One of the main features of Clinton's economic plan is a vast increase in infrastructure and expenditures. She would spend $275 billion on spending to build and modernize roads, bridges, water systems and more. While this number sounds large, in relation to our Gross National Product, we spend only about half as much on infrastructure as we did in the 1950's and 1960's This spending would create jobs and internet access to all. According the New York Times, in those households with incomes below $50,000 (about 40 percent of all families) one of three do not have access. She would pay for this by increasing taxes on high income tax payers. Many economists claim that the need is so great and interest rates so low even an increase in the debt would be acceptable.
Clinton wants to crack down on China's currency manipulation and theft of US intellectual property. The proposal to punish China for currency manipulation has been mentioned for years, but no one has been able to figure out how to implement this policy. She says that she will impose targeted tariffs that violate trade protocols. She is against the Trans-Pacific Partnership. Some trade experts feel that the partnership would benefit the US because other countries would have to lower their trade barriers to equal our much lower ones.
Clinton has proposed several policy changes what would benefit low and middle income families. These include raising the minimum wage, provide workers with paid family and medical leave, offer a tax credit for childcare expenses, provide universal preschool and reduce higher education costs. Clinton has proposed an individual tax credit of up to $2000 to $5000 family tax credit to be used for medical costs. While all of these policies involve costs and may temporarily increase unemployment and the national debt, many analysts feel that they would increase productivity and raise living standards.
She claims that all of that programs could be paid for without increasing the debt and without raising taxes on Americans making less than $250,000 a year. She proposes that all Americans who make over $1 million a year, pay at least 30 percent in federal income taxes. Those making over $5million would pay an extra 4 percent surcharge a year. Deductions would be limited to 28 percent of your tax bill. She would propose a new tax on high-frequency trading, a strategy that has little or no economic benefit and an exit tax of companies that move operations overseas. She would also lower the threshold after which estate taxes must be paid from $5.45 million to $3.5 million.
In many respects, Clinton's proposals echo those of the 1950s and 60's when income tax rates on the top earners were higher and infrastructure expenditures were much larger than they are now. When these policies were in effect, the US growth rate averaged over 3 percent a year, versus the present 1 percent per year.
Dr. Barbara Libby is a Professor Emeritus in Finance and Economics at the University of Niagara.
July/August - 2018
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