The recent debate clarified the candidate's economic policies, Clinton's somewhat more than Trump's I think, and presented a sharp contrast. President Obama inherited an economic crisis after the bursting of the housing bubble but after 8 years of his presidency the country's economy remains troublesome, a 1% growth rate, a fair employment rate but a very low labor participation rate, stagnant salaries, a nearly $20 trillion debt and interest rates continuing to be kept artif...icially low.
Clinton presented her plan which featured major new entitlements such as free college tuition for most families, pushing renewable energy over fossil fuels with subsidies, a major new government jobs program, a mandated universal increase in the minimum wage and keeping and refining Obamacare. All of this would be paid for by "asking" those who have benefitted most to pay their fair share, that is major new taxes on high income earners. Each of these proposals would be economic poison, likely to stifle the economy and further decrease employment.
For lack of space let's just talk about taxing the rich, a nice sounding something for nothing proposal, sort of like getting comped at the casino. It should be pointed out that as of the most recent figures the top 10% of income earners pay 70% of all income taxes, up progressively since 1986 when it was 54% (http://money.cnn.com/…/12/news/economy/rich-taxes/index.html) so exactly what is the fair share that Clinton will decide on. I suspect that her ax won't fall so heavily on the Wall Streeters who paid $250K for a ½ hour speech, or the Silicon Valley fat cats who paid $50K a plate for her company. So don't be surprised if most of the rest of us in the casino will be included in the fair share.
However the real problem with raising taxes is what economists call the deadweight effect. Raising taxes to high levels incentivizes actions designed to reduce taxable income and the net effect is to decrease market activity and reduce employment. As pointed out by Arthur Laffer in 1974 this effect may actually reach the point of diminishing returns. Famously the major tax rate reductions instituted by Ronald Reagan were followed by a marked surge in the economy and increased tax revenues. It is money in the hands of private enterprise and not government programs that makes all of us better off.
Reagan was great at explaining this phenomenon to the public. Trump is not, although he did make the point strongly that the major economic problems of our entitlement programs of Social Security and Medicare which are linked to our colossal debt would disappear with a change in our GDP from the present anemic 1% to his predicted 4%, similar to our performance in the past.
Probably the most succinct explanation I've heard was given in a short speech by President John Kennedy in 1962 as he explained to the American people the reason for his proposed major tax reduction. Here's the link and it's worth watching.
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