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  • Writer's pictureDoug Lagerstrom

Political Picture | Winter 2016

For the purposes of this article we will focus just on the economic policies of the candidates likely to get the nomination and the effect these policies will likely have on the economy as a whole. All information has been taken from the candidate’s website.

Currently the democratic candidates for President are focusing their message on the fairness of our economy. Bernie Sanders is supporting an increase of taxes on the wealthy to pay for free tuition for college students. He is also supporting an increase in the Federal minimum wage to $15 an hour. Hillary Clinton also supports a higher minimum wage, although her preferred rate is $12 an hour. She also would use tax policy to support college students by providing a tax break of $2,500 for coeds.

The Republican candidates seem more concerned with using tax policy to spur economic growth. Donald Trump would simplify the tax code and lower rates for individuals. He would also cut the corporate rate to 15%. Ted Cruz would institute a 10% flat tax for all taxpayers (with an exemption for lower income earning individuals). He also supports cutting the corporate tax rate to 16%.

None of the four candidates address the national debt directly on their website. Trump and Cruz believe that economic growth will pay for the lower tax rates. Clinton and Sanders plan to pay for their additional government programs with increased taxes on the wealthy and on Wall Street.

Economists differ, imagine that, on the impact these policies would have on our economy. Most believe that the increase in the minimum wage and the increase in taxes that both Sanders and Clinton propose will lead to a slower economy. Economists differ on the degree of the slowdown. The lower tax rates and simpler tax code that Trump and Cruz put forward should stimulate economic growth, but analysts differ on the impact the reduction in rates will have on the national debt.

Will the increase in economic activity outweigh the loss in revenue from the lower rates? It's not surprising that the candidates are proposing policies that appeal to their party’s base at this point. I would expect the eventual nominees to “refine” their message when they are running for the general election in September. All candidates must appeal to the base of their parties at this point and then can “pivot” to the center in an attempt to garner independent voters support.


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