Clinton’s Economic Speech Ignores the Main Problem: Slow Growth

Hillary Clinton’s economic policy speech in Michigan was built on answering four questions: Which candidate has a plan to create good-paying jobs? Who will restore fairness to the economy and make sure those at the top pay their fair share? Who will best represent working families? And who can deliver results that make a difference?

But no matter what the question is, Clinton’s answer is ostensibly the same: The government will tax wealthy individuals to spend more money on government programs and somehow we’ll all be wealthier because of it.

This isn’t just magical thinking. It is, as the National Review’s editorial board described it, mythology.

A seemingly trivial but nonetheless illuminating example of her fundamental intellectual unseriousness on economic questions was her repetition of the ancient, repeatedly discredited myth that Henry Ford raised his workers’ wages on the theory that doing so would enable them to buy Ford cars, thus increasing his company’s profit. Nothing of the sort ever happened, in reality, and the economic assumptions behind this myth — that one can spend one’s way to prosperity — is preposterous. Economically speaking, this is flat-Earth stuff, pure hokum from a woman who likes to smugly proclaim: “I believe in science!” …
What it in fact resembles rather closely is the “trickle down” theory of economics that exists almost exclusively in the minds and rhetoric of opponents of the Reagan-era policies defamed under that label: Let the money slosh around through the right sluices, and it will somehow magically multiply itself.

Hillary Clinton’s plan isn’t just bad because it lacks originality, it’s terrible because it’s been tried before to no good end. The worst example is her $275 billion government works program that she sells as “rebuilding the nation’s infrastructure.” If done correctly, there is opportunity there, but given that we have little to show for the $1 trillion we spent less than a decade ago on economic stimulus, it’s a tough sell. If Mrs. Clinton is craven enough to use the nonprofit Clinton Foundation as a tool to reward her friends (aka financiers), who knows what she’ll be able to do with a taxpayer-funded slush fund.

Among her other ideas, most of which would be right at home in the 1960s, is to expand housing subsidies, create a new government entitlement for universal childcare, expand Social Security benefits, transition Obamacare into a Medicaid-for all system of government-run healthcare, eliminate student loans for many families, and build a cleaner power grid. All of these are recycled ideas, and heck, none of them are even new to her campaign. As the Washington Post explained, “The Trump attacks made up the only new aspects of the speech, with its policies largely rehashing the ones developed during the Democratic primaries.”

And who will pay for all of this new stuff pray tell? Why the theoretical rich people that pay for all Democrats’ tax-and-spend schemes, of course! Well, they’ll at least pay for some of it – a recent review of Clinton’s plan by the American Action Forum shows her plan will increase taxes by $1.3 trillion, but boost spending by $3.5 trillion over the next decade. Something doesn’t add up.

Of course, bad math is par for the course for Democrats attempting to find a way to dramatically expand the welfare state while also promising not to raise taxes on the middle class – a needle that hasn’t been threaded by any government in the world. What’s most astounding is Clinton’s willingness to conform to Democrat orthodoxy at the expense of even mentioning the fundamental economic challenge of our time. The Washington Post editorial board writes:

For the most part, however, Ms. Clinton did not venture beyond the usual Democratic talking points: higher taxes for millionaires, equal pay for women, expanded Social Security and so on down the familiar list. Absent from her speech was any discussion of the persistent sluggish trend in U.S. productivity, which has fallen for the past three quarters after growing at a historically subpar rate of 1.3 percent from 2007 through 2015. Increasingly, economists name this as the greatest long-term threat to growth, and it would be nice to know, specifically, what Ms. Clinton proposes to do about it beyond investments in infrastructure and education.

She avoided it because she likely has little idea how to fix it, at least not ways that would jive with the leftist elements of her base that she’s been forced to cater to. If she was interested in solving our growth crisis she would talk about encouraging entrepreneurship through reduced regulatory barriers, improving (not just subsidizing) our higher education system, eliminating the distortions caused by crony capitalism, and reducing corporate tax burdens to increase our competitiveness with foreign economies. But these, by and large, run counter to the question she’s really trying to solve, which is: How can I justify a bigger government?

 

Photo Credit: Gage Skidmore