New York Post columnist and Donald Trump supporter Betsy McCaughey pointed to findings from Moody’s Analytics to claim that Democratic presidential nominee Hillary Clinton’s economic plan would dampen economic growth and job creation. McCaughey attempted to argue that Trump’s plan would help the economy, but she neglected to mention that Moody’s actually predicted Clinton’s plan would generate millions of new jobs and spur economic growth while Trump’s plan would cost jobs and likely lead to a recession.
McCaughey Advocates For Plan That Her Own Sources Say Would Harm Economy
NY Post’s Betsy McCaughey: “It Appears As If Our Economy Is Heading Into A Recession.” New York Post columnist Betsy McCaughey falsely claimed that it “appears” the United States is “heading into a recession” despite continued economic growth and job creation on the August 8 edition of CNN’s New Day. CNN economic correspondent Ali Velshi quickly corrected McCaughey, saying, “That’s just absolutely not true” because “we've had greater jobs growth in the last few years than we have seen for decades.” McCaughey had lambasted Democratic presidential nominee Hillary Clinton’s economic plan in comparison to Republican nominee Donald Trump’s proposal,claiming Clinton’s plan to invest in infrastructure and pay for it with new revenue will cost the economy jobs, pointing to projections from the conservative-leaning Tax Foundation and nonpartisan Moody’s Analytics. McCaughey argued that Moody’s is a “neutral source,” but she failed to mention that the same analysis also found Clinton’s plan would grow the economy and create millions of jobs while Trump’s plan would hurt the economy:
[CNN, New Day, 8/8/16]
Moody’s Analytics: Clinton Plan Would Boost Economic Growth And Job Creation While Trump Plan Would Drive Economy Into Recession
Moody’s Analytics Found Economy Would Grow Under Clinton And Shrink Under Trump. Moody’s Analytics released a report on Trump’s economic policies June 17 and a report on the Clinton plan July 28. The Clinton report concluded that her tax and economic plan would positively affect gross domestic product (GDP), benefit “middle- and lower-income households,” and “have little impact” on the national debt. Meanwhile, Moody’s concluded that the Trump plan would have a large and negative affect on GDP, exacerbate the federal deficit and national debt, largely benefit “very high-income households,” and stymie economic activity and job creation:
Under the scenario in which all [Trump’s] stated policies become law in the manner proposed, the economy suffers a lengthy recession and is smaller at the end of his four-year term than when he took office.
[F]our basic conclusions regarding Mr. Trump’s economic proposals can be reached: 1) they will result in a less global U.S. economy; 2) they will lead to larger government deficits and more debt; 3) they will largely benefit very high-income households; and 4) they will result in a weaker U.S. economy, with fewer jobs and higher unemployment.
[Moody’s Analytics, 6/17/16]
[F]our basic conclusions regarding the impact of Secretary Clinton’s economic proposals can be reached: 1) They will result in a somewhat stronger U.S. economy with increased GDP and more jobs; 2) they will mostly benefit middle- and lower-income households; 3) they have little impact on the nation’s fiscal situation, as they result in somewhat larger deficits but a mostly unchanged debt to-GDP ratio; and 4) they exhibit faith in the ability of government policy to positively influence economic behavior.
[Moody’s Analytics, 7/28/16]
CNN Money: Moody’s Says Clinton Plan Would “Result In A Stronger U.S. Economy.” CNN Money summarized the Moody’s Analytics review of Clinton’s economic policies, which found that the economy would create 10.4 million jobs under her presidency -- 3.2 million more than expected with no changes in the law -- and that it would see greater GDP growth:
Moody's Analytics estimates that if the Democratic presidential nominee's proposals are enacted, the economy would create 10.4 million jobs during her presidency, or 3.2 million more than expected under current law.
The pace of GDP growth would also accelerate to an annual average of 2.7%, from the current forecast of 2.3%.
“The upshot of our analysis is that Secretary Clinton's economic policies when taken together will result in a stronger U.S. economy under almost any scenario,” Moody's writes in its report. [CNN Money, 7/29/16]
CNN Money: Life Under Trump’s Plan “Will Be A Difficult Four Years For The Typical American Family.” CNN Money summarized the Moody’s Analytics review of Trump’s economic policies June 21 and found the plan would create a downturn that “would last longer than the Great Recession,” leading to millions of lost jobs and an increase in the unemployment rate to 7 percent:
The super rich would get richer and everyone else would be worse off, Moody's concludes.
Just how bad would it get? The downturn under a President Trump would last longer than the Great Recession. About 3.5 million Americans would lose their jobs, unemployment would jump back to 7%, home prices would fall, and the stock market would plummet, Moody's predicts.
“The economy will be significantly weaker if Mr. Trump's economic proposals are adopted,” writes Moody's. “It will be a difficult four years for the typical American family.” [CNN Money, 6/21/16]
Tax Foundation: Trump Plan Would Increase The Deficit By As Much As $12 Trillion. The conservative-leaning Tax Foundation’s analysis of the Clinton and Trump plans predicted that Clinton’s plan would reduce the deficit by $191 billion to $498 billion over 10 years while Trump’s plan would increase the deficit by $10 trillion to $12 trillion. The Tax Foundation also predicted more economic growth from Trump’s plan than from Clinton’s, but its analysis predicates some assumptions on the idea that tax cuts lead to economic growth:
[Tax Foundation, date accessed 8/8/16]
CRS: Lowering Top Tax Rates Does Not Affect Growth, Leads To Concentration Of Wealth. Reducing top income tax rates does not correlate to increased economic growth, according to a September 14, 2012, report by the Congressional Research Service (CRS), but lowering top rates does “appear to be associated with the increasing concentration of income at the top of the income distribution.” On November 1, 2012, The New York Times reported that CRS withdrew the report, which debunked “a central tenet of conservative economic theory,” after Senate Republicans raised questions about its “findings and wording”:
The results of the analysis suggest that changes over the past 65 years in the top marginal tax rate and the top capital gains tax rate do not appear correlated with economic growth. The reduction in the top tax rates appears to be uncorrelated with saving, investment, and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie.
However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution. As measured by IRS data, the share of income accruing to the top 0.1% of U.S. families increased from 4.2% in 1945 to 12.3% by 2007 before falling to 9.2% due to the 2007-2009 recession. At the same time, the average tax rate paid by the top 0.1% fell from over 50% in 1945 to about 25% in 2009. Tax policy could have a relation to how the economic pie is sliced--lower top tax rates may be associated with greater income disparities. [Congressional Research Service, 9/14/12; The New York Times, 11/1/12]