Long before Bill Clinton won an election by using the slogan “It’s the economy, stupid,” presidential candidates were making economic growth the centerpiece of their campaign promises — and the 2016 campaign is no different. Both major presidential candidates have promised to focus on infrastructure investments and job creation. But even the most ambitious plans for public investments are only as good as their funding sources, and on this measure, Clinton’s plan seems far more likely to succeed.
One of the most basic functions of government is to provide the infrastructure investments on which businesses and workers rely. Roads and bridges, for example, help businesses transport their goods and allow workers to commute without too much chaos.
To their credit, Clinton and Trump in their stump speeches have each emphasized the importance of these infrastructure investments. After Clinton announced plans to spend $275 million on infrastructure over five years, Trump subsequently said he would double that. But either candidate’s plan to invest in infrastructure — or other critical programs, for that matter — must be coupled with sensible plans to pay for such investments. Any ambitious spending program must be paid for through an adequate and sustainable stream of tax revenue.
And on this score, there are vast differences between the two candidates.
While the details of candidate Trump’s plan have changed over the past year, the centerpiece of his tax plan has always been an aggressive reduction in personal and corporate income tax rates. Even coupled with a small number of loophole-closing changes, Trump’s plan would blow a $12 trillion hole in the federal budget over the next decade. Clinton’s tax proposals, rather than digging our budget hole deeper, would raise a modest amount of new revenue through tax hikes targeted to corporations and the best-off Americans.
This doesn’t mean Clinton has all the answers. Every indication is that meeting our nation’s long-term infrastructure needs will require a more ambitious program of revenue-raising than she has so far been willing to propose. But Clinton does at least acknowledge the basic laws of budget policy.
Trump, by contrast, has largely chosen to pretend that the fiscal policy coin has only one side: taxes. He has argued that his tax cuts would act as an economic boost to the nation, and that criticisms of his plan’s cost miss this important point.
The only problem with this argument is that there’s no historical basis for believing it. Ronald Reagan’s supply-side tax cuts were quickly scaled back, and the most discernible effects of George W. Bush’s more recent tax cuts were a string of huge budget deficits and a decade-long fight on how to restore fiscal balance. In the end, the main effect of tax cuts is to make it harder to fund the basic infrastructure needs that make our nation go.
To be sure, presidential proposals can affect economic growth through channels that go beyond taxes and spending. Donald Trump’s proposals on immigration and trade policy have been far more central to his campaign than his fiscal policy ideas — and could be far more disastrous. His proposals to sharply limit immigration and impose new tariffs have been universally panned by economists, who view these moves as limiting future economic growth.
Presidential candidates’ promises for achieving economic growth can only go so far. Sometimes they simply fly in the face of economic realities — Herbert Hoover’s 1928 promise of “a chicken in every pot and car in every garage” comes to mind—and even in the best of times, presidential plans must find approval from an often-skeptical Congress.
In the current political environment, the ambitious public investments proposed by both candidates may face a harsh reception. But a basic condition for achieving legislative acceptance for any growth-enhancing plan must be fiscal balance. And from that perspective, Clinton’s plan seems far more reasonable — and attainable — than Trump’s.
Robert McIntyre is the director of Citizens for Tax Justice.