The latest spin out of Washington is that stock market declines over the last 10 days are due to Donald Trump’s surge in the polls. Well it is true that Wall Street tends to hate change — even when it’s positive. And if Donald Trump is anything, it is a change agent that will rattle the cages in Washington, and perhaps on Wall Street. Investors didn’t respond at all well to President Reagan until his policies were put in place, the economy rocketed forward, and only then did the greatest bull market expansion in American history get launched in 1982.
Something else is getting missed here. The Hillary Clinton agenda on the economy and the financial markets. Hillary says she has a cabinet full lot of new ideas on the economy. Unfortunately, most of them are really dimwitted.
I’ve identified five of Hillary Clinton’s lousiest ideas that could hurt employment, growth and stocks.
1. Raise the minimum wage to $12 or even $15 an hour. She might as well call this Teenage Job Elimination Act. Even the liberal Congressional Budget Office recently estimated that a $12 an hour minimum wage would reduce the number of starter jobs by as many as one million. Think how much joblessness for teenagers would come from $15. Seattle recently raised its minimum wage to $11 and headed to $15. An independent assessment by the University of Washington finds that so far the law has had the “negative unintended consequence” of fewer hours worked and fewer jobs. Is this what we want for the nation?
2. Hike income tax rates. There isn’t an economic philosophy known to man that says raising taxes will help the economy. But Hillary is going to give it a try to the tune of $1.5 trillion sucked out of the economy.
Under Hillary’s plan the income tax rate would rise to above 45 percent and the death tax would go to 65 percent for the very rich. Capital gains taxes would nearly double. History proves that raising tax rates is the least effective way for the federal government to raise revenue. IRS statistics indicate that most of the people who fall into the top one or two percent of income are small business owners — and they are America’s major employers. In the 1980s when income tax rates were slashed from 70% to 28%, the amount of tax revenues over the decade doubled and the share of taxes paid by the rich increased. All you have to do is look at the high tax states like Connecticut, and Illinois and New York and you can see the jobs and people fleeing. Our highest in the world business income tax rate has caused many household name companies, like Burger King and Johnson Controls leaving these shores for more tax hospitable places. Hillary’s plan may speed up this exodus.
3. Subsidize 500 million solar panels. Hillary says this proposal will stop the earth’s temperature from changing and protect us from climate change. But we tried these green energy handouts under Barack Obama and they were a failure. Remember Solyndra? That firm received some $500 million of taxpayer dollars an then went belly up. The Institute for Energy Research estimates a price tag of $200 billion for all these solar panels. That is more than it cost to put a man on the moon during the Apollo project. Solar energy already receives more than $100 of taxpayer subsidy per kilowatt of energy produced for every dollar that goes to oil and gas or coal. Let the free market pick the next great energy source, which may be clean burning natural gas.
4. Offer free college tuition. Hillary is right that one of the greatest financial scandals in America today is the cost that universities and colleges are charging students and their families. Some colleges now cost $60,000 for room board and tuition and the average cost is near $30,000. But if the students and the families aren’t paying these costs, taxpayers will, and costs will spike even higher. Universities will raise their tuition as they have every time the government provides more subsidies through Pell Grants and the like. A better idea would be to require every school to freeze tuition for four or five years as a condition of receiving any federal aid. Purdue has done this. Why not require schools with billion dollar plus endowments to use some of that money to lower the tuition for families?
5, Increase Social Security Benefits. Hillary wants to increase benefits to certain senior citizens and she wants to raise the tax on Social Security to “pay for it.” Really? The system is already tens of trillions of dollars in the red, according to the Social Security Administration’s own actuaries. Now we are going to increase the outflow and make even bigger benefit promises? She would also apply the payroll tax of 12.4 percent on wages of up to $250,000 (up from about $110,000 today), which would be one of the biggest tax increases of all time. Let’s rein in the entitlement programs, not expand them.
Mr. Trump would cut taxes, reduce regulation, produce more American energy, provide school vouchers for families in failing school districts, and kill Obamacare. If Wall Street really thinks this agenda is worse for stocks than Hillary’s tax, spend and subsidize agenda, the country is in even worse shape than I thought.
• Stephen Moore is an economist with Freedom Works, a Fox News contributor, and a senior economic adviser to the Trump campaign.