Hillary Abandons Income Inequality

Former Secretary of State Hillary Rodham Clinton (public domain photo via Department of Defense)
Former Secretary of State Hillary Rodham Clinton (public domain photo via Department of Defense)

Had you tuned in to Hillary Clinton’s hour-long speech on economics yesterday in order to learn the specifics of how she intends to achieve “strong growth, fair growth and long-term growth,” you would be unsatisfied:

Throughout the campaign, I’m going to be talking about how we empower entrepreneurs with less red tape, easier access to capital, tax relief and simplification. I’ll also push for broader business tax reform to spur investment in America, closing those loopholes that reward companies for sending jobs and profits overseas.

See, she’s FOR small businesses and she’s going to TALK about that.  As for the actual policies by which she will achieve these goals, well that’s for another time.

But as a preview of how she understands the politics of economic issues, the speech was revealing.

First off, she has abandoned “income inequality” as her central theme and instead embraced in a bear hug the central concern of voters: the rising cost of living.  Time and again she came back to this:

Wages need to rise to keep pace with costs. . . Paychecks need to grow. . . The defining economic challenge of our time is clear: we must raise incomes for hard-working Americans so they can afford a middle class life.  We must drive strong and steady income growth that lifts up families and lifts up our country, and that will be my mission from the first day I am President to the last.

We have been urging candidates since our inception to focus on the hit which steady if modest rising prices combined with wage stagnation has had on the average Americans’ budget.  But why is it happening?  Why, Hillary must be made to explain, after 8 years under President Obama are average Americans worse off?

Of course, she does not – cannot – recognize this as a failure of monetary policy, of a coordinated strategy to manipulate money to feed government debt and Wall Street’s pockets, but rather as a result of insufficient government management of the economy. But Republican candidates be forewarned: her pollsters have prepped her on Americans central economic anxiety—stagnant wages and rising prices—and she is going to put it front and center of her campaign.  Will Republicans do so as well?  And come up for a more persuasive explanation for why the economy is failing and what we can do about it?

She predictably attacks Jeb Bush as bloodless.  Of his goal of 4 percent economic growth (reported previously here), she said: “The measure of our success must be how much incomes rise for hard-working families – not just for successful CEOs and money managers – and not just some arbitrary growth target untethered to people’s lives and livelihoods.”  And she’s right: the goal of 4 percent economic growth is meaningless to the economic realities faced by America’s families.

She also took a jab at Bush’s statement, “Americans just need to work longer hours.”  “They don’t need a lecture,” she said, “they need a raise.”

While she did not articulate a tax reform plan of her own – and here she is lagging way behind a number of Republican candidates – she did single out Marco Rubio for attack: “Another priority must be reforming our tax code.  Now we hear Republican candidates talk a lot about tax reform.  Senator Rubio’s [tax plan] would cut taxes for households making around 3 million dollars a year by almost $240,000, which is way more than three times the earnings of a typical family [not clear here if she is referring to the $3 million or the $240,000, but her math is off in any case].  Well that’s a sure budget-busting give-away to the super-wealthy, and that’s the kind of bad economics you’re likely to hear from any of the candidates on the other side.”  The Pulse 2016 has previously reviewed the Lee-Rubio tax plan here.

Mrs. Clinton also sought to squeeze the running room to her left for an Elizabeth Warren or Bernie Sanders, promising to “rein in excessive risks on Wall Street,” that is, to continue the Fed-led campaign of turning investment banks into wholly owned subsidiaries of Washington, who exist to fund government, not the real economy.  Unfortunately for Mrs. Clinton, this goal and that of freeing up credit for the productive sector of the economy are mutually exclusive.

At root, her economic program is that government should be telling corporate America how to behave.  “One [new idea] that I believe in and will fight for is profit-sharing.  Hard working Americans deserve to benefit from the record corporate earnings they help produce.  So I will propose ways to encourage companies to share profits with their employees.”  She will also “help” CEOs focus on the next decade (instead of the next quarter); will reform the capital gains tax code to reward the “right kind of investments”; and will scold corporations which engage in stock buy-backs or pay dividends.

After experiencing the rank incompetence of the federal government over the past eight years (and before), it is staggering that anyone can still think that Washington has guidance to provide to the productive economy.  But voters are restlessly in search for someone who understands their economic pain and can provide an explanation and possible remedy.

Hillary has done Republicans this service: forewarned is forearmed.  She can match them platitudinous promise for platitudinous promise.  Time to get serious about economic reform.

Steve Wagner is the founder and president of QEV Analytics, a Washington DC-based public opinion research firm.