Is Trump a closet liberal and Clinton a secret conservative?

Billionaire Republican has taken positions to the left of his Democratic rival
© Bloomberg & Getty

Listen to this article

00:00
00:00

Donald Trump’s suggestion that he could accept higher taxes on the wealthy is the latest example of the mogul positioning himself near or to the left of Hillary Clinton on a range of economic policies as the candidate defies Republican orthodoxy and scrambles party traditions.

Mr Trump said on Sunday he would be open to raising taxes on the rich if it enabled him to strike a legislative deal with Democrats, undercutting the thrust of his official tax plan, which would cut taxes for all Americans and deliver the biggest savings to the wealthy.

“I’d say it’s unusual, but I’d give Mr Trump marks for candour,” said Terry Haines, an analyst at Evercore ISI. “I think the electorate understands that on many things like this party positions are a starting point.”

By straying on to Democratic turf, Mr Trump is creating challenges for Mrs Clinton, the likely Democratic nominee. He has mooted a large infrastructure programme, a crackdown on mergers designed to cut tax bills and the scrapping of a key Wall Street tax break — all policies that could sit comfortably in a Democrat’s policy platform.

He has also run roughshod over traditional Republican concern for balanced budgets, as his tax cuts — at least as originally proposed — deliver a multitrillion-dollar debt blowout.

“It is striking that at a time of record debt levels no candidate has anything close to a credible plan to address these challenges,” said Maya McGuineas, president of the Committee for a Responsible Federal Budget. “At the same time the Trump numbers are many multiple times worse in terms of how they would affect the debt.”

Hope Hicks, spokeswoman for Mr Trump, said his plans were “the exact opposite of tax-and-spend Hillary Clinton”, citing proposals including reduction of regulation, repeal of the Affordable Care Act and “massive tax relief” for Americans.

Mr Trump’s often contradictory policy stances make comparisons difficult. But now that he is the presumptive Republican nominee and Mrs Clinton is on course to win the Democratic nomination, how do their platforms line up?

Government spending

Mr Trump’s proposals include expanded access to medical care for veterans and protecting entitlement programmes such as social security and Medicare, while repealing the Affordable Care Act. Coupled with his original tax-cutting plans, which now appear to be up for negotiation, the proposals could add between $10.8tn to $15.45tn to the debt during the next 10 years, according to estimates released on Monday by the CRFB.

Mrs Clinton’s spending plans include support for college students, an expanded Affordable Care Act, more early childhood education, and a boost to infrastructure spending. The proposals would cost $1.8tn over 10 years, countered with $1.6tn of offsets.

Trade

Mr Trump has condemned the proposed Trans-Pacific Partnership as a “horrible deal” and wants to scrap the North American Free Trade Agreement struck with Mexico and Canada in 1994. He has pledged to declare China a currency manipulator and threatened to impose high tariffs on Chinese and Mexican imports.

Mrs Clinton has criticised the TPP, reversing her stance on the deal. However, her broader approach to trade is less hostile than Mr Trump and Bernie Sanders, who “really trash the merits of globalisation”, said C Fred Bergsten of the Peterson Institute for International Economics.

Corporate tax

Mr Trump is proposing a business-friendly cut in the top rate of corporate income tax from over 39 per cent to 15 per cent. But he has dismayed corporate America my mirroring Democrats’ criticism of companies cutting their tax bills using “inversion” deals, which shift their addresses overseas. He wants to deter inversions by imposing a one-off 10 per cent tax on existing offshore earnings and ending the non-taxation of unrepatriated profits in the future.

Mrs Clinton has taken an equally tough line against inversions, vowing to work with Congress to impose an “exit tax” (at an unspecified rate) on the untaxed overseas earnings of companies doing such deals. She has not proposed any change to the headline corporate tax rate.

Personal tax

Mr Trump’s official plan would give the wealthiest Americans the biggest tax cut by reducing the top tax rate from more than 39 per cent to 25 per cent. But on Sunday Mr Trump changed his tune, saying the rich would end up paying more once he had bartered a viable tax deal with Democrats in Congress.

On Monday, Mr Trump appeared to shift again, insisting any tax increase negotiated with Congress would represent a reduction on current rates.

The Clinton campaign responded by saying that such “makeover attempts won’t work”. Mrs Clinton has proposed a series of small-bore measures to raise more tax revenue from the rich. But overall “the best way to characterise Hillary’s plan is it’s basically the status quo”, says Kyle Pomerleau of the Tax Foundation, a right-leaning think-tank.

Immigration

Mr Trump and Mrs Clinton stand miles apart on immigration, an issue with big implications for the US labour force. Mrs Clinton has been courting the Hispanic vote by committing to comprehensive reform legislation that would include a path to full citizenship for unauthorised immigrants.

By contrast, Mr Trump has taken a hardline stance on immigration, vowing to build a wall between the US and Mexico and to deport approximately 11m immigrants living in the US illegally. The American Action Forum, a right-leaning think-tank, said that once all unauthorised immigrants working in the private sector were deported — some 6.8m people — industry output would fall by $380bn to 620bn.

Infrastructure

Mrs Clinton advocates a five-year, $275bn infrastructure plan, which she says would be funded through business tax reform — but she has not given specifics of what those reforms would be. Most of this would be allocated to direct public investment, but $25bn would go towards an infrastructure bank, something Barack Obama has also backed during his presidency.

Unlike many of his fellow Republicans, Mr Trump also has signalled he wants to see more public spending on infrastructure, saying this would get more people to work and renew America’s crumbling roads and bridges. He has not put any figures on his plans, nor set out a specific funding mechanism.

Wall Street taxation

Both contenders want to scrap a tax break worth billions of dollars to private equity and hedge fund managers. The preferential treatment of “carried interest” lets the managers of investment partnerships pay a lower tax rate than regular workers and has become a potent symbol of an economy that some voters say is rigged for the wealthy.

Wall Street reform

Both Mrs Clinton and Mr Trump find the politics of financial reform complicated by their own ties to Wall Street. Mrs Clinton has not endorsed her rival Mr Sanders’ call to break up the big banks, but says the Dodd-Frank reforms should be strengthened with a special focus on risks emanating from shadow banks such as money market funds.

In an early presidential debate Mr Trump declared bank lenders to be “total killers”. But recently he has taken a more conventional Republican stance against Dodd-Frank, saying it should be repealed or overhauled and voicing the Wall Street-friendly complaint that “regulators are running the banks”.

Listen to the podcast US election countdown: Fast forward to the general race

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.