2016 Presidential Candidates' Economic Plans

Clinton vs Trump: Who Will Save the Economy?

The 2016 Presidential candidates were Hillary Clinton (Democrat) and Donald Trump (Republican). Their party affiliation helps you understand their economic plans. 

Democrats promote the Keynesian theory. It says government spending and tax cuts boost economic growth by increasing demand. Most Democrats target these policies toward middle-income families. They offset deficit spending with higher taxes on investments, large businesses, and high-income families. They address income inequality by providing more benefits for low-income households. People without a lot will spend any extra money on food, medicine, and shelter. That drives demand more than saving and investing does.

Republicans promote supply-side economics. That theory says reducing business, trade, and investment costs are the best way to increase growth. Companies use the extra money to hire more workers. Unfortunately, that hasn't been the case in this recovery. Companies have plenty of cash but aren't spending it on new jobs. They are putting it in the stock market, U.S. Treasuries, and overseas investments. 

In 2016, many voters were frustrated with the traditional parties. That boosted Donald Trump's popularity. It has also taken him away from conventional Republican views. For example, he is opposed to free trade agreements. He wants to stop companies from outsourcing jobs by raising tariffs. Most Republicans think this makes U.S. companies less competitive in international trade

Here are the candidates' solutions to U.S. economic problems, and how well they would work. Keep in mind any plan must be approved by Congress. Presidents can't impose tax or spending plans via executive order. The candidates are listed in order of their electoral votes.

President Donald Trump (Republican)

Donald Trump
Republican president-elect Donald Trump gives a thumbs up to the crowd during his acceptance speech at his election night event at the New York Hilton Midtown in the early morning hours of November 9, 2016 in New York City. Donald Trump defeated Democratic presidential nominee Hillary Clinton to become the 45th president of the United States. Photo by Chip Somodevilla/Getty Images

Donald Trump promises to be the "greatest jobs-producer in history" by imposing tariffs on China, Mexico, and other trade partners. History has shown that protectionism doesn't work in the long run. Other countries would retaliate, reducing American exports. Tariffs also raise prices, increasing inflation and lowering the U.S. standard of living. Find out What Happens If Trump Attacks NAFTA?

He would lower income and corporate tax rates and eliminate many loopholes. Tax cuts are the least efficient method of creating jobs. It would reduce revenue by $950 billion a year, adding to the $19 trillion debt.

To offset the lost revenue, Trump would cut spending. He would eliminate the Departments of Energy and Education ($80 billion combined). Trump would cut military spending (currently at $800 billion) but somehow make Defense stronger and improving the Veterans Administration. Even if he eliminated these four departments ($880 billion), it would not offset the loss in revenue from his tax cuts.

Trump would need to cut the current $4.1 trillion budget by 12% to eliminate the $500 billion deficit. That includes mandatory spending such as Social Security and Medicare benefits. That's more than the 10% cut to the Discretionary budget mandated by sequestration. 

Trump, like most Republicans, promised to repeal Obamacare. Ironically, he would replace it with a universal market-based plan that mirrors Obama's Original Health Care Reform Plan.  Here's more on How Trump Could Change Health Care in America. More

Hillary Clinton (Democrat)

Hillary Clinton
Democratic presidential candidate and former U.S. Secretary of State Hillary Clinton speaks to guests gathered for a campaign event on the campus of Des Moines Area Community College on August 26, 2015 in Ankeny, Iowa. Photo by Scott Olson/Getty Images

Hillary Clinton would boost economic growth by giving tax cuts to the middle class and small businesses. She would reduce income inequality by raising the minimum wage. She would raise short-term capital gains taxes for those earning $400,000 a year.

These practical suggestions would work. Small businesses create 70% of all new jobs. Many top CEOs agree higher short-term capital gains taxes would reduce trading and increase long-term investment objectives. Here are 5 Ways Hillary Would Create Jobs.

Ahead of her time, Clinton was the only candidate in 2008 that committed to a balanced budget. Since the budget deficit is a large contributor to the declining dollar, high oil prices, and inflation, its elimination is critical to the long-term health of the U.S. economy.

Hillary has proven her ability to achieve her goals. Here are Hillary's 14 Major Accomplishments. More

Who Does Trump Have to Beat?

Bill Clinton created the most jobs.
Bill Clinton was the greatest jobs-producing president in U.S. history. Photo by J. Kempin/FilmMagic

Trump would have to beat two Democrats before claiming the title of best jobs-producing President. Bill Clinton created 21.5 million jobs, which is the greatest number. Lyndon B. Johnson grew the job market by 20.7%. Trump would have to create 31.4 million jobs to beat them both. That's 20.8% more than today's 151.030 million jobs. More

The True Causes and Solutions to Outsourcing

Emerging market commuter train
U.S. workers must become better at competing with English-speaking, trained, and lower-paid Indian workers. Photo by Tim Graham/Getty Images

Trump's tariffs would hurt U.S.-based companies that employ anyone overseas. It would also raise costs for consumers. That's because the companies would raise prices to cover the cost of more expensive U.S. workers. Some U.S. companies would just move their whole operation overseas, while others would go out of business.  More

Why Protectionism Feels So Good, But Is So Wrong

NAFTA protestor
Many U.S. workers lost their jobs when their companies moved to Mexico. That's why NAFTA is so unpopular. Photo: Getty Images

Trade protectionism protects jobs in the short term. But it weakens the industry, and the economy, in the long-term That's because the competition is necessary to spur innovation. That's what makes America so great. 

A nasty side-effect of trade protectionism is that other countries will immediately raise their tariffs. ​That would threaten the 12 million U.S. workers who owe their jobs to exports. More

Do Tax Cuts Create Jobs?

Now Hiring
Tax cuts create jobs, but aren't as effective as spending. Photo: Steve Debenport/Getty Images

Payroll tax cuts are more effective than income tax cuts in creating jobs. A study by the Congressional Budget Office found that every $1 million in payroll tax cuts creates 13 new jobs. That's because it allows businesses to hire new workers without increasing their payroll budget.

Even better are payroll tax cuts for new hires only, which creates 18 new jobs for every $1 million cuts. Income tax cuts aren't as effective, only creating 4.6 jobs for every $1 million cut. That's because many people save the extra money. It doesn't go into the economy, where it could stimulate demand.​ More

4 Best Ways to Create Jobs

bridge
Building roads and bridges is the best way the government can create jobs. Photo: Allan Baxter/Gety Images

The best way to create jobs is with public spending, not tax cuts. A U Mass/Amherst study found that $1 million in direct spending created 20 jobs. That same amount in unemployment compensation benefits created 19 jobs. Both of tactics put money into the hands of people who immediately spend all of it.  More