Hillary Clinton’s tax-and-spend economic plans would boost economic growth if implemented, according to an outside analysis released Friday that found that the benefits of her immigration and infrastructure plans would outweigh the costs of the higher taxes and regulations.
The Democratic nominee’s proposals would result in a “a somewhat stronger U.S. economy with increased GDP and more jobs,” the report from Moody’s Analytics concluded, with most of the benefits accruing to low and middle-class households.
By the end of Clinton’s first term in office, U.S. economic output would be 1.7 percent higher than it would be under current law if her plans were implemented as they’re spelled out on paper, with 3.2 million more jobs and higher after-tax incomes, the economists calculated. If Congress scaled back her plans, which would almost certainly be the case, the benefits would be mitigated but still positive.
The analysis also found that, while Clinton’s planned tax increases would prevent the federal debt from rising appreciably higher, her plans as a whole wouldn’t lower the debt in relation to the economy.
Yet Clinton’s platform, the authors wrote, is a bet on the idea of larger government: It “exhibit[s] faith in the ability of government policy to positively influence economic behavior.”
The same economists previously reckoned that Republican nominee Donald Trump’s economic platform would result in a lengthy recession, with the economy shedding 3.5 million jobs.
The economists, Mark Zandi, Chris Lafakis and Adam Ozimek, attribute the added growth from Clinton’s plans mainly to three factors: the undoing of spending caps, which would generate short-term stimulus; the added commerce from greater infrastructure spending; and the greater labor force participation that would follow from Clinton’s goal of comprehensive immigration reform to give legal status to illegal immigrants and double immigration levels.
By subsidizing college more and spending on early education, Clinton’s plans also would raise education levels, improving the workforce.
On the flip side, the tax hikes Clinton has proposed on businesses and individuals would crimp growth.
In all, the analysis finds that the Democrat advocates raising taxes by nearly $1.5 trillion and spending by $2.2 trillion over the next 10 years.
Although a number of assumptions go into the analysis, they are similar to the ones used in government economic models, such as those maintained by the Congressional Budget Office, that would be used to score any legislation.
The study did not consider the former secretary of state’s calls for stopping the Trans-Pacific Partnership trade deal that President Obama has pursued, nor her proposals to raise taxes to pay for Social Security expansion, curb high-frequency trading and prevent short-sighted corporate decision-making. All of those planks would likely cut into growth if implemented.
