The third Presidential debate took place last night, and no surprises, Clinton emerged the winner. One of the most hotly contested topics between the two candidates was the issue of the US economy.
Here’s a quick guide of how the two candidates differ in their opinions about the future of the world’s largest economy.
The most glaring issue which they differ over is tax planning.
Trump wants to slash taxes, and reduce the number of tax brackets from seven to three. He wants to reduce the tax rate to 33 per cent from 39.6 per cent for the highest earners.
Clinton, on the other hand, wants to increase the tax burden for the highest earners, and keep the rate of tax the same for earners in the other brackets. Individuals who earn more than $5 million, will have to pay 4 per cent more tax than they are currently paying, according to her plan.
Clinton’s plan would increase government spending, while Trump’s would reduce it.
In terms of jobs, Clinton wants to focus on skills training, and wants to invest in sectors like energy and infrastructure, which will employ people. Trump wants to cut corporate taxes, and make it easier for new businesses to open in the US and thereby employ more people.
Neither Trump, nor Clinton are clear on how they will fund the ballooning expenditures for Medicaid, Medicare, Social Security and pension funds in the next few years.
Trump also wants to renegotiate some of the free trade deals the US has with other countries, and wants to increase tariff on goods coming in from large trading partners like Mexico and China.
Here are some key highlights from the debate on the economy:
Clinton said she believes that when the middle class thrives, America thrives. She wants to raise the minimum wage, and make sure that women get equal pay, and wants to increase technical education in colleges. She said Trump’s plan would add $20 trillion to debt and cost America jobs.
Trump replied that the way he proposes to create jobs is to renegotiate trade deals like NAFTA (North Atlantic Free Trade Agreement), which he said is a ‘horrible deal’, and if he can’t renegotiate NAFTA, then he will terminate it. Products pouring in from China and Mexico have cut jobs, he said. He also reiterated his massive tax cut plan.
Clinton said that America has already tried cutting taxes on the wealthy, and that it doesn’t work. She added that the steps Obama took saved the economy, and enabled the US to dig itself out of a recession. In her argument, she tried to show that she looks at trade agreements and their benefits carefully, and that she has opposed the Trans-Pacific Partnership because it did not ‘meet her test’.
She also added, “There’s only one of us on this stage that actually shipped jobs to Mexico, that’s Donald.”
She said, “One of the biggest problems we have with China is the illegal dumping of steel and aluminum into our markets.” Donald has bought Chinese steel and aluminum and used it to build his hotels. “He goes around with crocodile tears about how terrible it is.”
Trump ended by saying how well he built his company. “If we could run our country the way I’ve run my company, we would have a country that you would be so proud of.” He said he started with a million dollar loan.
Note: Trump is the son of a real estate tycoon, and inherited a great deal of money from his father.
What do economists think of both plans?
Economists say that Trump’s plan will actually increase jobs in the short run, but will end up costing the US economy 690,000 jobs in the next decade. In contrast, Clinton’s plan would end up creating 645,161 jobs by 2027.
The study, conducted by the Wharton School of Business, found that Clinton’s plan would cause GDP to decrease by 0.19 per cent in 2018, but by 2027 GDP would grow 0.4 per cent above the baseline. Trump’s plan would cause GDP to grow in the short run, but would decline in the long run.
Trump’s plan could add as much as $6.2 trillion to the US economy, according to the Tax Policy Center’s report.