Andy Puzder explains in a Real Clear Politics column why Democratic presidential nominee Hillary Clinton’s policies would not lead to the benefits she promises.
After Monday’s debate, one thing remains crystal clear: Secretary Clinton believes that government can create the benefits of economic growth without any actual economic growth. Burdened by politically motivated policies that are incapable of producing genuine economic growth, what else could she believe? …
… So, to get GDP back on pace, we need to understand why economic growth has been so anemic. According to the US Commerce Department, one of the primary causes has been a decline in investment. Faced with the world’s highest corporate tax rate and looking to a future of 2% growth, businesses are understandably reluctant to invest.
Trump’s solution is to incentivize business investment by lowering the corporate tax rate and encouraging businesses to invest their foreign earnings in the US. As Trump stated in the debate, “I’ll be reducing taxes tremendously, from 35 percent to 15 percent for companies, small and big businesses.” He would also reduce the growth destroying regulatory burdens American businesses must bear, keep our energy dollars and jobs in the US by an “all of the above” energy policy, and negotiate more equitable trade deals to reduce our massive trade deficits. If the idea is to increase business investment, drive economic growth and create jobs, this is a “tremendously” effective approach.
Clinton, on the other hand, would raise taxes on “the wealthy” to “make the economy fairer”, further discouraging investment and condemning us to prolonged abysmal economic growth. She would also further enlarge the regulatory state and destroy energy industry jobs in the name of global warming. In her efforts to make the economy “fairer”, Clinton would sacrifice even the potential for economic growth.
Lacking that potential, Clinton turns to government mandates as the means to address stagnating wages, the decline in good paying jobs, the shrinking middle class, and growing income inequality. Her policy proposals include government mandates raising the federal minimum wage, forcing businesses to share more of their profits with employees, and increasing paid family leave and sick days. In other words, she would try to provide employees with the benefits of economic growth (increased wages and benefits) without any actual economic growth.
These proposals certainly have political appeal but there is a serious problem. When, as Clinton proposes, government attempts to create the benefits that come from economic growth without the underlying growth necessary to support the increased costs, businesses must act to reduce those costs. The simple solution is to reduce the number of their existing employees. Another solution is to reduce growth as increased labor costs decrease profit margins and discourage investment. In other words, fewer jobs. The minimum wage, if you don’t have a job, is zero (and there are no benefits).