In Part I of “Why Hillary’s Economic Policies Will Fail,” I pointed out the regressiveness of Hillary Clinton’s Progressive policies of more taxes on the rich, more taxes on businesses, and forcing businesses to stay in America. In “Hillary and the Progressives” I discussed the authoritarian nature of Progressivism. Regular readers know that I have been equally critical of Donald Trump and his policies.
My approach is to be critical of what politicians say and I base my criticism on basic economic truths and data. While it would be easy to enter the popular fray of name-calling and character-bashing, I think we should base our political choices primarily on candidates’ policies, not just character failings.
So, Hillary …
Like Donald, there is no problem that Hillary can’t solve. Beside imposing new taxes on the folks who create businesses and jobs, she will:
Fight for racial justice, revitalize rural America, support small businesses, fix Medicare and Social Security, end drug abuse, support middle-class families, cure Alzheimer’s, reform the criminal justice system, expand opportunities for the disabled, reform primary education, free college students from debt, beef up unions, affirm LGBT rights, bring manufacturing back to America, control guns, fix our infrastructure, invest in technology, give illegal immigrants a path to citizenship, guarantee paid family leave, support affordable childcare, reform and modernize the military and keep us safe and strong, combat terrorism, protect animals and wildlife, prevent climate change, end campus sexual assault, support families with autistic children, provide universal affordable health care, overturn Citizens United and other campaign reforms, reform Wall Street, support women’s rights, close the wage gap, increase the minimum wage.
This is an exhaustive and exhausting list. Almost all of it won’t happen.
Let me start with the obvious: she says nothing about the costs or how to pay for them. All of these programs have a cost. For some it is just the fiscal cost, but for others there are additional costs from their unintended consequences.
We have about $19.5 trillion of national debt (see usdebtclock.org). Based on existing programs deficits are growing, fast. Depending on who you believe (the Congressional Budget Office or critics), the national debt will increase by another $10-$15 trillion in the next ten years because of uncontrolled government spending.
In other words, her Progressive wish list ignores the consequences of more deficit spending and tax increases.
If you think that the national debt is of no consequence, you would be wrong. The government has only about $500 billion in discretionary funds it can spend. Medicare/Medicaid, Social Security, defense, welfare programs, federal pensions, and interest on the debt take the rest (about $3.3 trillion). Assume that current very low interest rates won’t stay this low forever. The 10-year Treasury note is now paying only 1.6%, near its historic low. A 2X increase is not inconceivable. Go back to 2008 and they were 3.7%. If interest payments on national debt doubled, then, all things being equal, the feds would have only $250 billion to spend on other programs.
Given the current debt dilemma, where will the money come from for new programs? Will she tax the rich and corporations even more to pay for it? Borrow even more to add to the national debt? Like it or not, we taxpayers will end up paying for it, directly or indirectly.
Taxes and federal debt suck money out of the economy and leave less private capital to invest and make the economy grow. Japan’s 20-year stagnation is an example of what happens with high debt and high taxes. Right now the economic gurus in Washington are scratching their heads about why economic recovery and growth have been so slow. For reasons they admit they don’t understand, things aren’t working out as they planned. Perhaps they should look at themselves for the answer.
In addition to the fiscal issues there are unintended consequences to her programs that impose different kinds of costs. For example:
Free trade is something she wants to “fix” to keep jobs in America. To do that she will have to prevent the importation of goods that are produced cheaper elsewhere. That means we will all have to pay more for things “Made in America”, making us poorer. Those countries would retaliate by barring American products which means employees of U.S. exporters would lose jobs.
A raise of the minimum wage will result in fewer job opportunities for low-skilled workers. Also, some businesses will not be able to afford the increase and will go out of business or automate. It’s a war on the underprivileged seeking jobs.
By “fixing” Obamacare she means adopting a single-payer medical system like many other countries in the world. Right now Obamacare is falling apart as costs skyrocket and insurers drop out. In every country in the world with a single-payer system, medical costs rise, taxes are raised to pay for it, medical services are rationed, and often quality declines.
More paid leave and paid childcare has to be paid by someone. If you think it is the employer, you would be wrong again. Costs will either be passed along to consumers, or businesses will become less profitable and reduce costs and employees, or go out of business.
Free college has a nice ring but who is going to pay for it? Student debt, a bad idea created by Congress, is now about $1.3 trillion and it can’t be wished away. Hillary offers no information about how to do this.
Spending money on infrastructure to create jobs is another illusion. The Obama Administration spent $787 billion on “shovel ready” infrastructure programs and once the money was spent the jobs evaporated and nothing changed. If you want to see where the money went you can look it up online as I did. Most of it was a waste. Again, who is going to pay for it? Us.
Going back to my premise in Part I, that all politicians lie and over-promise on programs they know they can’t deliver, one can say that Hillary is a politician. Her Santa Claus wish list of programs are Progressive fantasies that if enacted will harm the economy and taxpayers. Why is it that politicians never seem to be the ones who suffer the consequences of their actions?
Originally published September 4, 2016.