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Clinton, Trump Economic Advisors Spar in Debate

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“We’ve got to repeal Obamacare; that’s one of the first things we’ll do,” under a Trump administration, Stephen Moore, Donald Trump’s economic advisor said Wednesday during a raucous debate in Washington with Hillary Clinton’s economic advisor, Gene Sperling.

“We can cover every single American without insurance,” Moore told the audience during the event titled “How Would Clinton and Trump Manage Our Money,” which was held by the Committee for a Responsible Federal Budget at George Washington University in Washington.

While Obamacare can be improved, Sperling countered, despite the fact that the country is in a slowdown, the Affordable Care Act is “still providing 21 million people” who weren’t covered previously with healthcare coverage; this “is quite the evidence that it is possible to do more with less when you have smarter healthcare policies.”

Maya MacGuineas, president of the Committee for a Responsible Federal Budget as well as the head of the Campaign to Fix the Debt, who moderated the discussion, noted that the first presidential debate held Monday between Clinton and Trump failed to address entitlements—Social Security, Medicare and Medicaid.

“Social Security and healthcare account for well over 50% of the total federal budget, and over three quarters of the projected growth going forward, and they took up 0% of the discussion,” she said. She then asked the economic advisors what their candidates’ plans were for Social Security.

Sperling, who has also served as economic advisor to President Barack Obama, replied that when talking about Social Security, Medicare and Medicaid, it’s not that “costs are rising faster than they should,” rather “there are just more people. When we’re talking about Social Security taking up more, it’s not because we’re too generous. It’s simply because we have a baby boom, and there’s going to be more people.”

Moore, Distinguished Visiting Fellow, Project for Economic Growth, at The Heritage Foundation, noted that while he alone, not Trump, has espoused privatization measures for Social Security, a Trump administration would not “cut” Social Security.

Obamacare, or the Affordable Are Act, on the other hand “is a true catastrophe,” Moore added. “Every month we’re seeing the insurance companies drop out, the premiums go up. Thanks to Obamacare, my premiums this year are going up about 16%.”

The country’s goal, Sperling added, should be to ensure policies are in place so that people can have “strong home equity, strong Social Security and a strong pension.” However, “we did see in the financial crisis that your pension and your house value can be at risk,” so the “one thing that is rock solid” and not subject to the whims of the market, is Social Security, he said. “We should be thinking about policies to expand Social Security,” adding that Clinton has put forth proposals on a caregiver credit as well as raising the minimum benefit.

MacGuineas pointed out that the next president will enter office with the national debt at post-World War II record high levels. Debt held by the public currently totals over $14 trillion—nearly 77% of Gross Domestic Product—and is projected to grow as a share of the economy to almost 86% by 2026, and to about 150% by 2050, she said the center’s research has found.

Indeed, in its most recent report, “Promises to Price Tags,” which incorporates new policies both Clinton and Trump have added since June, the center found that rough and preliminary estimates of these new policies show Clinton’s plans would increase the debt by $200 billion over a decade above current law levels (compared to a prior estimate of $250 billion), and Trump’s plans would increase the debt by $5.3 trillion (compared to a prior estimate of $11.5 trillion).

“As a result, debt would rise to above 86% of GDP under Clinton and 105% under Trump,” the report found.

When addressing which policies will “do the most for growth,” as presented in the question posed by MacGuineas, Moore responded that “tax policy is so critically important.”

He noted his time helping former President Ronald Reagan craft the 1986 Tax Reform Act, which he called “an amazing accomplishment.”

Said Moore: “What we did was very simple: we cut the rates and we broadened the base, making for a much more efficient tax system…. why can’t we do that [1986 reform] again? It’s been 30 years since we cleaned out the barns of the tax system, and it’s messy and smelly in there now. We’ve got to get the rates down and get rid of the deductions.”

Moore relayed that Donald Trump asked him recently to summarize the difference in his and Hillary Clinton’s tax plans. His response: “We want to cut taxes to make the American economy grow. Hillary Clinton wants to raise taxes to make the government grow.”

Trump would also drastically reduce the current corporate tax rate from 39% to 15%.

“Our corporate tax system is a complete disaster,” Moore said. “We are exporting our jobs and exporting our businesses—Burger King, Walgreens wants to leave, Pfizer wants to leave. …they’re leaving because out corporate tax is way too high.” So the Trump team came up with a 15% corporate tax rate. “We want to make the U.S. go from the highest corporate tax rate to one of the lowest,” behind Ireland at 12.5%.

Sperling, however, shot back that “we have a fundamental difference in what leads to stronger growth: I think we need greater demand from the middle class, I think we need measures that get more of them involved; I think we do have a problem with people who were hurt during the recession and have not recovered. We need a tighter labor market to give them a chance to come in.”

Clinton and Trump have a fundamentally different approach to tax policy, Sperling said, with Trump espousing “cut taxes for the most well off and this will lead to dynamic impacts that will trickle down to the middle class. There is no evidence that this has worked.”

Sperling argued that the country’s “problems” are “mostly from the financial crisis, which were not a failure of progressive economics. It was a failure of a period of cutting taxes for the most well off and a completely hands-off approach to Wall Street and finance that led to us, as a country, having the worst financial crisis and the greatest run up in the debt—and most of the problems we’re dealing with.”

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