Commenting on the economic plans of both Democratic nominee Hillary Clinton and Republican nominee Donald Trump, AllianceBernstein director of global economic research Joe Carson noted that both candidates’ proposals were at odds with the views of their respective parties.
“For example, the Democratic Party’s platform is more aggressive on taxing the upper-income groups, on restricting companies and closing tax loopholes, on expanding the federal government’s role in healthcare and on raising the national minimum wage,” he said.
“On the Republican side, the presidential nominee’s plans run against such long-held Republican policies as free trade and reducing the scale and size of government in the economy.”
Mr Carson said that while new presidents had typically pushed their ‘vision’ for the economy by claiming an “elected mandate” for their plan, this is “quite unlikely” given the plans both propose changes to tax laws as well as heavy infrastructure spending.
“Either infrastructure spending plan would still need Congressional approval. History also suggests that any tax-law changes almost always involve both the individual and corporate sides,” Mr Carson said.
Additionally, outstanding US debt is currently over US$19 trillion with “additional budget deficits projected as far as the eye can see”, so taking on additional debt to finance growth could be “prohibitive”.
“However, with long-term – 10-year – financing costs at 1.6 per cent, the cost of new borrowing is less than half of nominal gross domestic product growth and projected revenues,” Mr Carson added.
“That makes a new fiscal plan look relatively benign and attractive, especially if the plan can lift projected growth over a span of several years.”
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