One of the chief architects of Donald Trump’s tax plan says the GOP nominee would place America on a course for explosive economic growth while Hillary Clinton’s vows of huge spending increases would lead to a recession and either higher taxes on the middle class or huge amounts of new debt.
“We’re cutting rates. She’s raising them,” said Trump economic adviser Stephen Moore. We’re helping small businesses. She’s hitting them with more taxes. We have an orientation toward more investment. She is taxing investment. So, this is a night and day comparison.”
During her convention speech, Clinton was very clear that she believes bigger government is the way to jump start the economy.
“In my first hundred days, we will work with both parties to pass the biggest investment in new, good-paying jobs wince World War II,” said Clinton at the Democratic National Convention.
Those investments would be used, in part, to provide free college tuition, forgive existing student loan debt and raise the minimum wage.
She was equally clear how she plans to pay for that.
“We’re going to pay for every single one of them,” said Clinton. “Wall Street, corporations and the super-rich are going to start paying their fair share of taxes.”
Moore, who is also a senior economic contributor at FreedomWorks and a distinguished visiting fellow at the Heritage Foundation, says those grand promises carry a pretty harsh reality, starting with the mount of spending needed to enact those policies.
“By my count, she’s got about a trillion dollars in new spending. That’s a lot, given we already have a $19 trillion national debt, soon to eclipse $20 trillion,” said Moore.
He says Clinton’s tax plan can soak the rich all she wants, but she still won’t have enough revenues.
“The idea that you’re going to get all the money for free college, free day care, free health care, free everything that you’re going to be able to get the money for that from the top one or two percent is just silly,” said Moore.
That reality, says Moore, would leave Clinton with two horrible options.
“The problem is you’re going to have to go after the middle class. If you want these massive new entitlement giveaways to the middle class, the fiscal reality is that you’re going to have to tax the middle class to pay for it or you’re going to have to rack up massive new amounts of debt,” said Moore.
Besides suggesting Clinton’s math is fatally flawed, Moore says the sitting president is proof positive that the government spending huge sums of money does not result in job creation.
“Government spending doesn’t create jobs. That should be one enduring lesson of the Obama years,” said Moore. “This has been the flimsiest, weakest recovery since the 1940’s, so over 60 years.”
While noting that some government spending is needed, the Obama stimulus wasted nearly a trillion dollars with almost nothing to show for it.
“The money just went down a rat hole. We don’t even know what happened to a lot of the money. Some of it went to failed companies like Solyndra. A lot of it went into programs like food stamps and so on. They were just giveaways to people. They had no positive economic impact at all,” said Moore.
Recent Commerce Department reports show the U.S. economy growing at just one percent. Moore says that small growth also raises red flags about the Clinton plan.
“That’s pathetic. That’s pitiful. It;s the reason Americans are so angry. When you’re at one percent growth, you’re not getting wage growth. You’re not getting the job growth you need. People are actually losing income relative to inflation,” said Moore.
“Fragile is the word I would use to describe this economy. Can you think of anything dumber to do with a fragile economy than to have a massive tax increase?” said Moore.
Moore is one of the key figures in crafting the Trump tax plan, alongside fellow supply-siders Larry Kudlow and Art Laffer. He says Trump is committed to using the tax code as a means to revive our sputtering economy.
The signature item would be to slash the corporate tax rate from the highest in the industrialized world, currently at 35 percent, down to 15 percent. Moore says that would convince U.S. companies to stay here and encourage major expansion and hiring at businesses of all sizes.
“We are going to apply this 15 percent tax rate not only to the big corporations but every one of the 25 million small businesses in America today will get a 15 percent tax cut. And they will get to immediately expense and write off all their capital purchases. I believe, if we do this, we’re going to see one of the biggest economic booms we ever saw,” said Moore.
Personal income tax rates would also drop under the Trump plan. Moore says that was among the clear “marching orders” from Trump to his team of economic experts.
“Number one, he wanted to make sure it didn’t blow a big hole in the deficit, so we’ve got the cost way down,” said Moore. “Second, he said, ‘I don’t want this to be for millionaires and billionaires like me.’ He said, ‘I really want it to be oriented towards middle class workers who are really struggling to pay their bills and are financially stressed out.”
Moore says all families would see lower taxes.
“Rich people would pay about a third of their income in federal taxes. That’s down from a rate of over 40 percent today. Most of the tax breaks on the individual side are for the middle class workers. Depending on the circumstances of a middle class family, they will save anywhere from $1,500 to $2,000 a year.
In the final analysis, Moore, who is admittedly partial to Trump, says the GOP nominee has a plan to bring the economy roaring back.
“Over the next five years, with a Donald Trump presidency, we will get four percent growth annually for five years. That’s a 24 percent increase in the U.S. economy when you take the compounding effect. That’s like adding another Texas to the U.S. economy,” said Moore.
However, he says Clinton’s plan would bring even harder times on the Americans who can least afford it.
“I really do worry she would plunge us into another recession. Given the financial status of so many families, I think half of our families are not financially or economically prepared for a recession. It could be gut-wrenching. It’s too big a risk to take to be talking about massive new amounts of spending, taxes, regulation and borrowing,” said Moore.