Maybe it is just me, but why would Hillary Clinton pronounce to the world that she wants to raise the estate tax to a whopping 65%. I get it, it would be on the billionaires, and we all want to get a piece of their money. It is about income inequality, and perhaps a bit about plain old jealousy.
But the politics of it baffle me. Right now, six weeks or so before Election Day. Is it because the icon of the left, Elizabeth Warren, just got a lot of face time undressing Wells Fargo CEO John Stumpf about that bank's most recent egregious conduct--paying a fine of $185 million, along with a bonus of $123 million to the executive whose conduct led to the fine--so Hillary is under a bit of competitive pressure to up her game as a warrior for the left? Has her campaign calculated that the estate tax rate pronouncement will be the final appeal necessary to bring Bernie voters into the fold?
Or have they simply lost their minds?
On the other hand, what better way to spook independents, and the 20% or so of persuadable Republicans who are hanging in the balance between her and Donald Trump, than by lobbing a huge tax increase out there. I know, it is supposed to be about taxing billionaires, but the truth is that it will be read by swing voters as a cavalier proclivity to go after other people's money. First, it is the billionaire, who knows who will be next.
This is, of course, the defining difference between Democrats and Republicans. Before the Reagan Revolution, the consistent trope of Republicans was that Democrats liked to tax and spend. Then the GOP learned to love spending, leaving the defining difference that Democrats like to tax. And that, in case they have never noticed over the years, is a practice that few across the electorate are actually fond of.
But the point is: why say anything at all about taxes? The man she is running against has proposed enough spending increases and tax cuts to outstrip anything Clinton might do in her wildest dreams. Sure, he has scaled back his original tax cuts--which were estimated by the conservative Tax Foundation to cost the federal government $10-12 trillion in foregone revenues over a ten-year timeframe--to a more modest $3-6 trillion. And that is just on the tax cut side of the ledger. Add in his plan for beefing up the Pentagon, doubling Hillary's proposed level of infrastructure spending and his commitment not to touch core entitlements, and Donald Trump's fiscal plans are beyond the wildest dreams of any Democrat, much less an independent socialist from Vermont.
When Bernie Sanders proposed a college tuition entitlement with an annual cost of $50-60 billion, the cacophony of demands for the details of how he was going to pay for it was deafening. And so it goes for any Democrat spending initiative, as the deficit hawks circle in the skies, looking for blood. But as to the trillions that Donald Trump has proposed to add to federal deficits, we have heard barely a word. Some of it is because no one really takes anything Trump says seriously, and some of it is the double standard that has come to be applied to Democratic fiscal plans vs. Republican tax cuts.
So why on earth would Hillary indulge this media double standard? And why would she commit the fatal sin of Walter Mondale in his debate with Ronald Reagan. Back then, as now, Mondale felt obligated to tell the world he would raise taxes, while Ronald Reagan simply promised the world tax cuts, feeling no obligation to say how he would be paid for them. Growth, the Gipper insisted, with a wink and a nod. Growth will pay for it all.
And that is Donald Trump's answer today. Even Trump's closest economic advisors don't try to mask the enormity of the deficit hole that his tax cuts and spending plans would create. Writing in the Washington Post this week, UC Irvine business school professor Peter Navarro and investor Wilbur Ross trumpet the growth that his plans would create. "Trumpnomics would generate millions of additional jobs and trillions of dollars in additional income and tax revenue."
This is the dynamic scoring argument that has been used since the Reagan era to justify moving away from traditional balanced budgets. And sometimes it works and sometimes it doesn't. But unlike prior versions, this time around neither Navarro and Ross, nor the Tax Foundation, deny that Trump's program would cost less than trillions of dollars under the rosiest of scenarios. Their argument is that growth is good.
And indeed it is. It may not cure all ills, but whatever ills it does not cure are only made worse without it. Growth, Hillary, that is the word you should be looking for. Forget tax hikes, just point to growth, and call it a day.
Artwork by Jay Duret. Find him at jayduret.com.