The American Election 2016: Fiscally Challenged

The American presidential primaries prove to be a great spectator sport. Opposition and
rhetoric from each side demonstrate the kind of difficulty associated with differentiating
discussion about policy from personality politics. Yet there is a difficulty between
campaigning and governing. Campaigning does test the strength of leaders to connect with
the wider public. It is no surprise especially that in the age of social media that ones
approach to maintaining a respectable public persona matters, yet governing is what
inevitably matters. And governing is much harder.
Whether or not free college will be practically possible is a conversation that perhaps still
needs to take place. Donald Trump knows there will never be a wall dividing the US and
Mexico. On the back of gender politics, much past conspiracy of being tied to the undue
influence of Wall Street, what needs to be stressed is that America is facing large and
complex problems. Lack of effective conversation on campaign trails can be disastrous as we
move on from the primaries to the general election. Candidates should not be at ease to
offer simplicity on the stump, rather than confront the social, political, and economic
realities of contemporary America.
Covering economic insight on the 2016 election, it is of no surprise that spending and fiscal
initiatives will be of particular interest. To reflect candidates ambitions on the nature of
outcomes, we gain an understanding by knowing that Republicans traditionally promote
supply-side economics. By accounting for a reduction in debt, a lowering of taxes, and
cutting spending to ensure a pro-growth economy, it proves to be in contrast to the
Democrats proposal of middle-class income tax cuts and higher taxes on investments and
businesses.
Republican frontrunner Donald Trump has inspired emotions ranging from amusement to
outrage. Yet is his tax plan as humorous or outrageous as his peculiar traits and viewpoints?
Trump has released a detailed plan that promises to consolidate tax brackets from seven to
four, cut corporate income tax rates, and create a substantial zero bracket for lower income
individuals.
According to the Tax Foundation, Trumps plan would, through lower marginal tax rates on
individuals and lower capital costs, greatly increase the U.S. economys size in the long run,
5.3 million jobs will be added and wages grown by 6.5 percent, but the federal
governments deficit would increase by $10 trillion.
Indeed, Trumps proposals do seem to be in conflict with much of contemporary economic
understanding. To credit international trade as producing win-win prepositions as most
economists do, Trumps belief that trade wars have clear winners and losers alarms critics
of what damage currencies and trade restrictions can uphold in an interdependent trading
zone. At various episodes throughout his campaign, Trump has pledged to put in place a
20% tariff on all imported goods. Reflecting much of playground tactics, he has announced
that he would even impose a Chinese-specific tariff to offset the effects of supposed
Chinese currency manipulation.

Yet, in line with Trumps views on foreign policy to project a hardline stance on illegal
immigration, turmoil in the Middle East, and negotiations with China, Russia, and Iran, this
sort of backward looking philosophy is only reminiscent of public policy disaster in the past.
Since the Smoot-Hawley Tariff Act of 1930, which imposed high tariffs on more than 20,000
foreign products in an effort to boost the profits of American companies and ensure
American jobs. Unfortunately, the tariffs proposed effectiveness was only overturned by
international trade slowing considerably, costing jobs around the world at the start of the
Great Depression.
Trumps rhetoric for the most part does seem to lack specifics as much as it lacks credibility.
In the context of a culture that supports free trade and the ability of nation states to
cooperate and mutually benefit each other, Trumps proposals mirror a vague future ahead.
Yet on the contrary, a future that is celebrated with as much progression and growth as that
guaranteed with candidate Bernie Sanders has also been of particular interest. Offering an
intolerance and distaste for economic inequality that has had much appeal to progressives
and the younger population, Sanders has invited much criticism with promises of free
education, universal healthcare, wage hikes and infrastructure repair. Arguments over the
implementation of payment under taxing off-shore corporate profits, Wall Street, top
earners, and closing various loopholes under the presumption that the system is indeed
broken in favour of the upper class have indeed raised the question of how costly Sanders
plan will be. The Wall Street Journal estimates Bernies domestic policy plan to cost $18
trillion over 10 years, requiring new taxes on most workers worth 8.4% of their income.
Gerald Friedman, a professor at the University of Massachusetts, concludes that if Sanders
passed his entire platform, including a $15 minimum wage, a single-payer health care, a $1
trillion infrastructure spending bill, and new taxes to pay for it all, U.S. economic growth
would rocket to an average of 5.3 per cent per year over a decade. On its face, the number
invites skepticism amongst economists taking into account an environment of an advanced
economy with an aging population that can sustain the pace of economic expansion.
When questioned over the Friedman report, Warren Gunnels, Sanders policy director said
the following:
Senator Sanders has been fighting establishment politics, the establishment economics and the
establishment media. And this is the last thing they want to take a look at.

Yet, it is this quality of being ambitious amongst voters that has invited further criticism. To
understand Friedmans forecast, it helps to look at his further projections year by year. Over
time, Friedman thinks the push largely from government spending will bring the U.S. back to
full employment. As the labour market gets tighter, the improved economy will attract more
immigrants, expanding the size of the workforce, and employees will simultaneously
become more productive. More people producing more goods and services over time will
sustain the pace of growth under President Sanders, even as tax increases take more of a
hike.

Far too radical? Too idealistic? Should anyone care? Sanders is respected as a values
candidate. Individuals buying into his incredibly idealistic brand of politics and utter focus on
economic inequality do seem to prove that his influence is one that has not been seen since
the likes of Truman or Johnson. Paying close attention to empirical research and taking a
skeptical approach to otherwise optimistic claims about future growth that would make
your grand plans easier to finance should lead to more careful and effective policymaking.
Where Trump is criticized on being far too irrational and vague on details, the Sanders
campaign has been viewed as being indulged in magical thinking. Economic decisions
matter. The criticism of political actors to dictate much of economic policy beyond a
complex understanding of resource capacity, natural rates of growth, and constraints has
been a central conflict in the arena of public policy. If individuals can gain respect from our
candidates, and we can gain a reputation as being engaged with decisions that
fundamentally reshape the worlds dominant economy, then details do matter. If not for the
collaborative efforts of tackling issues that we face for generations to come, it is only
advised for students of Economics and beyond to question and never stop questioning
claims and much optimistic agendas for what they truly represent at heart.