Austerity is officially dead, at least at the presidential candidate level. Congress? We'll have to wait and see. Both Hillary Clinton and Donald Trump are talking about increased spending on public infrastructure.
Hillary Clinton has launched her post-convention campaign push by talking about a "100-days jobs plan" that includes a 'Make It in America' plan to invest $10 billion in manufacturing communities.
Meanwhile Trump took a break from his fight with the parents of a fallen soldier to tweet his plan, which is, "We will bring back the American dream!"
Clinton's Jobs Plan
The Toledo Blade covered one Clinton campaign event, in "Clinton touts her jobs plan at Ohio rally":
She vowed to make the largest investment in jobs since World War II in her first 100 days in office. ...
“We are going to put millions of Americans to work,” Mrs. Clinton said. “We’re going to invest in infrastructure — our roads, our bridges, our tunnels, our ports, our airports, our water systems.
“But not just what you can physically see. We need a new electric grid to be able to take and distribute all the clean renewable energy we’re going to be producing.”
Mrs. Clinton said every U.S. home and business should have access to high-speed broadband Internet.
Clinton's plan includes a $10 billion "Make it in America" manufacturing initiative focused on strengthening manufacturing hubs, job training, rebuilding manufacturing communities and other efforts. Then there is a $275 billion infrastructure plan that includes $25 billion to seed a national infrastructure bank. This bank would fund public-private infrastructure projects (such as toll roads and bridges).
Trump's Jobs Plan
Trump's plan is basically that he is a billionaire businessman who knows how to make deals and he will make good deals for America. "And it will be beautiful."
But seriously, in late June Trump gave a speech outlining his plan, but offered few details. The speech was summarized by Voice of America, in "Trump Unveils Jobs Plan, Takes Aim at Clinton":
Trump outlined a seven-step plan to bring back jobs to the U.S. The plan included withdrawing the U.S. from the Trans-Pacific Partnership (TPP) free trade deal, renegotiating the terms of the North American Free Trade Agreement, and appointing trade negotiators to identify trade violations by foreign countries.
The plan also included several threats against China, the world's second-largest economy. Echoing his past comments, Trump vowed to label China a currency manipulator and to bring trade cases against Beijing both in the U.S. and at the World Trade Organization.
"If China does not stop its illegal activities, including its theft of American trade secrets, I will use every lawful presidential power to remedy trade disputes, including the application of tariffs," Trump said.
Fox Business News continues beyond trade and China, citing Trump's convention speech, in "'America First': Donald Trump Touts Jobs Plan in RNC Speech":
Trump’s comments on the economy also included a promise of tax reform. The longtime businessman said the tax code will be simplified and middle-income Americans will see their rates cut. Businesses will also see tax relief, he said. The top federal corporate tax rate is 35 percent, one of the highest in the world.
Excessive regulation costs the U.S. as much as $2 trillion annually, he said. Trump specifically pledged to lift restrictions on the production of American energy. Clinton, he said, will pursue regulations that hurt coal miners and steel workers.
... We will build the roads, highways, bridges, tunnels, airports, and the railways of tomorrow. This, in turn, will create millions more jobs,” Trump said.
Trump's website does not explain any details of plans to "build the roads, highways, bridges, tunnels, airports, and the railways of tomorrow." However, it does mention building a wall.
Trump's "tax reform" plan is basically huge tax cuts for the highest incomes; eliminating inheritance taxes entirely; huge, huge tax cuts from 35 percent to 15 percent for corporations; no taxes on profits corporations make outside of the country and rewarding tax-dodgers with a huge break from 35 percent to 10 percent on the taxes companies already owe for non-U.S. profits that they have been holding outside of the country.
Trump also say he will "eliminate job-killing regulations" but does not specify which regulations he means. His website does not explain.
Clinton's plan focuses on infrastructure and manufacturing, with a side dish of changing the way we do trade deals and ramping up enforcement of existing deals. Trump's plan focuses on undoing trade deals and applying tariffs, giving tax breaks to the wealthy and corporations, with a side dish of promises to improve infrastructure.
Fixing "trade" would over time bring back a lot of jobs, but only over a longer term. Unfortunately our trade policies have damaged our manufacturing ecosystem to the point that a massive investment would be required to bring back much of the manufacturing that has moved to low-wage countries.
There is no evidence that tax cuts promote economic growth, but obviously they do result in deficits and debt. There is also evidence that tax cuts aggravate inequality.
However, public investment in maintaining and modernizing our infrastructure would have a much quicker effect. People would be hired almost immediately upon funding and this would accelerate as more infrastructure projects come online – and accelerate further as economic efficiencies result from completion of these infrastructure projects.
Meanwhile Mark Zandi, a widely respected independent economic forecaster and former adviser to Sen. John McCain during his presidential campaign has analyzed the Clinton and Trump economic plans. The Clinton plan analysis results say that the economy would create 10.4 million jobs (3.2 million of these additional to current trendlines) with Clinton's plans in four years. The Trump results say his plan would result in 3.4 million fewer jobs than expected under current trendlines.
Zandi writes that during Clinton’s presidency, “the economy would create 10.4 million jobs, 3.2 million more than under current law. Unemployment is also lower, with the unemployment rate falling as low as 3.7 percent in the middle of her term, and ending her presidency in 2020 at 4.4 percent.”
During a Trump presidency Zandi projects that the economy would produce a “decline of 3.4 million jobs” and higher unemployment during Trump’s presidency if the “candidate's policies are fully implemented.”
Who benefits and who loses, according to Zandi? “[T]hose who would benefit most from Secretary Clinton’s economic proposals would be low- and middle-income households.” But under Trump’s policies, the “bulk of the [tax] cuts would go to those at the very top of the income distribution, and the job losses resulting from his other policies would likely hit lower- and middle-income households the hardest.”
What About Congress?
With both Clinton and Trump talking about priming the pump by spending on infrastructure, will Congress let it happen, should the Republicans maintain control next year?
Republicans have been blocking spending on infrastructure, manufacturing initiatives, research, and any other spending that might boost the economy. They understand that infrastructure and science and other public investment will create jobs and boost the economy – which helps the sitting Democratic president. They understand that economic decline turns people against the sitting Democratic president. So obstruction has been the only game in Washington town.
For Clinton to get this spending going, Democrats would have to win back the Congress, or Clinton would have to get enough Republicans to change their position on "government spending" to allow the country to get moving again. Continued Republican obstruction might require Clinton to use the "bully pulpit" to push for changes in the 2018 election. She could use the hammer that their own presidential candidate wanted to spend on infrastructure.
A Republican House might also oppose Trump – or it might not. A Republican president might be enough to open the spending spigot and get money back into the economy to get things moving. Or it might not.
What is clear is that just as relentless organized public pressure forced both presidential candidate to oppose the Trans-Pacific Partnership, we will need to maintain organized pressure on the presidential candidates to shape their promises on infrastructure so they actually do create jobs where they are most needed – and hold them to those promises.