This economy may be perilously close to recession. That was the message of the second-quarter real GDP report and its meager 1.2 percent growth rate.
Over the past year, real GDP has slipped to a paltry 1.2 percent. Business investment continues to fall. Building and factory construction has dropped sharply. Productivity is flat. The profits recession is still in force.
And what’s the Hillary Clinton plan? Tax us into prosperity.
In her own words at the Democratic National Convention in Philadelphia on Thursday night, Clinton said, “Wall Street, corporations, and the super-rich are going to start paying their fair share of taxes.” That’s her fix. Why? She continued: “Not because we resent success. Because when more than 90 percent of gains have gone to the top 1 percent, that’s where the money is.”
Let me get this right. In order to spur growth, Clinton intends to raise taxes on individuals, businesses, capital gains, stock trading and firms that move overseas (which they do because the U.S. has the most uncompetitive tax system in the corporate world)? In addition, Clinton’s door is open for a carbon tax, higher payroll taxes and a 25 percent gun tax.
She also argued in Philadelphia that the economy is not working the way it should because our democracy isn’t working the way it should.
What she’s getting at is appointing Supreme Court justices who “will get money out of politics” and pass “a constitutional amendment to overturn Citizens United.”
Citizens United removed spending limits for super-PACs. And yet those mean and nasty super-PACs have thus far benefited from pro-Clinton hedge fund contributions to the tune of $48.5 million, according to the Wall Street Journal.
Donald Trump, on the other hand, has received only $19,000 from hedge funds.
Get it? Citizens United, according to Clinton, is the source of our weak recovery and it must be overturned. Meanwhile, she is the big beneficiary of the Supreme Court decision to allow unlimited political donations.
Next, there are the recurring themes of class warfare and inequality, roots of evil according to Clinton. Turns out that the top 1 percent received a big share of income growth during the recovery. OK, but it also suffered the biggest loss during the Great Recession.
Research from Scott Winship of the Manhattan Institute shows that during the recession, the top 1 percent lost 36 percent of its income while the bottom 90 percent lost 12 percent. Through 2014 the top 1 percent was still poorer by 18 percent than it was in 2000. That’s compared to a 9 percent decline for the rest of us.
According to Winship, income for the top 1 percenters was basically no higher in 2014 than in 2000. It turns out that that group bumped into the same income stagnation suffered by the U.S. middle class since 2000.
And according to new studies by Aparna Mathur of American Enterprise Institute, raising top marginal tax rates reduces growth incentives and yields very few revenues. Yet, in addition to higher tax rates, Clinton wants $1 trillion in new spending programs.
The numbers also don’t add up for President Obama, who defended his so-called recovery at the DNC and even called Clinton a 30-year member of the establishment, a change-maker.
Obama’s seven-year recovery averaged 2.1 percent real growth at an annualized rate. For historical comparison, after seven years, President John F. Kennedy’s economy increased by 5.4 percent yearly and President Ronald Reagan’s by 4.5 percent.
Did Kennedy and Reagan beget long booms by raising taxes? No. They cut tax rates across the board.
Clinton is a combination of Barack Obama 3.0 and Bernie Sanders 2.0. This is not change. This will not yield strong growth, lift jobs and wages, and make America more globally competitive.
A week prior to the DNC Trump offered a different perspective at the Republican National Convention: “America is one of the highest-taxed nations in the world. Reducing taxes will cause new companies and new jobs to come roaring back into our country. ... Then we are going to deal with the issue of regulation, one of the greatest job-killers of them all. ... We are going to lift restrictions on the production of American energy. ... With these new economic policies, trillions and trillions of dollars will start flowing into our country.”
So Trump wants to reduce tax rates and regulations, unleash energy and make America the most hospitable investment destination in the world. Clinton wants to raise taxes, regulations and spending and put the energy sector out of business. (She would abolish coal and oil-and-gas fracking.)
No wonder the blue-collar, hard-hat, Democrat middle class is going for Trump.
Clinton is not an agent of change, nor does she have any idea how to restore rapid economic growth. Instead, she is a prisoner of the left.
If Trump stays on his growth message, he’ll whup her in November.