Monday, April 25, 2016

Can Hillary Clinton Fix America's Economy?

The title to this blog post tracks the title of an article in the British magazine, The Economist.  As I have often noted, UK publications often seem to give more thoughtful coverage to America that one can find in American publications.  The analysis in this case urges Hillary to be bolder, yet nothing as dramatic as Bernie Sander's supposed cures for America's ills.  The piece also notes that Hillary has put forward the most detailed plans of what she would do and has striven to make the numbers add up - something in short supply in Sanders' proposals and totally missing in the various GOP candidates' voodoo economic proposals. Here are some article highlights:
Mrs Clinton is experienced. In an age of extremes she has remained resolutely centrist. Yet, rather than thrilling to the promise of taking the White House or of electing  or of electing America’s first woman president, many Democrats seem joyless..
And America as a whole is seething with discontent. It may dodge putting a populist, an ideological extremist or a socialist in the White House in 2017. But, if voters’ anger remains unabated, it will not do so for much longer.
Mrs Clinton needs a bold plan to counter this popular frustration. Alas, judging by her economic policies so far, she is more inclined to tinker. 
To gauge Mrs Clinton’s programme, start with the Clintonomics that her husband pursued in the mid-1990s. Broadly, it got the big things right by transforming a tax-and-spend party into one that took deficits seriously. Under Bill Clinton, the Democrats made peace with Wall Street and free trade, and agreed to ambitious welfare reform. Thanks to these sensible policies, and the fortuitous tailwind of higher productivity growth, the economy boomed and prosperity was shared. 
America today is more divided; its economy is weaker and beset by problems. Since 2000 most workers’ incomes have stagnated, even as those of the richest have soared. Scarred by the financial crisis, battered by technological change and globalisation, less-skilled workers have fared worst. Many have left the labour force (54% of over-25s with only a high-school education are in work, down from 63% in 2000). An opioid epidemic is lowering their life expectancy. 
The Democratic Party looks different, too. 
Faced with all this, what are Mrs Clinton’s ideas? A lesser candidate would have veered to the left. Yet, even as Mr Sanders has proposed a top rate of tax of almost 70% and wants to scrap the trade pact with Canada and Mexico, Mrs Clinton has largely stood her ground. When she sets out to create “strong growth, fair growth, and long-term growth”, her rhetoric is hard to fault. In her plans to make college more affordable, grant paid leave to parents, introduce a $12 federal minimum wage and increase infrastructure spending, she has the rudiments of an agenda that does not stray too far to the left.
But next to the ills they are supposed to correct, Mrs Clinton’s solutions too often seem feeble. . . . Sometimes, her policies are fiddly. Rightly fearing that some Wall Street banks are too big to fail, Mrs Clinton wants an extra tax on their debt. Making sure banks hold enough capital and scaling back the tax-deductibility of interest on all firms’ debt would do the job better and be simpler. 
Her plans for personal income tax, which would take the top federal rate to around 45%, are equally complex, as is a proposed change to tax on the capital gains of long- and short-term investors, which looks like a solution to a non-existent problem. 
Mrs Clinton can be bold when she chooses. She has proposed reforms to criminal justice that would lead to fewer non-violent offenders ending up in jail. This has attracted criticism, because it underlines how, in the 1990s, she backed her husband’s hardline views on crime. 
In fact, she should be willing to overturn applecarts more often. . . . .Losers from globalisation and technological change need more ambitious support, from wage insurance to retraining and help to relocate for work. A big expansion of the earned-income tax credit—a kind of negative income tax—would be a start. More generally, Mrs Clinton should aim for a tax system that is efficient as well as progressive by stripping out deductions, including popular ones like mortgage-interest relief. 
To be clear, we are holding Mrs Clinton to a higher standard than other candidates. She has released more detailed plans than anyone else and made more effort to make the sums behind them add up. But she needs a compelling pitch because, if Americans concluded that the only way to bring radical change was to elect a Trump, Cruz or Sanders, it would represent a disastrous failure of the political centre. 
We are also asking her to be ambitious just when Washington has been plagued by gridlock and obstruction for its own sake. Yet the mess the Republican Party has got itself into may present Mrs Clinton with a chance to reshape the nation. What a shame if her ideas were too small to seize it.
I would like to see Hillary be bolder while still focusing on what can actually be accomplished.  In addition, she does need to formulate a bold vision  can offset the lies and disinformation of the GOP which is still peddling the same failed voodoo economics of the 1980's. 

1 comment:

Candide said...

The Democrats TOUCH mortgage relief--the ONE middle class tax break keeping most folks afloat--and they have lost all elections for the foreseeable future. These writers may be correct on some points, but a big swing and a miss there.