By Caroline Baum, MarketWatch
The results of Super Tuesday’s primary contests may not have sealed the deal for presidential front-runners Hillary Clinton and Donald Trump, but they made their path to victory a whole lot clearer.
True, Bernie Sanders won in four of 11 states on the Democratic side, including his home state of Vermont. Ted Cruz’s three-state win, including delegate-rich Texas, and Marco Rubio’s first-place finish in the Minnesota caucuses robbed Trump of a sweep. But the size and geographical scope of Trump’s and Clinton’s victories have put the nomination out of reach for the other candidates.
Ohio Republican Gov. John Kasich is determined to soldier on; his campaign’s staying power will be determined by whether he wins the winner-take-all Ohio primary on March 15.
Before there’s a further winnowing of the field, it might be worthwhile examining which of the candidates would be best for the U.S. economy. That assessment entails tangibles, such as policies that would foster economic growth, new business formation and job opportunity, as well as intangibles, including the ability to heal the partisan divide in Washington that impedes action on much-needed tax reform and simplification.
At polar extremes policy-wise are Republican Donald Trump and Democrat Bernie Sanders. In both cases, their party designation has little to do with their politics or policies. Sanders is a Democrat for presidential-election purposes, an independent in the U.S. Senate, and a self-described “democratic socialist.” Gallup reports that the most common response when Americans are asked what comes to mind when they think of Sanders is “socialist.” And that’s not a compliment.
The socialist stigma hasn’t tempered enthusiasm for the Vermont senator among millennials, who are too young to remember the devastation exposed on the other side when the Berlin Wall came down in 1989. The specifics of his policies matter less than the concept, which has proved to be an utter failure wherever and whenever it was tried, including the early 19th century Utopian socialist communities in the U.S.
A group of prominent liberal economists recently challenged estimates by a private economist — promoted by the Sanders campaign — that its tax-and-spend policies would have “huge beneficial impacts on growth rates, income and employment that exceed even the most grandiose predictions by Republicans about the impact of their tax cut proposals.”
There is no concession for idealism in this presidential contest. Sanders’s failing grade in economics, a subject all socialists flunk, puts him at the bottom of the list when it comes to economic impact.
What about Trump’s policies? A big unknown, as I wrote here last week. He was a Democrat before he became a Republican. His focus on protectionist trade policies are more in tune with left-wing trade unions than GOP free-traders.
The best news about Trump is that most of the damage he would inflict on the economy through high tariffs and a likely trade war would require legislative approval, a constitutional prerequisite that seems to have eluded the first-time candidate. Trump has changed positions — “evolved,” as he calls it — on so many issues, sometimes in the same sentence, that what he actually stands for is a mystery.
In terms of his interpersonal skills, Trump has already issued a vague threat to House speaker Paul Ryan. He gets an “F” in the category, “plays well with others,” and an “incomplete” on the impact of his policies.
Ted Cruz would be equally divisive as a leader. He is already widely disliked among his Senate colleagues, a badge that he wears with pride. It’s hard to see how much healing goes on with Cruz in the White House.
Cruz’s focus has been on constitutional and social issues rather than fiscal ones. That said, he has proposed to restructure the U.S. tax system , repealing the payroll, corporate income, estate and gift taxes and replacing them with a 10% flat tax on individuals and a 16% value-added tax on businesses. Those changes would increase incentives to work, save and invest (good), increase the federal debt (bad), and are a nonstarter given Congress’ inability to take even baby steps on tax reform.
When Hillary Clinton scolds U.S. businesses for incorporating overseas to take advantage of more favorable tax treatment, she sounds as clueless as President Barack Obama. Writing additional rules and regulations and imposing penalties when a simple reduction in the corporate tax rate to the OECD average of 25% would do the trick is just plain dumb.
Clinton proposes to raise taxes on the wealthy, cut taxes for the middle class and small business, raise the minimum wage and raise the short-term capital gains tax rate to create a disincentive to “quarterly capitalism,” the tendency of companies to focus on short-term earnings ahead of long-term investment. Adding a few thousand more pages to the tax code does not sound like a recipe for economic growth.
Rubio, the default establishment candidate, and Kasich get good grades for upbeat attitude and demonstrated ability to work across the aisle; in Kasich’s case, at both the federal and state level. Both candidates would lower tax rates, flatten income tax brackets, reduce the corporate tax rate, implement a territorial tax system and allow immediate expensing of investments. All good ideas, which require congressional action.
Kasich says he will balance the budget in eight years, which is a challenge because the “era of declining deficits is over,” as Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in response to the Congressional Budget Office’s most recent projections.
A balanced budget is a noble idea. Yet there is an irreconcilable difference, evident in this and other proposals, between what the public wants and what it is willing to pay for. There are not enough rich people in the country to tax, even at usurious rates, to pay for the promises the U.S. has made to the elderly, not to mention new campaign promises, such as free tuition.
No candidate wants to deliver the bad news at campaign events, especially when the goal is garnering votes. Maybe that’s why Trump’s “Make America Great Again” plays so well to audiences. After all, everyone is in favor of greatness — especially when there’s no price tag attached.