Tuesday, April 19, 2016
What follows is my April Op-Ed in the Orlando Sentinel
As the United States grinds ever closer to the Hillary versus Donald festival this fall, I have been reflecting on the presidency of Mr. Obama in preparation for lectures I will give my students. As I pour over the economic-policy proposals of Mrs. Clinton and Mr. Trump, it has dawned on me that 2017 may very well mark the first year — of many years in a row — that we will wish Barack Obama were still in office.
Let's look at it.
First, there is the issue of income taxes. Yes, Obama did in fact increase income-tax rates with the highest marginal tax bracket reaching 39.6 percent. Hillary Clinton wants it to hit 43.6 percent. Obama also championed the push for higher taxes on capital gains — arguing for a top rate of 28 percent. Clinton wants rates as high as 47.4 percent (Bill Clinton lowered it to 20 percent) depending on whether or not we keep our investments for the number of years she believes is best. Of course, compared to Bernie Sanders' plan for a top income-tax rate of 54 percent and his stated belief that even 90 percent might be reasonable, Hillary's "soak-the-rich" model looks downright magnanimous.
While Trump has called for much lower tax rates — and fewer brackets — his horrible understanding of the economics of international trade and immigration makes his economic vision for America worse than anything Obama has created over the past seven years.
Despite all of his economically illiterate rhetoric, Trump cannot show that liberalized trade has been bad for the United States. While Bill Clinton was in office, international trade between the U.S. and the rest of the world skyrocketed — and the unemployment rate fell to less than 4 percent while incomes increased and the American economy experienced record growth.
Don't tell that to Mr. Clinton's wife, though. She is on record criticizing her husband's pro-trade policies (without mentioning him by name) and even though she initially supported the new Trans-Pacific Partnership, she is now feeling the "I hate free trade" heat from Bernie Sanders and has backed away from supporting this treaty.
That leaves no one from either party arguing for the very economic practices that have created trillions in global wealth. Rather, all three of the remaining major candidates are pushing us back to the disastrous 1930s when the Smoot-Hawley Tariff Act destroyed international trade and accelerated the march to World War II.
Meanwhile, Trump is proposing to deport 11 million workers/consumers/taxpayers all in the name of creating the illusion that unemployed Americans will now be able to work in agricultural fields and in meat-packing plants.
His deportation plan in so economically disastrous in its potential that economists stand in rare unison to decry it. The impact on consumer prices, the gross domestic product, border town economies, agriculture, construction and countless other areas of our economy would be enormous — and negative.
I suppose that is OK because on the other side, we have Hillary and Bernie blaming everything from global warming to childhood obesity on Wall Street. Each of the Democratic candidates has a long list of promised "crackdowns" and regulations on the "evil" men and women who provide capital to our nation's economic infrastructure. The last time I checked, Wall Street has helped bring greater opportunities to new businesses than the federal government ever has.
No matter. It is time that the folks who have "rigged" the economy pay dearly — while we sit back and watch capital become more expensive and less available.
I would be the first among many economists who would give Barack Obama a very low grade for his economic policies. The list of bad decisions is long — and our meager economic recovery punctuates this point.
Yet, as I and other economists look into our crystal balls at what a Trump or Clinton or Sanders presidency would mean, we see even worse years ahead.
Enjoy your retirement, Mr. Obama — you don't look so bad after all.