C Adam Pfander
In the 2016 race for the White House, we turn our attention to former Secretary of State Hillary Clinton. Much like her Democratic counterpart Senator Bernie Sanders, the Clinton campaign is vocal in its rhetoric to reduce income inequality. Clinton, however, takes a much different tack in approaching this issue.
First and foremost, Clinton would raise the federal minimum wage to $12 per hour, while encouraging States to raise their minimum wage even higher. This plan is designed to boost incomes for working-class Americans, but is not completely beyond reproach. Some economists speculate that this higher minimum wage would be too expensive for rural areas, and would thus choke small businesses who cannot afford to raise wages. This pressure may be alleviated, however, by Clinton’s plan to reduce the tax burden for small businesses.
Beyond simply raising wages, Clinton wants to raise the aggregate productivity and job preparedness of American workers by making college education more affordable. This goal is epitomized in her “New College Compact,” which would make community college completely free, state college loan-free, and provide tax cuts up to $2,500 per student to alleviate the burden of paying for college. The Clinton campaign estimates an approximate $350 billion price tag for this program over the next 10 years – a tall order, which Clinton contends can be met by closing tax loopholes - an issue we will explore momentarily.
Turning away from the workforce, Clinton wants to invest heavily in American infrastructure. As President, Clinton would establish a National Infrastructure Bank, whose sole purpose would be to give funds to construction projects for roads, bridges, power lines, etc.. This type of financial support is designed to make infrastructure development easier and cheaper.
Economists normally love this type of investment spending. Better roads mean less cost, more efficient production and transportation, and ultimately, higher economic growth. However, in a recent poll of 22 economists conducted by National Public Radio (NPR), emotions are mixed. Some economists feel that the practical aspect of establishing a bank this size is too costly; others are not convinced that a bank is even necessary, when the federal government can just spend directly on investment.
How does Clinton plan to pay for these projects? Her main budget proposal is to simplify the tax code. Specifically, she wants to close the numerous tax loopholes that effectively allow corporations and the wealthy to pay lower taxes. In other words, Clinton feels that the federal government is leaving money on the table when it comes to tax revenue; she wants to get it back. In this manner, Clinton would increase the progressivity of the tax code. Economists, however, debate whether there is enough money left on the table to cover her proposed spending.