Five questions for Clinton and Trump: The economy and taxes

A October 20, 2013, photo shows the U.S. Treasury Department on Pennsylvania Avenue in Washington, DC.

MANDEL NGAN/AFP/Getty Images

Aiming to accelerate the slow-but-steady economic progress of the last several years, 2016 candidates Hillary Clinton and Donald Trump have offered a variety of proposals to increase job creation and jumpstart economic growth. Their plans run the gamut – from taxes and trade to workplace reforms and energy policy.

Amid all the white papers and policy statements, though, some crucial details have not yet been provided. Ahead of the first general election debate this weekend, here’s a list of five questions for Hillary Clinton and Donald Trump on their economic proposals:

How will your tax plan affect the budget?

Donald Trump would like to eliminate the estate tax, reform personal income taxes by simplifying the income brackets and reducing rates, and reduce the federal corporate tax rate from 35 percent to 15 percent. The Republican nominee’s latest tax plan has been revised from a previous version, but an analysis of the previous version by the Tax Policy Center concluded it would reduce revenues by roughly $9 trillion even after some budget-balancing efforts are factored in like closing loopholes.Trump has said the growth his plan would create would offset that shortfall, but economists at the Center for a Responsible Federal Budget say “growth rates would have to be roughly 5 times as large as projected, and more than twice as high as the fastest growth period in the last 60 years” to bring the budget into balance.  His team has offered few spending cuts that would keep his plan from increasing the national debt.

Clinton, by contrast, has proposed expanding the estate tax to collect more money from wealthy heirs. She’d also like to institute the “Buffett Rule to ensure people with incomes over $1 million pay at least 30 percent in taxes – something she says she’d accomplish by closing personal tax loopholes than primarily benefit high-earners. She’d also adjust the corporate tax code to discourage companies from outsourcing labor or moving headquarters overseas.

Analysts at the Tax Policy Center estimate Clinton’s tax proposals would bring in an additional $1.1 trillion in revenue over 10 years. She’s said she will use that money to fund investments in education, workplace reforms, and more. She has not offered details yet on which personal loopholes she would eliminate to collect more money from wealthy taxpayers, and how she’d adjust the corporate code to encourage domestic growth.

If TPP fails, what next?

Both Clinton and Trump oppose the Trans-Pacific Partnership, a 12-country free trade agreement, suggesting Asian countries will benefit more by the access to U.S. markets than American companies, costing U.S. jobs.

Trump has said he will not only pull out of TPP, he’ll also renegotiate existing trade agreements (like the North American Free Trade Agreement, or NAFTA), to secure a better deal for the United States. He has the authority to do that as president without Congressional approval. It would be the first trade deal the U.S. had pulled out of since 1866. But he’s not addressed concerns from trade experts that the increased tariffs on goods coming into the U.S. from Mexico would hurt American companies with plants there. This would increase prices for American consumers on those goods. (The U.S. imported $259 billion in manufactured products from Mexico last year.)  Machinery, plastics and vehicles that flow from the U.S, making Mexico the second largest market ($214 billion in manufactured products from American companies last year) would undoubtedly face higher tariffs from Mexico.

The Obama administration has warned that a failure to pass TPP will allow China to make trade deals with other Asian nations that will favor China and make it harder for U.S. companies to do business across the region – why are they wrong?

Clinton, despite speaking positively about a draft version of the Trans Pacific Partnership as secretary of state, has now confirmed her opposition to the final agreement, suggesting it doesn’t meet the labor, environmental, and other standards she’s set for any such pact. She’s said she will continue opposing it unless those standards can be met. But what are those standards, exactly? How long is she willing to hold out for an agreement that meets her requirements? Is she willing to throw out the work that’s been done thus far on TPP if such an agreement fails to materialize? And is she worried about the national security implications of China having better relations with countries the U.S. has tried to build stronger ties with through the TPP in order to counter-balance China’s effort to expand.

Both candidates, as an aside on trade, should be pressed on the use of tariffs. Trump has openly mused about levying massive tariffs on other countries to protest unfair trade practices, and even on companies manufacturing goods abroad who wish to bring those goods home – how does he answer critics who say he’d start a trade war causing other countries to tax U.S. goods or block them altogether, hurting U.S. companies that sell goods overseas?

Clinton has talked about more targeted tariffs, and she’s also proposed increasing U.S. trade office personnel to crack down on unfair trading practices. Under what specific circumstances could she see herself imposing a “targeted” tariff as president? And what on what specific unfair practices would she like trade prosecutors to focus their efforts?

How will your workplace reforms help families?

After a complicated back-and-forth, Trump seems to have settled on a proposal to hike the minimum wage from the current $7.25 per hour to $10 per hour. He’s suggested individual states and localities could raise wages even higher. He’s not said, though, whether he’d index the rate to inflation – a crucial detail that could prevent policymakers from having to readjust the wage every few years and thefefore make it potentially harder to raise the wage again in the future.

Trump would also like to create a tax deduction for child care. One potential problem, according to the New York Times: “If the policy were implemented as a typical deduction, it would provide no advantage for the 45 percent of people paying no tax and provide the biggest advantages to people in high-income tax brackets. His campaign has indicated that the Trump administration would find ways to make its advantages shared more broadly, though staffers had no details.” Trump should be asked to provide those details – how would he ensure ??

Clinton, after initially proposing to raise the minimum to $12 per hour, eventually said she would support a hike to $15 per hour national wage, indexed to inflation - a proposal that has now been enshrined in the Democratic platform. She’s supported efforts by states and localities to go even higher. She should be pressed to address criticism from some economists that a $15 per hour national minimum wage might cause employers in areas with lower cost-of-living to hire fewer workers or shrink their hours.  

Clinton has also proposed limiting the cost of child care to 10 percent of a family’s income, and she’d increase access to child care on college campuses for parents getting a degree. Perhaps her most consequential proposal on child care, though, is her idea of a child care tax credit for families. Unlike Trump’s plan, credits are available for parents who don’t pay federal income tax.

Clinton has also proposed guaranteeing at least 12 weeks of paid family leave, with individuals on leave receiving at least two-thirds of their usual wages. Current law guarantees 12 weeks of leave for new parents, but it does not require employers to pay them, leaving many families with infants unable to take considerable time off work after a child’s birth. She’s said she will pay for these workplace reforms with her tax code adjustments, but history have shown tax reform can be a tall order – how will she ensure Congress actually acts on tax reform and provides the revenue necessary to pay for them? And is she willing to finance these workplace proposals with deficit spending if Congress doesn’t follow through on her tax reforms?

Is the future of energy renewable or carbon-based?

Clinton’s energy policies place a heavy emphasis on increasing our use of renewable power sources, with two stated goals: first, powering every home in America with renewable energy within 10 years of taking office. Second, increasing renewables’ total share of U.S. energy production to 33 percent from the current level (roughly 15 percent) within 10 years of taking office. She wants to install half a billion additional solar panels and expand other forms of clean energy, like wind, geothermal, hydroelectric, and more. She also wants to invest in revitalizing the power grid to increase efficiency and reliability, especially in rural areas.

Clinton also wants to preserve and strengthen President Obama’s climate action plan, arguing the new federal standards for power plan emissions shouldbe a “floor,” not a “ceiling.”  She came under fire for suggesting earlier this year that her policies might put coal miners out of business. Though she’s since apologized, she should be pressed on how she’ll help the energy industry and its workers transition from carbon to renewable fuels. Is it realistic to expect laid-off coal miners in Appalachia to be put to work building wind turbines and solar panels?

Trump has placed much more emphasis on increasing domestic energy production of carbon-based fuels by loosening regulations. He’d immediately rescind all of President Obama’s executive actions, including the Climate Action Plan capping greenhouse emissions from coal-fired power plants. Trump would also like to lift the moratorium on energy production on federally owned areas, and he’d urge Canada to renew the application for the Keystone XL oil pipeline, which the Obama administration quashed.

Trump’s website says his energy plan “includes nuclear, wind and solar energy – but not to the exclusion of other energy,” but it offers no specifics on how his administration will encourage the development of green energy. Trump should be asked whether he’s missing an opportunity to aggressively grow America’s presence in the burgeoning clean energy sector.

Given Trump’s push to increase production of carbon-based fuels, and his vow to pull out of the recent Paris Climate Accord – two steps most scientists say would greatly exacerbate climate change -- Trump should be asked how he’ll act to reduce carbon emissions. Or, perhaps more basically, he should be asked whether he accepts the science behind climate change to begin with. [he doesn’t. He says it’s a hoax, so maybe this last sentence should go or that information should be included elsewhere.]

How will you pay for your infrastructure investments?

Both Trump and Clinton have proposed massive infrastructure investments to create jobs and improve the condition of America’s roads, bridges, rail lines, airports, and more.  But they’ve both been, at times, vague about how they’d pay for it.

Clinton has proposed $275 billion in new spending, and her website claims she’d pay for the improvements through “business tax reform.” But a recent report from the nonpartisan Committee for a Responsible Federal Budget found her corporate tax proposals would only net $150 billion over a decade – how would she make up the remainder?

Trump has proposed spending at least double the $275 billion that Clinton has suggested to rebuild the country’s infrastructure and create jobs, but he’s not offered an exact spending target. He has raised some ire among fiscal conservatives, however, by suggesting he’d tolerate significant deficit spending to make it happen. He should be pressed for specifics. How much, overall, would he allocate to infrastructure? How much of that would he be comfortable financing with deficit spending? Given the hole his tax proposals are already projected to blow in the budget, is it responsible to propose another massive spending project with no offsets?