Analysts Say Clinton Proposals Would Strengthen The Economy

The economy would grow even stronger and create more dividends for low- and middle-income households in a Hillary Clinton administration than it would on its current track and far more than under a Donald Trump administration, according to a new analysis from Moody’s Analytics. And they found that the Clinton economy would benefit in particular from uncommon policies like paid family leave and universal preschool.

The independent firm ran the numbers on a variety of proposals that Democratic nominee Clinton has put forward, and it concluded that her plans would boost GDP growth and create more jobs, increase incomes particularly at the middle and bottom of the income scale, and would not end up being costly or significantly increasing the deficit.

Moody’s looked at what would happen if her plans were fully or partially implemented through the year 2026. Some of it is standard fare: it found that her proposals to spend government resources on infrastructure would stimulate the economy and that financing the spending by levying more taxes on the wealthy would not have a significant economic impact. It also warned of a minimal negative effect on jobs stemming from her call for a higher minimum wage (although there is good evidence that the economy can swallow minimum wage increases without significant job losses).

But the economy would also benefit greatly, according to Moody’s, from more unique aspects of Clinton’s agenda. Long-term growth would be particularly fueled by expanding the country’s workforce and giving people access to better education and skills. That would be accomplished in large part through a national guarantee of paid family leave — which has been shown to keep people in the labor force — and investments in expanding preschool to all four-year-olds and making college more affordable. Moody’s also notes that immigration reform would be a significant factor for increasing the workforce and thus boosting productivity.

All told, Moody’s finds that if Clinton implemented all of her policy prescriptions, the economy would be 1.7 percent larger than its current projected course, there would be 3.2 million more jobs, and the average American household would have $2,000 more in after-tax income. The poor and middle class would benefit the most, keeping their tax bills about the same but getting far more in government assistance, while the wealthy would pay “much more” in taxes.

Moody’s also said this would be accomplished without a huge impact on the federal budget. Instead, it found that her plans would cause a “modest” increase in budget deficits. In fact, if she didn’t propose undoing the sequester — the automatic budget cuts that were put in place in 2013 as part of a budget deal — her proposals would be deficit neutral, with the new government spending all but covered by increases in taxes on the rich.

The analysis stands in stark contrast to what Moody’s found would happen if Republican nominee Donald Trump wins the election. Last month it released an analysis that concluded that his policies would plunge the country back into a recession, cost millions of jobs, fail to improve Americans’ incomes, and increase the deficit by $1 trillion. In response, an adviser to Trump’s campaign released a report saying that the nominee’s plans wouldn’t increase the deficit because he has said they won’t.


This has been reposted from ThinkProgress.


Photo from Disney on Flickr.

Posted In: Allied Approaches