Where do we go now? What the economic policy of the United States would look like under the leading Presidential candidates

Original content provided by Stephen Alexander

 
  Courtesy of Newsweek

Courtesy of Newsweek

 

The Players

Hillary Clinton: In her second run for president of the United States, the democrat appears to be the most likely candidate to win with a 4 point lead over Donald Trump in the Rassmussen presidential poll and a 77.7% chance of winning according to FiveThirtyEight. The former First Lady, senator, and Secretary of State looks to reform the economy with higher taxes on the wealthy and corporations, nixing the TPP, and investing in higher education.

Donald Trump: The real estate mogul/reality television star/billionaire has stolen the show in the presidential cycle with his fiery rhetoric and frequent Twitter use. Though he has gotten more media attention than any other candidate, he is down in the polls to Clinton and losing ground fast. His economic policy proposals are still vague with less than 100 days to the general election, but Trump’s platform focuses on reworking current trade agreements and a massive tax overhaul.

Gary Johnson: The former two-term governor of New Mexico is running for president as the candidate for the Libertarian party. After an unsuccessful attempt in the Republican primary in 2012, Johnson regrouped and is campaigning independent of the GOP. Though relatively unrenowned for most of the election cycle, Johnson has become the leading alternative to Hillary Clinton and Donald Trump. Johnson bills himself as a pragmatist who can solve the economic problems of the country with massive cutbacks on government spending and taxation. He is polling at 6% nationally in the Rassmussen presidential poll as of August 4th.

 
  Courtesy of ABC News

Courtesy of ABC News

 

The Background

The three leading candidates are wildly different in terms of their fiscal views, with Clinton flashing a more progressive, liberal agenda, Johnson being about as fiscally conservative as possible, and Trump remaining somewhere in the middle. Globalization has increasingly mitigated some of the influence presidential policies have on a nation’s economy, though the policies still have the power to transform the nation, good or bad.

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Hillary Clinton has many policy ideas in mind but to fund them she will need to tax appropriately. Her tax plan is not radically different from the current one under the Obama administration, though she plans to raise rates on the wealthy and incorporate the Buffet Rule, which ensures a minimum effective tax rate of 30% for earners over $1 million. The benefits of her plans will be vigorously debated as the Tax Foundation projects her tax policy to shrink the economy by 1% in the long run. This could eliminate over 300,000 jobs and reduce wages, albeit by .8%. Clinton hopes to significantly boost her tax plan by reshaping America’s education system and penalizing companies for moving operations overseas. Clinton proposes free community college for all Americans, which she hopes will strengthen manufacturing communities and get back manufacturing jobs that have moved abroad.

Donald Trump’s policy reforms reflect many of his ideas as a whole, simple and maybe not well thought out. Trump’s tax plan centers on simplifying the tax code to four brackets and hammering away at corporate and estate taxes. Trump plans to reduce the corporate tax rate to 15% and completely eliminating the estate tax. Though this will invigorate the economy and create more than 5 million jobs, the national debt could increase by 80% by 2036 due to the $10-12 trillion dollar reduction in revenue from taxes, according to the Tax Policy Center. This could, in turn, force massive spending cuts in the government, which may require an equally massive governmental job cuts. Trump insists he will not touch Social Security or Medicare, though he will eliminate Obamacare. This creates an issue though, as the decreased revenue from taxes will not be able to cover the expenses of the two without greatly increasing the deficit. Another highlight of Trump’s platform is his plan to eliminate bi-lateral trade agreements. Trump promises his negotiating power will be able to rework current trade agreements, add manufacturing jobs back to the U.S. and make America great again.

Gary Johnson flaunts fiscal responsibility as his greatest asset. He managed to cut taxes many times as Governor of New Mexico and left the state with a $1 billion surplus. Johnson is proposing a reduction of taxation to just a consumption tax, which would tax spending instead of income. His economic policy proposals have not been much more specific otherwise, though he encourages a less interventionist military. This could in theory create a massive windfall for the United States, as the federal government spent $598.5 billion in discretionary money on the military in 2015. Whether his success in maintaining a budget at a state level could translate to a federal one is up for debate. The United States has never been headed by a Libertarian Commander-In-Chief, so many of the proposed policies are untested.

 
  Courtesy of CNN News

Courtesy of CNN News

 

The Story

Economists are divided mostly into tax-and-spend advocates and those who think fewer taxes will benefit the nation most. This election divvies up the candidates into those camps, with Clinton in the former and Trump and Johnson in the latter. Though each side offer numerous economic models to support their theories, the many moving parts of the American economy prohibit a fundamental exhibition for either side. If elected, Clinton will face a Republican-heavy Congress which will fight her ideas and may inhibit them from taking shape. Trump may face the same issue, as he is very unpopular among GOP incumbents. Johnson does not realistically have a shot at becoming president this election cycle. The unpopularity among both candidates has his stock slowly rising however; he may benefit from gained notoriety for a run in 2020. Each candidate’s proposals are far from perfect in the eyes of most economists, but it is up to American democracy to evolve platform to policy and improve upon the concepts along the way.