Trump vs. Clinton: The Economy
By Jenna Goff and Joan Greve
Washington Week Fellows
Two candidates. Two speeches. Two very different plans for the economy.
Speaking just days apart in the Detroit metro area, part of Michigan still recovering from the Great Recession, presidential candidates Hillary Clinton and Donald Trump recently outlined their plans to revive America’s sluggish economy. Although speaking about the same country, each candidate drew very different pictures of America and what needs to be done to improve it.
Over the next 12 weeks leading up to Election Day, Washington Week will take a deep-dive into the issues that will define the presidential race and highlight the deep divisions that have emerged between the two major party candidates.
Up first: the economy.
Trump recently abandoned his original tax plan and embraced the plan issued by House Republicans earlier this year. He would lower the tax rate on top earners from the current 39.6 percent to 33 percent and decrease the number of tax brackets from seven to four, including a zero bracket for the poorest Americans. To bring overseas jobs to the U.S., Trump proposes a drastic decrease of the federal corporate tax rate from 35 percent to 15 percent.
Clinton’s tax plan goes in a very different direction: she has proposed a “fair share surcharge” that would increase taxes on the wealthiest Americans to provide tax relief for middle-class families. Like Trump, Clinton wishes to bring jobs to the U.S., but suggests a different way to do so: she would end corporate and Wall Street tax loopholes such as tax inversions that reward companies for shifting profits and moving overseas, and would charge an “exit tax” on some companies wishing to leave the country.
Trump remains much more hostile to trade deals than Clinton. He is in favor of a tougher line on trade policy, including rejecting the Trans Pacific Partnership (TPP) trade deal and renegotiating the North American Free Trade Agreement (NAFTA), signed by President Bill Clinton, which Trump has called the “worst trade deal in history.” In terms of specifics, Trump proposes a seven-point trade plan that would label China as a “currency manipulator” (accusing the country of manipulating its currency to make its exports cheaper), curtail intellectual property theft, and impose tariffs on countries that “cheat.”
Clinton similarly opposes TPP, saying it “kills jobs [and] holds down wages,” but is much more open to trade than Trump. She encourages trade enforcement and seeks to make trade work so that the U.S. does not “cut ourselves off from the world.” Like Trump, however, she would impose tariffs on companies that break the rules and points to currency manipulation and intellectual property theft as pressing issues.
Trump and Clinton both agree that more money should be spent on infrastructure, but the exact amount varies greatly.
Trump hasn’t yet proposed a specific infrastructure plan, although he has advocated for “double [the] numbers” of Clinton, and maybe “a lot more than that” to build new infrastructure. He has also indicated that it is a great time to borrow, because interest rates are so low. Congressional Republicans, who have concentrated on reducing deficits, are not sold on his proposal.
Manufacturing has taken a major hit in the past couple of decades--a loss of five million jobs since the dot-com bust in 2001. Many commentators believe that these jobs are unlikely to ever return, as Andrew McGill wrote for the Atlantic, “While low-skilled labor dominated manufacturing in decades past, automation and computers have made factory floors both tremendously productive and relatively human-free.”
But the average voter would not get that impression from Trump and Clinton’s platform proposals.
Trump has repeatedly promised supporters, “I’ll bring back our jobs,” and his economic plan suggests going after China to do so. In his platform, Trump states his manufacturing aim as, “Reclaim millions of American jobs and reviving American manufacturing by putting an end to China’s illegal export subsidies and lax labor and environmental standards. No more sweatshops or pollution havens stealing jobs from American workers.”
In a very recent development, both Trump and Clinton now agree that the government should provide some relief to families paying for expensive childcare. This represents a pivot for Trump, who, when asked a question about affordable childcare in November, responded by belittling companies who did not provide in-house childcare, as some of his do. According to The Washington Post, Trump said in response, "You need one person or two people, and you need some blocks and you need some swings and some toys. You know, surely, it's not expensive. It's not an expensive thing... It's something that can be done, I think, very easily by a company."
In August, Trump then announced that he would be proposing a heightened tax deduction on childcare for American families. Parents can currently deduct $6,000 related to childcare costs from their federal income taxes, but Trump would substantially raise that number. Some economic experts were quick to criticize the plan, as it would do nothing to alleviate costs for the 45% of American families who already pay no federal income tax. The Trump campaign responded to the criticism in a statement, which clarified that lower-income families would be able “to exclude childcare expenses from half of their payroll taxes—increasing their paycheck income each week.” They also promised fuller details in the near future.
In contrast, Clinton has proposed an overall capped cost of childcare for American families. Under her plan, no American family would have to pay more than 10% of their income to cover childcare costs, which would be a significant improvement for states where average childcare costs can exceed 50% of the average median income. Clinton has also proposed increasing the salaries of childcare providers, expanding the Early Head Start program and providing childcare scholarships to student parents.