As I have recently pointed out, Hillary Clinton is now likely to be our next president. In my last post I provided vivid evidence that middle class income grew dramatically between 1971 and 2001 and has been either stagnant or declining since then. The fact is that the years from 1971 – 2001 were a time of rapid economic growth, about 3.5% per year.
So it is obvious what needs to be done to fix America’s economic woes: grow the economy faster! In its latest issue, the Economist asks, “Can she fix it?” The tentative answer suggested by the Economist is no, based on Mrs. Clinton’s tepid policy proposals to date:
- She wants to make college more affordable, grant paid leave to parents, raise the national minimum wage to $12 per hour, and increase infrastructure spending. These are nice sounding proposals but will have only minor effects on growth or add greatly to the national debt (infrastructure spending).
- She proposes a tax-credit for companies to encourage profit-sharing schemes. This would just make the tax code more complicated.
- She wants an extra tax on the debt of big banks but simply increasing capital requirements on big banks would be more effective.
- She wants to raise the top tax individual tax rate to 45% but shrinking deductions and closing loopholes would be a more efficient way to make the tax code more progressive.
- She wants to abandon the Trans Pacific Trade Partnership rather than figuring out how to help those workers who lose from expanded trade with such measures as wage insurance or better job retraining.
As the Economist concludes, “A bigger plan to help American workers would start by boosting competition, both by slashing unnecessary regulations for small businesses, and by ensuring that big firms no longer operate in protected markets.”
If we are going to end up with another Clinton presidency, we certainly don’t want four more years of Obama-type economic stagnation!