The first presidential debate occurred this morning (Singapore time). It focused on what the candidates plan to do to “achieve prosperity and secure America”. The debate was very frustrating to listen to as Trump seems incapable of staying on topic or even forming complete sentences. Below are evidence based estimates and analyses of the most likely outcomes due to proposals from each candidate. Whether we look at debt, taxes, jobs, or trade, Clinton seems to be the clear and logical choice as Trump would be a disaster across the board.
Plans for Achieving Prosperity
Promises and Price Tags: A Preliminary Update
“Incorporating rough and preliminary estimates of these new policies, we find that Clinton’s plans would increase the debt by $200 billion over a decade above current law levels (compared to our prior estimate of $250 billion), and Trump’s plans would increase the debt by $5.3 trillion (compared to our prior estimate of $11.5 trillion). As a result, debt would rise to above 86 percent of GDP under Clinton and 105 percent under Trump.”
“Clinton’s plan would increase both spending and revenue. Under our preliminary updated central estimate, she would increase primary spending by $1.65 trillion over the next decade, including about $500 billion of spending on college education, $300 billion each on paid family leave and infrastructure, and significant new health-related spending. Meanwhile, she would increase revenue by $1.5 trillion on net, including $1.05 trillion from increased income taxes on high earners and $150 billion of net business tax increases. Some of these tax changes were added to her plan just this week. Clinton’s plan would also result in roughly $50 billion of additional interest costs over a decade.
Meanwhile, Trump’s plan would decrease both non-interest spending and revenue. Under our preliminary updated central estimate, he would lose about $5.8 trillion of revenue, including $1.45 trillion from individual tax reform, $2.85 trillion from business tax reform, and $1.2 trillion from repealing the taxes imposed by the Affordable Care Act (“Obamacare”).
Trump would also reduce spending by $1.2 trillion, the net effect of almost $3.2 trillion of spending cuts – largely from the Affordable Care Act (“Obamacare”), Medicaid, and non-defense discretionary spending – and over $2 trillion of spending increases on defense, veterans, childcare, and Medicare (by reversing the “Obamacare” cuts). Under our central estimate of Trump’s plan, interest costs would increase by $700 billion over a decade.”
Getting Real About Paying For Trump's Tax Plan
“Trump's campaign estimates the new tax plan will cost $4.4 trillion, about half of the $9.25 trillion that we had estimated his old plan would cost. The new plan would be paid for in part with reductions in non-defense spending but mostly by increasing economic growth to 3.5 percent annually. This rate of economic growth is likely unachievable, and unfortunately Trump has taken many alternative offsets off the table that he could use to make up the difference.”
Is Sustained 4 Percent Annual Real Growth Achievable?
“As we noted in our 16 Myths document, the last time the U.S. had 4 percent growth on average for 25 years was 1940-1964. And in the modern context with an aging population and a large percentage of women now already in the labor force, pursuing a number of pro-growth policies mentioned would only achieve about 3 percent real growth at best over the long run. Therefore, it would be very difficult to achieve sustained 4 percent annual real GDP growth.”
Analysis of Donald Trump's Tax Plan
“The proposal would cut taxes on household s at every income level, but much more as a share of income at the top (18.3 percent change in after-tax income for the top 0.1 percent versus 1.1 and 4.9 percent change in after-tax income for the lowest and middle income quintiles) . The fundamental concern the plan poses is that, barring extraordinarily large cuts in government spending or future tax increases, it would yield persistently large, and likely unsustainable, budget deficits.”
Moody’s: Clinton economy would create 10 million jobs
“Moody's Analytics estimates that if the Democratic presidential nominee's proposals are enacted, the economy would create 10.4 million jobs during her presidency, or 3.2 million more than expected under current law.”
Live Fact Check: Trump And Clinton Debate For The First Time
“The pro-trade Peterson Institute for International Economics warns that Trump’s threat of steep tariffs on imports from China and Mexico could unleash a trade war, costing 4 million jobs and driving the economy into recession. Clinton is not calling for new import tariffs, but like Trump she opposes the Trans-Pacific Partnership. Peterson says each year’s delay in TPP reduces GDP by tens of billions of dollars.”
Assessing Trade Agendas in the US Presidential Campaign
“Hillary Clinton, the Democratic candidate, has expressed skepticism about trade but in effect represents stasis.”
“the shock resulting from Trump’s proposed trade sanctions would also damage sectors not engaged directly in trade, such as wholesale and retail distribution, restaurants, and temporary employment agencies, particularly in regions where the most heavily affected goods are produced. Millions of American jobs that appear unconnected to international trade—disproportionately lower-skilled and lower-wage jobs—would be at risk, according to the empirical study.”
“Hillary Clinton has a nondoctrinaire track record on trade issues. She supports strengthened enforcement of existing rules, increased efforts to deal with currency manipulation, and changes in the tax code that eliminate tax loopholes that are subject to abuse by US firms operating abroad. She, however, opposes TPP, the only major trade agreement currently under consideration, an agreement that has been estimated to yield huge benefits to the United States.
Donald Trump advocates policies that could potentially overturn the existing US-led rules-based international trade system. He has promised to slap high tariffs on China and Mexico and reconsider or abrogate US participation in existing free trade agreements and even the WTO itself. The analysis presented here shows that the trade war these policies is likely to spark would send the US economy into a recession and cost millions of Americans their jobs. The most intensely hit sectors would be manufacturing and mining, but the largest job losses would be in sectors such as wholesale and retail distribution, restaurants, and temporary employment agencies. His policies place at risk the livelihoods of millions of Americans, most of whom probably do not think of their jobs as tied to international trade. The American casualties in this trade war would be drawn disproportionately from the ranks of lower-income and lower-skilled workers.
Depending on the international response, some localities could experience devastating job and income losses. These adversely affected regions include high-tech centers like Silicon Valley; business service hubs like Los Angeles and New York; manufacturing centers like Everett, Washington; and rural counties in states such as Arkansas, Mississippi, Missouri, and Tennessee.
The results presented in this analysis constitute a conservative assessment of the damage to the US economy that could result from some of the trade policies advocated by candidate Trump. Other policies he has proposed—such as withdrawing from the WTO—could be cataclysmic, undermining 80 years of US economic diplomacy and pushing the United States back into the Smoot-Hawley world of the Great Depression. The opposition of both candidates to TPP is regrettable. But Trump’s casual invocation of “trade wars” is irresponsible and reckless, jeopardizing the livelihoods of millions of Americans.”