Taxes. Trade. Immigration. On these key issues and many others, Donald Trump and Hillary Clinton are miles apart, with economic proposals that in many ways are diametrically opposed.
But the real difference between the candidates on the economy may come down to patience. Trump wants faster growth now, and he believes a few crucial moves will make it possible. Clinton believes it will take longer-lasting change to boost the economy’s performance, and she’s less willing to predict fast results. Both plans are risky, one for doing too much and the other for doing too little.
Yahoo Finance hosted a 45-minute panel discussion with top advisers to each candidate on Nov. 1, with the full session posted above. The gulf between the two candidates’ plans was immediately apparent in the conversation. Peter Navarro, a senior economic adviser to Trump, the Republican nominee, repeated the candidate’s plan to boost growth from today’s middling 2% range to 3.5% or better through a sort of economic shock therapy. Roger Altman, a senior Clinton adviser, made the case for longer-term programs that are less risky but more likely to pay off in years or even decades. The varying approaches reflect the gap between Americans who are falling behind and feel an urgent need to catch up and those who are doing OK but still feel modest improvements are needed.
One telling exchange revealed the starkly differing approaches to the economy. Around the 15:15 mark in the video above, Navarro says of the Clinton team, “They never say they can do better than 2% growth.” He then asks Altman, “Do you think you can do better than that?”
Altman didn’t answer directly, instead citing a couple of analyses of both candidates’ plans by third-party groups, including a Citigroup study that found Clinton’s plan would modestly boost growth. But when pressed whether he could cite a target growth rate, Altman said, “I’m not putting a number on it.”
That may actually be the wiser move, because claiming that an economic plan will produce a set outcome at some fixed date is begging for trouble. President Barack Obama made this mistake in 2009 by promising that if his big stimulus program passed, the unemployment rate would never exceed 8% and would return to a healthy 5% by 2013. The stimulus passed, but unemployment rose all the way to 10% and didn’t drop back to 5% until 2015. The broken promise made a modestly successful stimulus plan seem like a failure, because it fell short of expectations that Obama set too high.
Trump’s plan is very risky, because it would upend free trade deals, disrupt global supply chains and shrink the labor force by deporting up to 11 million undocumented workers. Trump says all this, combined with huge tax cuts, would ultimately create 25 million jobs and boost growth to 3.5%. But many economists disagree, arguing that Trump’s plan would instead send stocks tumbling and perhaps cause a recession. So Trump’s plan basically asks voters to decide if they’re willing to risk a big loss for a sizable gain.
Clinton’s plan is far more incremental and conventional, befitting a cautious candidate often characterized as risk-averse. Altman, for instance, says that sending more kids to college “is probably the single key to getting incomes turned around.” And he highlights the virtues of full funding for pre-kindergarten schooling for every American child, saying “universal Pre-K improves the lifetime earnings of that child.” Most researchers who have looked into these problems agree—but it would take years, if not a generation, to see tangible results.
The real question about the US economy is whether anything can be done to juice economic growth in the short term without causing more harm than good. More spending on infrastructure might help, and it’s something both candidates support (though they’d raise the money in different ways). Corporate tax reform could help, too, if corporate lobbyists could ever stop fighting over the details and agree on a way to lower rates, close loopholes and make the whole US economy more competitive.
Compromise will only come after the election, however, if it comes at all. Until then, voters have a clear choice to make between a candidate who is so eager for results that he might err in their pursuit and one who’s so cautious of mistakes that she may reach short of what’s possible.
Rick Newman is the author of four books, including Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman.