The Economics of Trump and Clinton: Comparing the policy positions of the candidates

I stopped writing about the presidential election several months ago because I entered into a funk. But never mind that … election day is nearly here and I feel compelled to share my thoughts about the economic policies of Donald Trump and Hillary Clinton.

Because of my funk, or what you might call nervous depression, I’m going to give a pass to several things that bother me. I’m putting my anxieties about Clinton’s email server, Benghazi and Bernie Sander’s-inspired liberalism on a shelf. I’ll do the same with Trump’s 3 a.m. Twitter tirades, lack of any prior experience in public office, and his offensive language toward women, Mexicans, veterans and really anybody he wants to lash his ugly tongue at. I’m looking purely at the efficacy of selected economic policies.

And just so you know where I’m coming from, I want to speak with candor about my economic world view. I believe market economies are the best way to organize an economy and create the greatest good for the greatest number of people. My assessment of the candidates’ economic policies comes from an enthusiastic market orientation.

I also believe that sometimes government can improve market outcomes. The trick is to look for correct and careful ways to intervene to improve efficiency and equity. This is no easy task. Markets fail, but so do governments.

Unfortunately, neither candidate hits the mark for me. Neither is market-oriented enough, nor careful enough in their proposed interventions.

Trade policy

Trade policy is a good example. Donald Trump clearly believes trade agreements (passed and pending) are damaging the United States. He wants to repeal NAFTA and improve pending trade deals such as the Trans Pacific Partnership (TPP), an agreement among 12 Pacific Rim nations, including the United States, but excluding China.

Hillary Clinton takes a more tempered approach, but she’s jumped on the anti-trade bandwagon by intensifying her opposition to the TPP.

The positions of both candidates leave me wanting. I believe globalization has done more to raise living standards in this country and the world than any other economic breakthrough. Open markets create economic winners and losers, but public policy can address these challenges. The solution is not to shut off trade, but rather to retool the U.S. workforce and to optimize the social safety net to help in this transition.

Immigration policy

When it comes to immigration policy, Clinton is the hands-down winner. Trump’s policy to deport 11 million, or 3.5 percent of the total U.S. population, would do much to hurt an already tight labor market with an unemployment rate under 5 percent. And the cost of a mass deportation of undocumented immigrants is estimated at approximately $450 billion. Add this to his commitment to build “an impenetrable, physical, tall, powerful, beautiful southern border wall,” and the economics begin to crash even more.

Clinton supports substantial reform of the nation’s immigration laws through the bipartisan “Gang of Eight” bill. I like the bill because of its pro-family focus. The bill would reward immigrants with greater education and English fluency and result in a substantial increase in hourly and high-skilled immigrant workers. I give Clinton the nod on immigration policy.

Tax and spending policy

Which brings me to tax and spending policy. This is the most complicated, but can be simplified: Trump gives higher income households tax breaks, while Clinton raises taxes on the same. Clinton spends more, but pays for it. Trump spends less, but doesn’t have the revenues to pay for it.

Clinton supports the “Buffet rule,” which imposes a 30 percent minimum tax on taxpayers with an adjusted gross income in excess of $1 million. Because of this and other policies, she brings in substantially more government revenue than we have today, but also proposes more expansive spending. She wants to infuse $300 billion over five years into infrastructure projects. She also wants to invest in early-childhood education, paid family leave and clean energy programs, to name a few.

Trump takes a vastly different approach. He proposes a massive overhaul of the tax code, with lower marginal rates, closed loopholes and scaled-back deductions. He also proposes reducing the corporate tax rate from 35 percent to 15 percent. These tax cuts are significant and could do much to stimulate growth if spending were controlled at the same time. The problem is his stated opposition to changes in Medicare and Social Security, while simultaneously proposing large increases in military and veteran spending. I fear the budget deficit would rise significantly.

Policies matter

The policies of presidential candidates are actually extremely important. In a well-known analysis, political scientist Michael Krukones analyzed approximately 70 years of campaign promises made by presidents. Krukones concluded they achieved roughly three-fourths of what they promised. More recently, PolitiFact examined campaign promises made by Pres. Barack Obama and found he has achieved a compromised version of about 70 percent of them.

Words matter. Policies matter. Campaign pledges matter. I think the policies of both candidates need refinement. In this election year, I’m grateful for the checks and balances in our system and hope they will work in keeping us prosperous.

Natalie GochnourNatalie Gochnour is an associate dean in the David Eccles School of Business at the University of Utah, director of the Kem C. Gardner Policy Institute and chief economist at the Salt Lake Chamber.