You might be confused about which is the left-wing, welfare-state presidential candidate. One of them wants to junk up the tax code with new deductions, load up on debt and pull up the drawbridge on trade. The other one is Hillary Clinton. She’s no Milton Friedman, but there is a good case that Donald Trump is in tone and policy more like Sen. Bernie Sanders (I-Vt.) than any previous Republican candidate, and yes, as bad if not worse than Clinton on fiscal policy and basic economics.
At the most general level, Trump infantilizes workers by claiming we’re losing and need tariffs to make us competitive. We should passively entrust our fate to him “alone,” who has some magic formula for “winning.”
In comparison, Clinton sounds like she is channeling Ronald Reagan’s “Morning in America.” In Michigan she told the crowd:
When Donald Trump visited Detroit on Monday, he talked only of failure, poverty, and crime. He’s missing so much.
And the same is true when it comes to our country. He describes America as an embarrassment. He said – quote — “We’re becoming a third-world country.” I don’t believe that. We have a lot of urgent and important work to do – and that’s what I’m going to talk about today – but all the people I’ve met in this campaign have convinced me that Donald Trump is wrong. America’s best days are still ahead of us.
It’s true — liberals used to be the ones who saw only failure (absent their grandiose welfare-state plans) while Republicans were the ones with confidence in the workers, investors and employers. Even Trump’s language — “I’m going to take care of them,” he says about whatever group he is pandering to at the moment — is a parody of liberal paternalism.
Then there is Trump’s tax plan. He sort of revised it, only to be slammed for setting up Ivanka’s pet project, federal subsidized day care that benefits only upper-income taxpayers who itemize. (Clinton on Thursday cracked, “His plan was panned left, right, and center – because it’s transparently designed for rich people. He would give wealthy families 30 or 40 cents on the dollar for their nannies, and little or nothing for millions of hard-working families.”) And, as we’ve pointed out, he keeps another oldie-but-goodie for the rich — eliminating the estate tax for those few estates (over $5.4 million) that still pay it.
Trump has also said he’d trim back his tax plan so that it would “only” lose $3 trillion, not $10 trillion over 10 years, as did his original plan. Matt Jensen of the American Enterprise Institute finds out that he is not remotely close. “If Trump’s team is serious about cutting the cost of his tax plan from $10 trillion to $3 trillion, we should expect many more changes to be forthcoming, because the rate schedule tweaks will only get him down to $6.7 trillion, at best. He may need to pare back the large expansion of the standard deduction.”
But Trump has repeatedly told us he “loves” debt. On Thursday, he expanded upon this bizarre notion, advanced at a time we have a $19 trillion debt. (Shouldn’t we all be rich if debt is so great?) On CNBC (of all places), he blathered on at length:
Well, I’ve always loved leverage. As Becky [Quick] can tell you. I’ve always, you know, respected leverage but I’ve always loved it. But a country is a different thing. However, with that being said,the interest rates are so low, I mean, the numbers are so low, that yes this is a time to borrow and borrow long-term. So that we have the money and rebuild our infrastructure . . . . Normally you would say you want to reduce your debt. And I would like to reduce debt too as much as anybody. The problem is you have a military problem, you have an infrastructure problem, a tremendous infrastructure problem. And you have other problems. And also, the asset is your rates are so low. What’s going to happen when the rates eventually will go up and you can’t borrow, you absolutely can’t borrow because it’s too expensive? It would destroy our balance sheet, totally destroy the balance sheet. So you’d be paying so little interest right now. This is the time to borrow.
Whatever Clinton wants to spend on infrastructure — $500 billion — he’ll double! This is fiscal insanity.
Patrick Newton, spokesman for the Committee for a Responsible Federal Budget, in an email explains, “Unless the government runs a surplus (not in the near future), the additional debt we rack up today will still be on the national credit card when rates go up, whether next year or 10 years from now. At that point, borrowing isn’t free.” He adds, “Borrowing to pay for pro-growth policies would be one thing if we had a sustainable debt and a budget closer to [being in] balance. But it needs to be thought of in the context of debt levels that are the highest they have ever been in history other than around World War II and rising, deficits that are headed to $1 trillion by 2022, and entitlement spending that is growing much more rapidly than our revenue sources to pay for them.”
Trump seems not to appreciate the negative consequences of debt. “The higher the debt, the higher chance of a potential future interest rate spike, no matter what the rate is now,” Newton says. “No one can predict when investors might lose confidence in the U.S. and demand higher interest rates, but everyone would agree our debt burden can’t increase forever without consequence.” (Trump may have gotten the idea from multiple bankruptcies and stiffing creditors that borrowing means never having to pay back your debts. The U.S. government does not have that luxury.)
Nevertheless, what Trump knows about debt and deficit-financing dwarfs what he knows about trade. Clinton — although she seems to suffer from the same anti-trade pandering — in her speech yesterday argued:
Now Mr. Trump may talk a big game on trade, but his approach is based on fear, not strength. Fear that we can’t compete with the rest of the world even when the rules are fair. Fear that our country has no choice but to hide behind walls.
If Team USA was as fearful as Trump, Michael Phelps and Simone Biles would be cowering in the locker room, afraid to come out to compete. Instead, they’re winning gold medals. America isn’t afraid to compete.
Right now, thousands of Michigan companies are exporting billions of dollars of products around the world. We want them to sell even more, and create more jobs here at home.
Too bad she doesn’t take that advice and push for passage of the Trans-Pacific Partnership.
As the droll Web site HoldingOurNosesForHillary.com reminds us, “Hillary Clinton might be corrupt, but at least she can add . . . . Math is not a partisan thing.” For Trump, nothing — his tax plan, his budget, his trade notions — adds up to a constructive and attainable pro-growth plan.