trump vs. hillary

Presidential Election 2016: How the Candidates Compare on Economic Issues, Pt. 3

Job Creation

Posted: September 12, 2016

As a general rule, iHire doesn’t dabble in political commentary, but we decided a once-in-a-lifetime election with the two most unlikable candidates in history (according to analysis by the folks at fivethirtyeight.com) deserved at least a little of our attention. After covering Trump and Clinton’s positions on taxes and trade in part one as well as workplace reforms in part two, part three in our blog series is dedicated to job creation. Read on to learn about the candidates’ plans to get America back to work as well as input from economists regarding their chances for success. Check back next week for the final installment on the campaigns’ plans to invest in infrastructure and energy.

Moody’s Analytics provided detailed reports on both candidates’ economic plans that included concrete job creation projections, assessing Trump’s policies in June and evaluating Clinton’s ideas in July. Moody’s was the only organization that did an in-depth examination; however, this analysis comes with a very large caveat: the economist who led the project has (loose) ties to the Clinton campaign (more on that in a moment).

Their prediction was startling to say the least: under Clinton, the US can expect to add 10 million jobs, but a Trump presidency would cause approximately 3.5 million jobs to be lost. That’s a huge discrepancy and one that has caused critics of the report to question its accuracy.

This skepticism is not without reason. The lead economist for both reports was Mark Zandi. While Zandi previously served as an economic advisor to John McCain during his candidacy for president in 2008, he was also a prominent supporter of President Obama’s stimulus plan and donated $2,700 to Clinton’s campaign in 2015 (the maximum amount allowed). Unfortunately, that means that Moody’s findings must be taken with a grain of salt.

Furthermore, there are some other fundamental issues with the analysis itself, as discussed by Heather Long from CNNMoney.

  1. If Clinton simply continued with policies put in place by the Obama administration, the US economy would still add 7.2 million jobs. While the influx of 2.8 million more opportunities for American workers is nothing to sneeze at, it’s a bit misleading for the Clinton campaign to take credit for all 10 million jobs.
  2. Immigrants would get many of the jobs generated by Clinton’s policies. Part of Clinton’s plan calls for awarding more visas to highly skilled workers, meaning a large percentage of these potential opportunities would be created by and for foreign professionals.
  3. Finally, the Moody’s report relies largely on a few key assumptions and follows a Keynesian approach in direct opposition to the supply-side economic theory adhered to by Trump’s plan. Clinton’s proposed spending and tax increases are forecast to produce significant benefits for the US economy, while Trump’s suggested tax cuts and reduced regulations are estimated to negatively impact economic growth and cause a spike in borrowing costs (with interest rates jumping from 1.6% to 8.6% by 2018). A supply-side economist would argue against many of these assertions and invariably arrive at very different conclusions.

At the end of the day, the most important thing to keep in mind is that there’s a reason why no other economists attempted to make specific projections based on the two candidates’ economic plans: it’s a very complicated and difficult thing to do based on the level of detail the Trump and Clinton campaigns have provided. However, it’s worth noting that a majority of economists from the National Association for Business Economics (NABE) are on the record stating that Clinton would do the “best job as president managing the economy.”

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Sources:

BBC News – Trump v Clinton: Comparing Their Economic Plans

Heather Long – Would Clinton’s Plan Really Create 10 Million Jobs?

Jake Miller & Gabrielle Ake – Comparison: Donald Trump vs. Hillary Clinton on the Economy

Freddie Rohner, iHire
Posted by: Freddie Rohner, iHire
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