Donald Trump has a number: 3.5%, or more. Getting the economy to grow at this pace would double the anemic growth rate of the last few years and make all of his big plans possible.
Only one problem: There’s no obvious way to trigger growth without causing another set of problems. Trump, the Republican presidential nominee, thinks he’s found a magic formula, but many economists think he’s wrong.
Trump would remake trade deals, reenergize American manufacturing, unleash domestic energy production, hack down regulations, slash taxes and spend up to $1 trillion on new infrastructure projects. But each proposal carries risks. Changing the ground rules with trading partners such as China and Mexico could kick off punishing trade wars and inflation. Manufacturing jobs still might not come back. Cutting taxes without cutting spending would add trillions to the national debt. For these reasons and others, some economists think Trump’s plan would send growth in the wrong direction, causing a recession.
Clinton’s plan to create jobs is safer, more conventional—and less exciting. She, too, would ramp up infrastructure spending, paying for it with tax hikes on the wealthy. Other proposals might take years to produce tangible results, such as making college more affordable for lower-income kids. When asked during a recent Yahoo Finance debate if Clinton was targeting any particular rate of growth, Roger Altman, a Clinton economic adviser, said, “I’m not putting a number on it.”
Clouding each candidate’s job-creation plan is the reality in Washington, where Congress kills many White House initiatives. It’s possible Congress could pass a modest hike in infrastructure spending or a bit of regulatory relief, but big changes in taxes, spending or immigration could be elusive. Trump’s ambitious growth target doesn’t take account of that, either.
Rick Newman is the author of four books, including Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman.
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