Clinton’s economic plan: raise taxes. Her jobs plan: use those taxes to rebuild infrastructure. While I agree we need to upgrade our infrastructure, as an economic/jobs plan, it sounds completely lamebrained to me. It’s robbing Peter to pay Paul. While some sectors might benefit from the infrastructure spending (engineering and construction firms for instance), all sectors are impacted by the tax hikes. I think it would be devastating to jobs and the economy.
Let’s say you own a business that makes breakfast cereal. Too bad, you’re not going to see a dime of that infrastructure money. But your taxes are sure going up. Your cost of doing business has just taken a big climb. You’re either going to have to increase sales (which, if you could do that, you would have already done so), raise your prices, or cut operating costs. Raising prices will either hurt your consumers, who may already be struggling to make ends meet, or force them to use less product or switch to a less expensive brand. If either of the latter happens, you lose sales. Your business is starting to fall into a death spiral. In order to save the business you have to find a way to cut operating costs. That’s never a good thing for the employees.
If your employees are lucky, maybe they’ll only see their wages frozen and their bonuses suspended. More likely, some will lose their jobs or have their hours reduced. Perhaps you’ll even cut back the labor force enough that you fall below the employee threshold so you can now stop providing health insurance coverage. This might make your business profitable again, but you’re stuck at your current size and can’t afford to expand. At least you saved the company. Had you already been teetering on the edge of viability, the tax hikes might have forced you out of business altogether and thrown everybody onto the street.
For those lucky enough to keep their jobs, their incomes have been reduced and they’ve lost their health insurance. I just hope they can afford to pay their mortgages and stay in their homes. For those out of work, guess what, nobody else is hiring either because they’re all in the same predicament. If you’re one of those out of work, there is one ray of hope – you can put on a hardhat and go see if you can get one of those infrastructure jobs. Of course, having no experience in construction is going to work against you. Perhaps somebody will give you a break and take you on as a common laborer, putting you to work running a jackhammer all day. At least it puts food on the table. I just hope the job doesn’t go to an illegal immigrant first. One more thing, you’ll probably be forced to join the laborer’s union because the democrats are sure to put something in the bill to enrich Hillary’s union buddies.
But hey, you voted for it, right.
And here's an alternative narrative regarding using taxes to rebuild infrastructure.
Sure, it's only going to be engineering and construction firms which get contracts here, and that's going to completely dry up the labour market of skilled construction workers. So there's going to be competition among companies to poach those employees from each other. Presumably, then, there's going to be a market in training up partially skilled people (say, carpenters, plumbers and other people with a background in housing construction).
Then, as the infrastructure improves, traffic bottlenecks disappear and transport companies can deliver goods faster between cities and with lower fuel costs due to being able to maintain steady speeds for greater distances. As a result transport costs go down.
Due to savings in distribution costs, your cereal company can afford to drop the wholesale price of its products, making them more attractive to various supermarket chains. Sales go up and the company goes from two to three production shifts, hiring a few extra staff.
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As an example here in Australia is the highway between Canberra and Sydney, a distance of about 300 kilometres.
About 40 years ago the highway was one lane each way, passing through about four towns of various sizes and maybe half a dozen villages. There was one major hill about 60km south of Sydney (the Razorback for those who remember back that far) which broke the radiators of many cars and trucks. There were lots of passing lanes on hills, but in general the speed limit was at best 100 km/h, down to 60 km/h in the towns, and with several sets of traffic lights in the towns. A trip from Canberra to Sydney could easily exceed four hours, and be much worse in school holidays or bad weather.
Then, over the 1980s and 1990s dual carriageway bypasses were built (including avoiding the Razorback), along with freeway sections which gradually expanded and linked up. Since about 2000 we've had dual carriageway at 110 km/h with no traffic lights all the way from Canberra's edge to Sydney, and in the last few years we've had that continued through Canberra to link up with the highway going south to the snowfields. A trip from Canberra to Sydney is now usually done in under three hours in all conditions, even though the amount of traffic on the road has pretty much tripled.
This was all paid for by governments, state and federal, and the economic benefits to this part of the country are noticeable. Even the bypassed towns haven't suffered: those nearest Canberra and Sydney are now viable places for commuters to live, which they weren't before; many people work in the service centres along the highway; and the towns and villages along the way are tourist attractions in their own right, now that the highway traffic has been removed. On top of that there's the reduced medical and other costs from fewer vehicular accidents, injuries and deaths.
