of Representatives, but this may change by the time that the elections occur.
Furthermore, it is no guarantee that Republicans give Trump carte blanche. Many of Trump’s policies do not align with traditional conservative values, and many Republicans have clashed with Trump thus far, although it appears as if more are aligning with him, if for no other reason than the appearance of solidarity.
Specific policy proposals could also be very costly to implement. Trump’s immigration proposals would cost between $400 billion to $600 billion, according to the American Action Forum, a right-leaning issue advocacy group. This does not factor in the fact that the labor force would shrink by over 10 million workers, the U.S.’ GDP would decrease by $1.6 trillion, and it would take much longer to say, build a wall, than Trump is admitting.
Trump has provided a good amount of detail on how he would overhaul the tax code. He would exempt many American households from paying tax, while not growing the national debt. This may seem too good to be true, and perhaps it is.
While many have pointed out that his tax code policy is very pro-growth and helps Americans across the board, the key issue is that tax revenue would be significantly decreased. One estimate found that while wages would increase by 6.5 percent and GDP by 11 percent, tax revenue would decrease by almost $12 trillion over a decade.
The U.S. would have to operate by spending only 75% of what it does today, which while not impossible, would require cuts to certain programs. Trump has not specified which programs he would cut or curtail.
It is ultimately believed that Trump’s off-the-cuff remarks that have gotten him this far will not be appropriate for the actual presidency itself. In fact, they could dramatically hurt economies worldwide, as individuals would not feel comfortable with the Leader of the Free World being so controversially outspoken.
To reiterate, Trump’s behavior and tact as President of the United States would play a big role in the functioning of the economy.
The Economy Under Hillary Clinton
Hillary Clinton is somewhat of a mystery in the sense that voters don’t know if she’ll take the more lenient positions of her husband, Bill Clinton, or if she’ll buckle down more on financial institutions like President Obama has.
Part of the reason that Bernie Sanders gained so much support in the primaries is because he explicitly called out large financial institutions, something Clinton has been unwilling to do. Many believe that with many of Clinton’s supporters being wealthy, she refuses to cast aspersions upon any of them.
Some policy proposals Clinton has come out in favor of include:
- Expanding the Dodd-Frank and Volcker Rule measures
- Closing tax loopholes for those in higher tax brackets
- Better regulating hedge funds and other “shadow banking” entities
- Increasing pay for working families
- Creating jobs in infrastructure, clean energy, and scientific and medical research
- Providing tax relief for small business and the middle class
- Expanding college affordability and job training opportunities
Clinton will have a strong demographic of voters who will support her on tougher Wall Street regulation, as 67 percent of the U.S. wants stronger regulations on financial institutions, according to an ABC News poll conducted late last year.
Many, including Sanders, have called Clinton out for not releasing transcripts of her speeches to large financial firms, which Clinton has deflected. She had emphasized that her speeches do not signal that she would cater to those parties.
Clinton has said that she would reintroduce certain parts of the Dodd-Frank Act that Republicans tried to exclude, such as the Volcker Rule, which aims to stop banks from making risky investments. A bank tax would also be imposed upon larger financial institutions.
She has called for doubling the potential jail time for those who commit major financial crimes, and said that executives should lose bonuses when they are directly involved in a bad decision that entails a fine.
Clinton has also made it clear that she will close the “carried interest loophole”, which allows money managers to pay significantly less in tax, while taxing those who make $5 million or more annually an additional four percent.
Hillary has been criticized in some circles for not supporting Glass-Steagall, a repealed regulation from the Great Depression era that intended to separate commercial banking from investment banking. Sanders was a big proponent of reinstating it.
One item on which many are more confident with Clinton being president concerns her foreign economic policy. While she has mistakes, she has extensive experience, including during her tenure as First Lady and Secretary of State. Many believe that she will largely mirror Obama when it comes to economic policy.
On many occasions, Clinton has expressed that she supports a higher minimum wage, likely somewhere in the $12 to $15 an hour.
Ultimately, much like with Trump, the implementation of Clinton’s policy ideas may be out of her control, as Congress is currently controlled by Republicans, and very well may continue to be so.
Most don’t see Republicans working with Clinton much better than they did with Obama, which highlights the importance of having your party serve a majority throughout the federal government.