Hillary Clinton says she comes from “the Clinton school of economics.” It’s her way of identifying with her husband, Bill Clinton, and suggesting that if elected president she would duplicate the economic success of his presidency.
Given what she’s proposed in her campaign for the White House, the chances of this happening are practically nonexistent. Her policies are closer to those of socialist senator Bernie Sanders, her rival for the Democratic presidential nomination, than to Bill Clinton’s.
She is against nearly everything her husband either signed into law or benefited from in the 1990s. He raised income tax rates in his first year in office, the top rate increasing from 31 percent to 39.6 percent. But after Republicans captured the House and Senate in 1994, he backed away from tax hikes.
Hillary Clinton’s campaign is focused obsessively on higher taxes for the wealthy. “I want to make sure the wealthy pay their fair share, which they have not been doing,” she said in December during the third Democratic debate. “I want the Buffett rule to be in effect, where millionaires have to pay 30 percent tax rates instead of 10 percent to nothing in some cases.” She has promised to unveil more proposed tax increases on the affluent this month.
That’s just for starters. In 1997, Bill Clinton agreed to cut the tax rate on capital gains from 28 percent to 20 percent. Now, Hillary Clinton has an elaborate plan to raise capital gains taxes, nearly doubling the current 23.4 percent rate for wealthy investors. This would be counterproductive, since lower rates tend to generate more private investment.
Bill Clinton, with help from congressional Republicans, won passage of the North American Free Trade Agreement (NAFTA), a boon to economic growth. She supported it. And as secretary of state, she called the Trans-Pacific Partnership (TPP) the “gold standard” of free trade treaties. In October, however, she flipped, declared her opposition, and joined her husband’s protectionist foes. On the other hand, “One of the planks in her small business proposal is to expand ‘access to new markets,’ which seems to contradict her newly found opposition to TPP,” noted economist Richard W. Rahn in the Washington Times.
Neither of the Clintons is likely to admit it, but the economy in the 1990s was aided by Republicans. They not only curbed spending, but also killed Hillarycare, the health care program envisioned by First Lady Clinton. For Bill Clinton, this was a stroke of good luck. It would have been as much of a drag on his economy as Obamacare is now—and would continue to be during a Hillary Clinton presidency.
At an Iowa event in December, she claimed her husband and President Obama “each inherited economic problems from their Republican predecessor,” according to the New York Times. This was true in Obama’s case, but not in her husband’s.
A legacy of President Reagan’s deep tax cuts, sweeping tax reform, and relief from excessive regulation was an economy prone to robust growth that lasted well into the Clinton years. In contrast, Clinton left his successor, George W. Bush, with a mild recession. If Hillary Clinton succeeds Obama, she would inherit a weak and overregulated economy and soaring public debt—still more reason why her prospects for matching her husband’s record are meager.
She says she will propose tax breaks for small business and tax credits for low-income Americans. That’s fine. More broadly, “we have to do more to incentivize profit sharing,” she said in the debate. She failed to mention any incentives to profit-making itself or investment, which has lagged under Obama.
Hillary Clinton has burdened herself with a risky promise: Anyone earning less than $250,000 a year should be exempt from a tax increase. “No middle-class tax raises,” she said at last month’s debate. “That’s off the table.” A tax hike won’t be needed, she said, “because I don’t think we should be imposing big new programs that are going to raise middle-class families’ taxes.”
Yet she is proposing a whole series of big new programs. She favors universal pre-K schooling, a $350 billion debt-free college plan, worker training, $275 billion in infrastructure spending, and increased Social Security benefits for widows and single women. The Clinton campaign has put no price tag on these plans. But the cost of 17 new and expanded programs was calculated by McClatchy Newspapers to be at least $1.1 trillion over 10 years.
Can all that be financed solely by raising taxes on those with incomes of more than a quarter-million? Probably not. Something would have to give, the programs or the tax pledge. My guess is that both would.
She is clever enough to come up with a scheme for doing this. Eager to raise more revenue from capital gains, she came up with an excuse. Too many investors hold stocks for too short a period, jeopardizing the long-term health of the economy, she said. Her remedy is to boost the tax bite on short-term gains taken by those in the top income tax bracket.
The problem is there’s no need for this. The long-term future of the economy is being looked after quite adequately. Last year, for example, spending on research and development accelerated “at its fastest rate in fifty years and is at an all-time high as a percentage of GDP,” business columnist John Cassidy noted in the New Yorker.
To achieve her goal of increasing take-home pay for middle-income Americans, Hillary Clinton isn’t looking to growth. She wants the rich and corporations to fund a wealth transfer. The money would come from higher income taxes and in the form of wage hikes and price controls on things like prescription drugs.
In Hillary Clinton’s case, “growth” is a talking point. And she talks about it a lot. “If we don’t get the American economy moving and growing, we’re not going to recognize our country and we’re not going to give our kids the same opportunities that we had,” she said in the debate. If it falls to her to produce a growing economy, heaven help us.
Fred Barnes is an executive editor at The Weekly Standard.
