Hillary Clinton on Economy and Jobs
Would Hillary Have Created More Jobs Than Bill?
Hillary Clinton focused her 2016 presidential campaign on creating jobs for the middle class. She's had experience in doing so. She was the First Lady when President Bill Clinton, her husband, created more jobs than any other President. Here are five ways her economic plans would have created jobs.
Give tax cuts to the middle class and small businesses. Across-the-board income tax cuts, such as the Bush tax cuts, create 4.6 jobs for every $1 million in cuts. Tax cuts for middle-income families work better than for higher income families. That's because they are more likely to spend any additional income, putting it directly into the economy. Higher-income families are more likely to save or invest any tax savings. That helps banks and the stock market but doesn't create economic growth. That's because the nation's measurement, Gross Domestic Product, doesn't include stock market gains as economic output.
Tax cuts for small businesses work best if they are payroll tax cuts. The Congressional Budget Office (CBO) study found that payroll tax cuts create 13 new jobs for that same $1 million. The best tax cut goes to companies only when they hire new workers. That creates 18 new jobs for every $1 million spent. For more, see Do Tax Cuts Create Jobs?
Allocate $27.5 billion annually to a National Infrastructure Plan to improve roads, bridges, public transit, rail, airports, the Internet, and water systems. That's the best way to create jobs, according to a UMass/Amherst study. Researchers found that $1 million spent creates 20 new jobs. That means Clinton's $27.5 billion would create 550,000 jobs. For more, see 4 Real Ways to Create Jobs.
Spend $9 billion on an Energy Plan to repair oil pipelines and other related activities. It could have created 180,000 jobs. (Source: "The Clinton Tax Hike Plan Revealed," GOP Research, January 26, 2016.)
Raise the Minimum Wage
Ask Congress to raise the U.S. minimum wage to $15 an hour. Increase workers' benefits, expand overtime, and encourage businesses to share profits with employees. That puts money directly into the pockets of lower-income employees. That boosts demand because they are more likely to spend than save or invest.
Invest in Education
Supporting teachers unions and collective bargaining. Make community college free.The College Affordability Plan would spend $35 billion a year to help refinance student debt. It would also pay states to guarantee tuition. The Expanded Childcare Plan and the Early Education Plan would spend $27.5 billion a year. States could make preschool available to all 4-year-olds and expand Early Head Start. (Source: "It's Time to Raise Incomes for Hard-Working Americans," Hillary Clinton 2016 LinkedIn page, July 13, 2015.)
Funding for education is the second-best way to create jobs. Each $1 million spent creates nearly 18 new jobs. That means Clinton's plans would create 112,500 new jobs. Furthermore, these jobs are better paid than retail or food service workers. That's because the new positions are also in the education field.
Raise Taxes on the Wealthy
Ask Congress to tax earnings above $1 million a year at least 30 percent. Impose a 4 percent surcharge on incomes above $5 million a year. That includes capital gains as well as earned income. She would restore the Estate Tax to 2009 levels, or 45 percent. (Source: "Comparing the 2016 Presidential Tax Reform Proposals," Tax Foundation.)
Charge risky banks extra. That includes financial institutions with more than $50 billion in assets, too much debt, or excessive reliance on short-term funding. (Source: "Clinton Proposes Big Bank 'Risk Fee," The Wall Street Journal, October 9, 2015.)
Combat "quarterly capitalism" by raising short-term capital gains taxes. That targets those earning $400,000 or more a year, the top 0.5 percent of taxpayers. She also wants to impose higher taxes on high-frequency traders. She would tax companies that relocate their headquarters overseas to avoid U.S. taxes. These Wall Street tax increases would raise $80 billion a year. (Source: Dunstan Prial, "Hillary Clinton Would Double Taxes on Short-Term Capital Gains," Fox Business News, July 24, 2015. "Clinton Proposes Wall Street Curbs," The Wall Street Journal, October 8, 2015.
Chief Economist at Stifel Fixed Income, Lindsey Piegza, December 8, 2015, newsletter.)
Tax increases typically don't create jobs. But Clinton's tax increases would have boosted the economy by reducing income inequality. Between 1979-2007, the richest 1 percent of American households increased their income by 275 percent. Income for the top fifth rose 65 percent, but only increased 18 percent for the bottom fifth.
One reason is that many of the wealthiest receive their income from investments. Those capital gains taxes are lower than income taxes. That means they pay a lower tax rate than ordinary workers. For example, hedge fund managers only pay 15 percent because their income is long-term capital gains.
Income inequality is one reason why the U.S. economy isn't rebounding as fast as in prior recoveries. High-income households invest, which is why the stock and bond markets are having record years. If low-income households had tripled their earnings, like the top 1 percent did, they would have spent more. That creates more jobs than the stock market does.