The Economic Debate and the Failed Consensus

Reprinted from Campaign For America's Future

This week, a policy debate threatened to break out in the presidential campaign. Amid the insults ("crooked Hillary," "unfit Trump"), purblind lunacy and rolling scandals, invented and real, the two presidential candidates traveled to Michigan to lay out contrasting plans for the economy.

The moment was quickly lost in the din over Republican candidate Donald Trump's latest idiocy ("Barack Hussein Obama is the founder of ISIS). But the two speeches (Hillary Clinton here; Donald Trump here) did give an indication of how the establishment economic consensus is beginning to crack, and where the two candidates truly divide.

Taking On the Rigged Global Economy

Most of the commentary focused on the traditional contrast between the candidates: Trump embracing Republican gospel of tax cuts for the rich and corporations; Clinton for raising taxes on the rich and lifting the floor under workers. But what is more interesting is how the two candidates are moving to challenge the old, failed, bipartisan "Washington consensus."

Both candidates now trumpet their opposition to the bipartisan trade policies of the last decades. Trump's assault on our "lousy trade deals" is the centerpiece of his appeal to working people. He promises to renegotiate NAFTA or tear it up, to crack down on China's currency manipulation and mercantilist policies, and, of course, to oppose the Trans-Pacific Partnership trade deal that President Obama continues to promote. Trump's alternative, naturally, is that he'll negotiate better deals -- whether these are better deals for global corporations or for workers is less than clear. He indicts Clinton for championing the old deals in office, while criticizing them on the campaign trail.

Under pressure from Sanders in the primary and Trump in the general, Clinton restated her opposition to the TPP deal that she had championed while secretary of state: "I oppose it now. I'll oppose it after the election, and I'll oppose it as president."

She called for a new trade policy, beginning with a special trade prosecutor to crack down on trade violations, and promising to levy penalties on companies that move their headquarters abroad. Carefully attuned to polling data, Clinton touts the benefits of trade, innovation, and investment in education and training so Americans can compete. She has yet to detail what her alternative strategy would be.

But both candidates for president now stand in opposition to the establishment consensus. The editors of The Wall Street Journal and The Washington Post, fretting about the rising tide of "protectionism," rebuked Trump and Clinton respectively. The old "Washington consensus" is beginning to crack.

Public Investment Over Austerity

Both candidates now support large-scale public investment as a source of jobs, economic growth and increased productivity.

Clinton promises to pass the "biggest investment in new, good-paying jobs since World War II," calling for spending $275 billion over five years to rebuild our infrastructure plus an "infrastructure bank" that can mobilize private capital into public works investment. Trump says that her program is too small and he'd double it.

Both break from the austerity budgets of the last years that bear much of the blame for the slow recovery.

Tax and Spend vs. Tax Cut and Spend

Trump, the self-proclaimed "king of debt," isn't worried about increasing deficits and debt. He calls for massive tax breaks along with public investment in infrastructure and the military. He argues that these imperatives are more important than deficits, and that the resulting growth will pay for them in the long run.

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