As Veronique de Rugy noted earlier today, Hillary Clinton has given a speech in Michigan on economic policy, just like Donald Trump did on Monday.
If The Donald's speech was short on details and long on invective, Clinton's speech (transcript) was both long on invective and long on giveaways, handouts, employer mandates, and new public-spending projects. Sadly, neither candidate seems particularly interested in reducing governmental drag on the economy. Rather, each wants to build a semi-permeable membrane around America, one that will reduce imports but allow lots and lots of exports while also forcing companies to keep jobs in the United States. What are the odds of success for plans that simultaneously punish companies, force new mandates on them, and shovel tax breaks and handouts their way? If the past 15 or so years—rife with just these sorts of mixed, schizophrenic incentives—are any indcation, the answer is: less than zero.
Clinton's remarks were essentially cribbed from her acceptance speech at the Democratic National Convention in Philadelphia. The problem, she asserted, isn't that anything is wrong with America. No, America is already great, except that the "1 percent" is making too much money at the expense of everyone else. And China, too, is "gaming" the system of international trade by giving Americans cheap clothes, trinkets, and more. The answers, she says, are to beef up private-sector unions, force "sharing economy" companies such as Uber and Lyft to pay benefits like traditional employers, and to create "a more progressive, more patriotic tax code."
Given that the United States already has "the most progressive [tax system] in the developed world," it's not exactly clear where Clinton can take things. As it stands, the top 10 percent of income earners in America pull 34 percent of income and pay 45 percent of taxes. In terms of "patriotic taxes," Clinton has at various times said that companies that "ship jobs overseas" will be required to pay back tax incentives they've received in the past. Details are for the little people, of course, but wouldn't it simply be easier to cut the various tax incentives offered companies in the first place? Like Trump, Clinton has assailed the Trans-Pacific Partnership (TPP) and has been slagging NAFTA since the mid-2000s. She and Trump seem to share a vision of America as besieged by cheap imports and corporate overlords who readily move jobs overseas. Whatever else you can say about that vision, it's not shared by a majority of Americans, who correctly believe that free trade agreements "have been a good thing" for the country. According to Pew Research, 51 percent of us favor free trade. Among Democrats, the percentage is even higher, at 56 percent.
Although both Clinton and Trump have pledged to increase spending from already historically high levels, Clinton continues to add her slate of Christmas gifts. Before the DNC, Clinton's spending plan, as scored by the Committee for a Responsible Federal Budget (CRFB), would increase spending from 22 percent of GDP to 22.7 percent over the coming decade. At the DNC and today in Detroit, Clinton added more new spending measures, such as guaranteeing free in-state college tuition to households making up to $125,000 (more than double the median household income), opening up Medicare to people at 55 years rather than 65, and forgiving student-loan debt. The exact costs of these new programs aren't clear yet, though CRFB says it will be generating estimates for them in the coming weeks.
Even before the new spending gets added up, CRFB wrote that "neither former Secretary of State Hillary Clinton nor businessman Donald Trump has put forward a plan to address the national debt" while noting that high levels of debt correlate sharply with reduced economic growth. In July, the Congressional Budget Office (CBO) issued its long-term budget outlook and concluded that under "real GDP would increase by 2.1 percent per year, on average, over the next 30 years, compared with 2.9 percent between 1966 and 2015." Economic growth is ultimately where increased living standards come from, so a slower rate of growth is no small matter.
Lord knows that Clinton and Trump are hardly the same when it comes to their rhetoric and their preferred targets of taxpayer-funded and tax-code-enabled largesse. But in the final analysis, each is incapable of suggesting how to goose the rate of growth. Instead, they inhabit a zero-sum world, where one side's gain—foreign countries such as China, say, or the top 1 percent—by definition comes at the expense of everyone else. "Too many of the gains have gone to the top 1 percent," said Clinton today. "China and other countries have gamed the system for too long."
Yet her response to all this is to propose making workers more expensive by saddling employers with a doubling of the minimum wage, forcing them to provide more child care and paid parental leaves, and laying new regulations on everything imaginable. It will take nothing short of a miracle for the economy to overcome such specifics, much less the the uncertainty of ever-increasing government spending which ultimately must be paid for. "'Stronger Together'" is not just a slogan for our campaign, averred Clinton in Michigan today.
It's a guiding principle for the future we're going to build. And it's the choice we've got to make this November — whether our country will work for everyone, or just for those at the top.
Whether it'll be a "stronger together" economy where we all rise together, or an "us versus them" economy where we all fight over a shrinking pie.
It's nice to hear Clinton fret over a "shrinking pie." It would be better still if her plans didn't lead precisely to such an outcome.