Donald Trump, left, and Hillary Clinton, right, delivered competing economic speeches this week. Mary Altaffer and Chuck Burton/AP
Despite the vast differences between Donald Trump and Hillary Clinton, there were some striking similarities between the economic speeches they delivered this week. They both spoke in Michigan, where they both talked a lot about manufacturing, with both of them insisting that they would obtain fairer trade deals.
That’s because both candidates are trying to latch onto — and insist that they can alleviate — a pervasive feeling among Americans that they just can’t get ahead, and that it’s related to a fast-changing U.S. economy. The candidates, of course, diverge vastly on many issues, but they also have some surprising areas of agreement.
Read below how the two candidates differ.
“That is why I have announced we will withdraw from the deal before that can ever happen. Hillary Clinton will never withdraw from the TPP. She is bought, controlled and paid-for by her donors and special interests. Because my only interest is the American people, I have previously laid out a detailed 7-point plan for trade reform, available on my website. It includes strong protections against currency manipulation, tariffs against any countries that cheat by unfairly subsidizing their goods, and it includes a renegotiation of NAFTA. If we don’t get a better deal, we will walk away.” — Donald Trump
“But the answer is not to rant and rave – or to cut ourselves off from the world. That would end up killing even more jobs. The answer is to finally make trade work for us, not against us. So my message, my message to every worker in Michigan and across America is this: I will stop any trade deal that kills jobs or holds down wages – including the Trans-Pacific Partnership. I oppose it now, I’ll oppose it after the election, and I’ll oppose it as President.” — Hillary Clinton
Trump and Clinton had a similar basic message on trade: I’m for trade deals; just not these trade deals.
Trump, for example, said he would “walk away” if a renegotiation of NAFTA didn’t turn out the way he wanted. And as he later added: “Trade has big benefits, and I am in favor of trade. But I want great trade deals for our country that create more jobs and higher wages for American workers.” He also warned that the Trans Pacific Partnership would mean a million lost manufacturing jobs.
As for what he would do, in that seven-point trade plan he said he would label China a currency manipulator (people accuse China of manipulating its currency’s value to exports cheap, meaning other countries’ consumers would buy more), crack down on intellectual property theft, and impose tariffs on countries that “cheat.”
Clinton likewise says that she doesn’t want the U.S. “to cut ourselves off from the world” and that trade can “work for us.” But she also — like Trump — had strong words against TPP: “I will stop any trade deal that kills jobs or holds down wages – including the Trans-Pacific Partnership. I oppose it now, I’ll oppose it after the election, and I’ll oppose it as President.”
And she had many echoes of Trump in her speech — she said in her speech that she would impose “targeted tariffs” on companies that “break the rules.” Like Trump, she also pointed to currency manipulation and intellectual property theft as a problem.
Trump’s rejection of trade deals fits with one of his own broader campaign narratives: rejecting the establishment. Many Republicans — and, importantly, the Chamber of Commerce, which has given heavy financial support to Republican candidates — support free trade. This is just one way Trump thumbs his nose at more traditional Republican ideas.
“A big part of our plan will be unleashing the power of the private sector to create more jobs at higher pay. And that means for us, creating an infrastructure bank to get private funds off the sidelines and complement our public investments. $25 billion in government seed funding could unlock more than $250 billion and really get our country moving on our infrastructure plans.” — Hillary Clinton
“But we are going to look boldly into the future. ￼We will build the next generation of roads, bridges, railways, tunnels, ￼seaports and airports. That believe me folks is what our country deserves. American cars will travel the roads, American planes will connect our cities, and American ships will patrol the seas. ￼American steel will send new skyscrapers soaring. ￼We will put new American metal into the spine of this nation.” — Donald Trump
Another area in which Clinton and Trump broadly agree: both want to ramp up infrastructure spending.
Clinton has said she wants to spend $275 billion over five years (with additional private spending, eventually). She’s proposed an infrastructure bank — an idea that has been around in Washington for decades now (at times, with bipartisan support, though it has been more of a Democratic cause in recent years) but that continually fails to gain much traction.
The basic idea is that the government would start a fund — in Clinton’s case, $25 billion — and use it to finance major projects, for example through loans and loan guarantees (this CBO report is a good background). This can help spur new private investment that construction projects do not currently attract, as the left-leaning Center for American Progress explained in a 2012 report.
Trump likewise in his speech touted infrastructure spending, though he didn’t get into detail. However, he has explained those details elsewhere: he has seemed close to Clinton on the idea that something like an infrastructure bank would be the way to fund those projects, as the Wall Street Journal’s Nick Timiraos wrote earlier this year, with Americans buying “infrastructure bonds.”
However, he has said he wants to spend $500 billion or more on infrastructure, nearly double what Clinton wants to spend. Because interest rates are low right now, he has said, it is a great time to borrow. This puts him at odds with current Republican economic principles, which have focused more on reducing deficits.
“And Wall Street corporations, and the super-rich should finally pay their fair share of taxes. That’s why I support the so-called Buffett Rule, because multi-millionaires should not be able to pay a lower tax rate than their secretaries. We should also add a new tax on multi-millionaires, crack down on tax gaming by corporations, and close the carried interest loophole – something I’ve advocated for years.” — Hillary Clinton
“I am proposing an across-the-board income tax reduction, especially for middle-income Americans. This will lead to millions of new and really good-paying jobs. The rich will pay their fair share, but no one will pay so much that it destroys jobs, or undermines our ability as a nation to compete.” — Donald Trump
Trump’s tax plan is where he hews much more closely to other Republicans’ ideas. In fact, he recently overhauled his initial tax plan (which has been removed from his website) in favor of a new plan with brackets that match those proposed by House Republicans, though Trump has said would also add in a zero bracket. His new plan would lower the top rate from 39.6 percent to 33 percent, and with that zero bracket would have only four brackets, down from the current seven.
Those consolidated, lower rates would largely benefit wealthier taxpayers. Not only that, but Trump would drastically lower the corporate tax rate and eliminate the estate tax — both of which are standard Republican talking points.
An analysis from the Tax Foundation found that those House Republican income tax brackets would provide tax cuts across the economic spectrum, but that the benefits would be much bigger for rich Americans. The top 1 percent would see their after-tax incomes grow by 5.3 percent, while people below the 80th percentile would see little change, with their incomes growing by less than 1 percent (these figures do not take into account any additional economic effects the plan would have).
Altogether, Trump’s plan would slash revenues and thereby grow the deficit. His former plan would have added $9.5 trillion to the deficit over a decade, according to the Tax Policy Center. This one, with its higher income tax rates, would cut that figure, though it’s unclear by how much. Larry Kudlow, a CNBC commentator and informal advisor to Trump, said the addition to the deficit would now total $3 trillion.
Clinton’s plan, meanwhile, goes in the opposite direction: she relies heavily upon taxing the rich, a major way she pays for her other programs. Lower and middle-income people, meanwhile, would see their incomes change little — some with a slight decline — while the richest one percent would see their incomes fall by 5 percent or more, according to an analysis from the Tax Policy Center. The Tax Foundation likewise found few income changes for people who aren’t the very highest earners.
The Tax Policy Center has estimated that Clinton’s tax proposals would boost revenue by $1.1 trillion over a decade.
“All of our policies should be geared towards keeping jobs and wealth inside of the United States. Under my plan, no American company will pay more than 15 percent of their business income in taxes. In other words, we’re reducing your taxes from 35 percent to 15 percent.” — Donald Trump
“Right now, when a corporation outsources jobs and production, it can write off the costs. We must stop that, and we must make them pay back tax breaks they ever received from any level of government in our country. And for those that move their headquarters overseas to avoid paying their fair share of taxes, they’re gonna have to pay a new exit tax. So if they want to go, they’re going to have to pay to go.” — Hillary Clinton
Trump and Clinton both talked about taxes in terms of bringing overseas jobs into the U.S. Trump framed his plan for this as simple: he would drastically lower the federal corporate tax rate from 35 percent — which is high among other advanced economies — to 15 percent, in an attempt to lure businesses into the country. (However, many U.S. businesses take advantage of tax breaks to pay far less than that 35 percent rate right now.)
Trump’s 15 percent plan may have an unintended consequence, however; he would apply that rate to “pass-through” business income, which is taxed at a top rate of 39.6 percent. That benefits the owners of certain types of businesses, allowing them to drastically cut their tax bills, and could encourage people to avoid taxes by changing how they report their earnings.
Clinton’s framed her business taxes, meanwhile, as a way to stop companies from leaving the U.S. — she would imposes an “exit tax” on some companies leaving the country, and she also said she would crack down on tax inversions, in which a company moves its headquarters in order to take advantage of lower tax rates overseas.
“I think instead we should expand the Child Tax Credit to provide real relief to tens of millions of working families struggling with the costs of raising children – the same families that his plan ignores. And that’s just a start. Because the more we do to help working families, the more our entire economy will benefit.” — Hillary Clinton
“My plan will also help reduce the cost of childcare by allowing parents to fully deduct the average cost of childcare spending from their taxes.” — Donald Trump
Trump’s childcare plan focuses on allowing families to deduct the average cost of childcare from their taxes. That was immediately panned this week as largely benefiting richer Americans — higher earners pay higher tax rates, and many lower-and-middle-income households don’t pay any federal income tax. Trump’s campaign added that they would also have a plan for those lower-income households, allowing them to “exclude childcare expenses from half their payroll taxes.”
Clinton swung back in her speech, emphasizing criticisms that Trump’s plan would mainly benefit more well-to-do families. She touted her plan, which she said would cap the cost of childcare at 10 percent of families’ income, but then added that she was also proposing paid family leave, not to mention equal pay policies.
These kinds of “family friendly” policies have been at the center of Clinton’s campaign throughout this election season. Though Trump is venturing into this territory, she seemed to be saying that she owns this policy area far more than he does.
It’s not clear how much these programs would cost, but they could get expensive. Trump’s would cut the tax liabilities of richer families in particular. Clinton’s, meanwhile, would expand the Child Tax Credit and further subsidize childcare, as the Washington Post has reported. The Huffington Post pointed to Sanders’ universal child care plan — which, admittedly, is not quite the same as Clinton’s — to provide a “sense of scale.” The bill for that plan came out at $35 billion per year, by one estimate.
“Hillary Clinton’s Trans-Pacific Partnership (TPP) will be an even bigger disaster for the auto industry. In fact, Ford Motor Company has announced its opposition to the deal. According to the Economic Policy Institute, the U.S. trade deficit with the proposed TPP member countries cost over 1 million manufacturing jobs in 2015. By far the biggest losses occurred in motor vehicles and parts, which lost nearly 740,000 manufacturing jobs.” — Donald Trump
“And then in 2000, as the market began to change and some of the auto companies began to realign, [Futuramic was] faced with a choice. We all face choices in life, don’t we? And this company could have just said hey, you know, our business is not going to be what it was. We’ve got to just fold up. Let’s, you know, just kind of quit. But that’s not what happened here. And what happened here is what can happen across America.” — Hillary Clinton
Trump and Clinton both champion manufacturing in their speeches — it goes hand in hand with their strong rhetoric on trade. Trump focuses on the sharp decline in manufacturing jobs — the U.S. now has around 12.3 million manufacturing jobs, down by more than 7 million from a late-1970s peak. And while automation has helped to eat away at manufacturing jobs, there’s also good evidence that China — one of Trump’s chief villains when he talks about trade — played a big role in hurting U.S. manufacturing jobs.
However, it’s important to point out that the manufacturing industry itself is doing pretty well, something that isn’t readily apparent from Trump’s rhetoric. In fact, manufacturing output is about where it was at its pre-recession peak.
Trump connected his manufacturing ideas with his plans for infrastructure and trade (for which, see above): he said that the goods used to produce this new infrastructure would be made in America, and he focused on foreign competitors (in particular China) whom he says have severely hurt American manufacturing. Tougher trade enforcement with China, he said, could reshore “millions of jobs.”
Clinton, meanwhile, seems to be saying that looking to manufacturing’s past is the wrong strategy; she emphasized this with an anecdote about how Futuramic (the company where she spoke) moved from auto supply to aerospace manufacturing to remain profitable.
Like Trump, she linked tougher trade policy to boosting manufacturing jobs. However, she also touted other specific plans that fit with her innovation-themed speech, like expanding “scientific research that can create entire new industries.” She also touted a tax credit aimed at boosting low-income areas.
The manufacturing industry has become fertile ground in an election season where populist candidates like Donald Trump and Bernie Sanders have been unexpectedly successful.
Though the industry employs a relatively small share of Americans, the emphasis on manufacturing — a strong sector that nevertheless has lost millions of jobs — may nevertheless resonate with the many Americans who hear that the economy is recovering, yet feel that they no longer have the opportunities for prosperity that they once had.