Hillary, Democrats still don’t understand the U.S. economy

Hillary, Democrats still don’t understand the U.S. economy

Based on what Hillary Clinton said in her speech, the Democrats still don’t understand how to correct this country's grueling 8 consecutive years of economic stagnation.

Cartoon by Branco, reprinted by arrangement and with permission. (See link below*)

WASHINGTON, July 12, 2016 — Bernie Sanders has finally endorsed Hillary Clinton for President. Sanders did so in a speech about his policies, after which Clinton listed her five-part plan for America’s economic policy. Both speeches revealed an inconvenient truth: Democrats still don’t understand the economy and they still don’t understand how to correct this country’s grueling 8 consecutive years of economic stagnation.

Our current economic problems result from having experienced no solid growth in this country in almost a decade. This is due to not only to the Great Recession of 2008/2009 but the economic policies of the Obama administration as well, which were never geared to grow the economy. Instead, Obama’s policies were geared to address perceived social injustices. Amazingly, that is exactly what Clinton said she would focus on during her first 100 days in office if she wins the American presidency in Election 2016.

Economic growth would provide more jobs, create more opportunity for all Americans. This would increase incomes, reduce the unemployment rate, reduce the number of people collecting food stamps and welfare, increase tax revenue to all levels of government, reduce deficits, raise wages, allow individuals to pay for their health care, reduce income inequality, reduce poverty and bring down crime rates. All of these are problems today, primarily because of the lack of sustained economic growth.

What economic policies would accelerate growth?

Such policies would be exactly opposite to what Obama, Clinton and the Democrats suggest. Growth occurs when there is sufficient capital and sufficient qualified labor available to the economy. Growth also occurs when the government allows markets to operate freely with minimal regulation and minimal market interference. Growth occurs when there is sufficient demand for goods and services in the marketplace.

Growth also occurs when business is encouraged to expand and add jobs for one simple reason: the business sector creates the vast majority of jobs. Government does not create the majority of jobs. Government merely hires people to serve the public, something they’ve been less and less effective at in recent years

Each of the five points in Clinton’s plan to correct the current economy will, she believes, cure perceived social injustices, but will not stimulate growth. In fact, her policies will be a drag on economic growth, extending further the dismal track record of the current administration.

Clinton said she would increase government spending to create jobs. That has failed in the past, as witnessed in Obama’s nearly trillion dollar stimulus package that provided few jobs. Obama claims he has created 14 million jobs since the recession ended, but the jobs he “created” are mostly part-time and mostly low paying. That’s what happens when government tries to create jobs.

Clinton said she would give free college tuition to all students whose families earn less than $125,000 per year. While it will be free to the students, however, taxpayers will foot the bill, reducing their ability to spend, which in turn reduces demand and slows economic growth.

Clinton further stated she would clamp down on companies that outsource their manufacturing and encourage companies to manufacture here in the U.S. Won’t that help create jobs and grow the economy?

The answer is no. All that will do is raise the price of goods to consumers, who will then have less to spend on other goods. This reduces demand and tends to slow growth. For example, if the smartphone in your pocket had all its components made in the U.S. and the phone itself assembled in the U.S., it would likely cost about $1,800 instead of the $600 you paid for it.

While manufacturing the phones in the U.S. may help a few thousand Americans get jobs, hundreds of millions of Americans would have $1,200 less to spend on other goods, thus reducing demand and slowing economic growth.

Clinton said she would raise the minimum wage. This helps the less than 4% of the population working at minimum wage, but results in higher prices for all Americans. Raising the minimum wage tends to slow economic growth, regardless of the contrary arguments offered by the Democrats.

Clinton wants to raise taxes on the very wealthy so they pay their “fair share.” Although “fair share” has never been defined, she would raise the top tax bracket to almost 44 percent and raise the capital gains tax rate, likely to 28 percent. This reduces capital creation and tends to slow economic growth.

Finally, Clinton said she would increase government spending for programs like Social Security and Medicaid, while expanding health care coverage to more people who can’t afford to buy their own insurance. While she argues this is a social responsibility for all Americans, it will be paid for by middle-class taxpayers, which will once again tend to slow economic growth.

High periods of economic growth occurred in the 1980s when the government reduced tax rates for all Americans, reduced regulations to business and reduced spending on social programs. High periods of economic growth occurred in the late 1990s when President Bill Clinton lowered the capital gains tax rate from 28 percent to 20 percent, reduced the welfare rolls and declared “the era of big government is over.”

Based on what Hillary Clinton said in her speech, the Dems just don’t understand the economy.

*Cartoon by Branco via Comically Correct. Reprinted by arrangement and with permission.

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