Those who still have the emotional stamina to follow developments in the presidential race closely, headed into the past week expecting a bombshell from Wikileaks.
But while the site followed through Saturday on its threat to expose unflattering aspects of Hillary Clinton’s campaign, publishing 2,000 emails it said came from her campaign chair John Podesta, the real headline-maker came out of left field: the same day, the Washington Post published a 2005 video in which Donald Trump, unaware that he was being recorded, bragged about what even his defender Rudy Giuliani agreed to describe as “sexual assault.”
The fallout from that revelation was swift and severe. Republican grandees began condemning Trump en masse, with two dozen of the party’s lawmakers calling on him to quit the race. Trump issued a rare, if qualified, apology. He promised he would not drop out, however, even as major outlets such as the Wall Street Journal mused about the potential legal complications of dumping the nominee with a month to go before the election. (See also, Donald Trump for President: What Are the Chances?)
Characteristically, Trump doubled down. He entered Sunday’s debate in St. Louis flanked by three women who had previously accused Bill Clinton of raping or groping them, along with a woman who was raped at the age of 12, and whose assailant Clinton represented as an Arkansas public defender.
The debate immediately erupted along these flashpoints, then quickly subsided into a more subdued nastiness. Each candidate seemed to realize that this line of attack could only end in disaster, taking both of them down and benefiting neither. The upshot of this doctrine of mutually assured destruction? There was actually some time to debate economic policy.
The “Not Affordable” Care Act
The first question to touch on America’s wallets came from an audience member and centered on the Affordable Care Act, which the questioner described as “not affordable.” He asked what the candidates planned to do about rising premiums, deductibles, copays and prescription prices. (See also, The Real Reason Prescription Drug Prices Are So High.)
Clinton acknowledged rising costs, but defended a number of the health reform’s provisions, including the changes that prevent insurers from denying coverage to patients with preexisting conditions or charging women more than men for coverage, as well as the ability for people up to 26 years old to remain on their parents’ plans. She pointed to record levels of coverage in the years since Obamacare’s passage: according to the Census Bureau, the uninsured rate fell to a record low of 9.1% in 2015, from 16.3% in 2010, the year the law was passed.
Her defense of Obamacare came at an awkward time, just days after her husband appeared to decry it as the “craziest thing in the world.” Clinton referred to her plan to bring healthcare costs down, but did not offer details. According to her website, she will “cap prescription drug costs” and “make sure the Secretary of Health and Human Services has the authority to block or modify unreasonable health insurance premium rate increases,” as well as offering a public option to compete with private insurers on state exchanges.
Trump called Obamacare a “disaster” and repeated his pledge to “repeal it and replace it with something absolutely much less expensive and something that works.” His plan includes allowing insurers to sell across state lines and providing Medicaid funding through block grants to states.
According to a study released last month by the Commonwealth Fund, Clinton's health plan – that is, the aspects they felt were concrete enough to attempt to model – would add nearly $90 billion to the federal deficit by 2018. It would, however reduce the number of uninsured individuals from 24.9 million to 15.8 million, and lower out-of-pocket costs for people in all income groups. (See also, Million Lose Health Insurance With Trump, Gain With Clinton.)
Trump's plan would be significantly cheaper, adding $5.8 billion to the deficit, but it would reduce coverage. The total number of uninsured individuals would rise from 24.9 million to 45.1 million. For those under the federal poverty level, the uninsured rate would more than double, from 12.0 million to 25.5 million. The only group to receive better coverage would be those who make over 400% of the federal poverty line: 2.4 million would be uninsured, rather than 2.9 million.
Assessing the Affordable Care Act’s record is not entirely straightforward. State exchanges, which the law created, have seen high-profile defections by major insurers, leading to a widespread lack of competition. Many counties have only one option, while Pinal County, Arizona is expected to have none next year. (See also, Is the Affordable Care Act Failing?)
According to the Kaiser Family Foundation premiums rose 5.1% per year on average between 2009 (Obamacare was signed in 2010) and 2013. While high, that rate is less than the average increase of 13.1% annually over the previous decade.
In response to an audience member’s question about how the candidates would ensure that the wealthiest pay their fair share of taxes, Trump pledged to remove the carried interest provision that allows fund managers to report much of their compensation as capital gains, which are taxed at a lower rate than other income. (See also, Carried Interest: A Loophole in America’s Tax Code.)
Trump implied that Clinton would prefer to hang onto the loophole, since many of her wealthy donors have benefited from it. Clinton began opposing the treatment of carried interest during her 2007 primary run against Barack Obama and John Edwards, according to Politico. Trump asked why she didn’t change it when she was a senator from 2001 to 2009, then answered his own question: “because all of these people give you money.” As Politico points out, the Democrats did not scrap the loophole when they controlled both houses of Congress from 2007 to 2011. (See also, Democratic National Convention 2016 Donors’ Names Released.)
Clinton pointed out that, according to a New York Times report at the beginning of the month, Trump may have used a $916 million tax loss to avoid paying federal income tax for up to 18 years. Asked by one of the moderators, CNN’s Anderson Cooper, whether that report was true, Trump dodged the question, repeating his claim to “understand the tax code better than anybody who’s ever run for president.” Trump has refused to release his tax returns, breaking with decades of tradition for major party nominees.
Another point of contention regarding taxes was the exact nature of the candidates’ promised tax cuts. Trump mentioned the effects of the U.S.’s relatively high corporate tax rate: so-called corporate inversions – he did not use that term – in which companies use mergers to shift to other, lower-tax jurisdictions, and the difficulties the high rate presents to smaller entrepreneurs. He compared the U.S.’s subdued GDP growth rate to China’s near-7%, though he did not repeat his running mate’s promise in the vice-presidential debate to return the U.S. to 3.5-4% annual growth. He promised to cut taxes “big league for the middle class,” adding that Clinton would raise them.
Clinton countered that Trump’s plan “will give the wealthy and corporations the biggest tax cuts they've ever had,” while raising taxes for “millions of middle class families.” According to the conservative Tax Foundation, Trump’s plan – without accounting for an expected positive effect on GDP growth – raises the lowest earners’ (0-10% decile) adjusted gross income by 1.4%, while the highest earners’ (90-100% decile) incomes would increase by 14.6%. For the middle class (30-80%) the figure would range from 3.0% to 8.3%.
In a static scenario that ignores an expected drag on GDP growth, the same group sees Clinton’s plan as having no effect on incomes up to the 90th percentile. Incomes in the 90-100% decile would fall by 0.7%, and incomes in the top percentile (99-100%) would fall by 1.7%. (See also, Good News! Americans are Earning More.)
The national debt received only passing mention in Sunday’s debate. To read more about the effects the candidates’ tax plans are likely to have on growth, federal tax revenue and the national debt, see our coverage of the VP debate.
The Special Interests
Perhaps because it received such exhaustive treatment in the first presidential debate, trade was not a focal point Sunday. Donald Trump took swipes at NAFTA and the TPP, both of which have Clinton fingerprints on them – Bill’s and Hillary’s, respectively – but his opponent largely sidestepped the issue.
Where trade did feature briefly was near the conclusion of the debate, when the candidates responded to a question about energy policy. Between Trump’s deriding the EPA for “absolutely killing” the energy sector and Clinton’s observing that the industry’s woes have more to do with low fuel prices than regulation, Trump wove in an attack on China for dumping steel. (See also, NAFTA, Trickle-Down, Trump’s Wealth: Debate Questions Answered.)
If your only source of information on the American economy were the candidates’ rhetoric, you could be forgiven for thinking that manufacturing is the dominant sector. In fact manufacturing accounted for less than 8.5% of employment in September, according to preliminary Bureau of Labor Statistics data. You might also think that steel was of supreme importance to the labor market, and that below-cost Chinese imports threatened the economy’s basic underpinnings. The USGS estimated in January that blast furnaces, steel mills and iron and steel foundries employed 218,000 people, less than 0.2% of the total workforce. (See also, The Trump vs. Ford Dilemma.)
Both candidates derided special interests during the debate: Trump by suggesting that Clinton should have self-funded part of her campaign with her allegedly ill-gotten fortune, Clinton through her criticism of the Supreme Court’s Citizens United ruling. It would seem that hedge fund managers and their carried interest are not the only special interest throwing electoral priorities off kilter. There is the 1%, and there is the 0.2%. (See also, So You Want to Move to Canada: Good Luck.)