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How A Clinton Presidency Could Affect Your Finances

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Heather Long, CNN, Hillary Clinton

With Heather Long, CNN’s Senior Markets and Economy Writer

It’s a lot more fun to focus on the controversies surrounding both Donald Trump and Hillary Clinton than to look into what they actually stand for. But before anyone goes into a voting booth on November 8th, it’s imperative to look past the media noise to find the substance and to understand the core issues that anchor each candidate’s platform.

Heather Long, who holds a master’s in financial economics from Oxford University and is currently CNN’s Senior Markets and Economy Writer discusses Hillary Clinton’s economic policy and how the average citizen would be impacted were she to be elected.

In contrast to Trump’s economic message of “America first”, and Hillary’s has been tagged “families first”, a platform that Heather examines in depth. While Trump wants to start on day one by tackling our trade policy, Hillary’s primary goal in the first 100 days is to bump up infrastructure spending.

At the heart of Hillary’s plan for the first 100 days is bumping up infrastructure spending, something that both sides of the aisle concede is badly needed. Across the nation, many of our roads and bridges require repair and maintenance work, and many economists feel that the jobs created by these projects could boost the overall economy and growth rate.

Aside from infrastructure, Hillary has proposed four key programs that support her family first position:

  1. Paid family leave without fear of losing employment for new parents.
  2. Free pre-school for every 4-year-old in America.
  3. An option for debt-free college at a state university or community college if certain requirements and contributions are met.
  4. Expanding some social security benefits, for instance, in the case where an elderly woman would retain full payment when her spouse dies.

How will all these projects be paid for? Hillary’s tax plan is to raise the tax rate on people who make a million or more, ensuring that this group pays a minimum rate of 30% and, for those who earn over 5 million, she wants to place a surcharge of 4%. In addition, the threshold for estate tax would be reduced to 3.5 million (from 4.47) and the taxable rate on that excess would go from 40% to 45%.

Many independent organizations (Tax Policy Foundation and Tax Policy Center) have stated that her plan, in its present form, is basically revenue plus. Heather cautions, however, that Hillary may be “a lot closer to revenue neutral, but whether or not she has a surplus certainly remains to be seen.”

Some changes to the tax code are also on her agenda, rendering it even more complicated than it presently is. Trump, on the other hand, wants to simplify the tax code, reducing it to three brackets.

Heather feels that no matter who is in office, of all of these plans, both infrastructure spending and corporate tax reform have the best chance of getting through a Republican House.

A candidate’s campaign program is never set in stone, nor can it be since we are a nation built upon a two-party system and have a government with built-in checks and balances. That being said and acknowledged, the obligation of every citizen is to have a comprehensive understanding of each candidate’s platform.

Next week, Onthemoneyradio.org will present the economic plan of Donald Trump and the Republican Party.

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On September 22 at The Boca Raton Renaissance Hotel, Steve Pomeranz invites all interested parties to an open discussion of what the outcome of this presidential election means to your money, your portfolio, and your financial future.  Click here to sign up.


Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital.  Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions.  Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances.  The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.

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Steve Pomeranz : On September 22, I will be inviting people to join me in person as I discuss what this presidential election means to your money, your portfolio, and your finances; and I’ll talk more about that in detail at the end of the segment, so stay tuned for that. (Click here for more information.)  Today I begin the discussions on the various candidates’ proposals and the effects they’re going to have on your pocketbook.  We’re going to divide this discussion into two segments.  Today’s talk will be about Hillary, and we’ll tackle Donald next time.  To get started I’ve invited CNN’s senior markets and economy writer, Heather Long to join me.  Welcome, Heather, welcome to the show.

Heather Long: Thank you.  Good to be here.

Steve Pomeranz: Before we get to Hillary, in particular, let’s start with the tone of the discussions put forth by both.  Hillary is saying family first, Trump is saying America first.  Is that just election rhetoric or does that actually have some real meaning?

Heather Long:     Well, yeah, it totally makes for nice speeches on the stump, but I do think it has a little bit of actual resonance.  Trump with this whole America first—obviously, a big part of his campaign has been the trade issues, right?  Really, he keeps saying that they’re disastrous policies that we have in place, particularly with China and Mexico, and he wants to level the playing field doing this America first concept by potentially slapping tariffs, large fees on goods that would come in from China or Mexico.  That’s been a big part of his message and his sell from day one and that’s really crystallized in that America first concept.

On the flip-side you have Clinton, what does family first mean?  Well, she’s trying to say…look, her plan is to tax the rich and then take that money and redistribute it to lower and middle class families by doing, paying for programs like, “Hey, let’s have preschool for all 4-year-olds in America.  Hey, let’s have paid family leave.” That’s kind of the contrast there.

Steve Pomeranz : All right, so truly for—without getting into the details— there seems to be some substance to this idea of America first versus families first, and so we’re going to talk about Hillary and her programs for family first.  You know, I—well, I guess we’ll get into this later—but I will want to kind of discuss this whole idea that you even mentioned that taxing the rich and redistributing.  You know that word “redistributing” is such an important word; it’s kind of a Bernie Sanders word.  We’re not here to get into that kind of a discussion. Let’s talk about some of the programs that Hillary is advocating, and I’m going to start you off here:  275 billion dollars of new spending in her first term to basically put towards America’s roads and bridges.

Heather Long:     Yeah, this is an issue that is really the heart of her plan, and that is to bump up what we call “infrastructure spending”.  The roads, the bridges, she also talks about making better internet waves or channels, however you want to say that.  Internet super-highways, as well—fixing those.  She actually wants to do that her first hundred days, that’s like her day one plan.  Again, Trump wants to do day one on the trade deals; Clinton wants to really push hard on the infrastructure plan.  I’ve noted that a lot of people call it her best economic idea.  It’s something that a lot of economists across the political spectrum and folks from Wall Street to Main Street, most of us—we drive around; we see the bad roads; we know they need improvement; and, from an economic perspective, this would be a big boost to the economy to inject this kind of level of spending.

Steve Pomeranz: Well, I think the current administration has been attempting to do similar things, but they’ve been basically blocked by Congress, and I guess the question as to whether she’s going to be able to push this through is going to be very much dependent on what the legislature looks like if she is, in fact, elected.  Now one of the reasons that-

Heather Long:     I think you’re right, sorry, if I could jump in.

Steve Pomeranz : Yeah, please.

Heather Long: I would just say this probably has the best chance—the two items that have the best chance against a Republican House, regardless of whether Trump of Clinton is elected, are infrastructure spending and corporate tax reform.  Power…

Steve Pomeranz : I guess the question, yeah, go ahead.  Go ahead, I’m sorry.

Heather Long:     I mean, even at the end of last year, it didn’t get a lot of attention, but President Obama and the House Republicans came to an agreement on an expanded transportation bill, transportation highway bill.  Not the sexiest thing to talk about, but it was a first go at bumping up infrastructure spending, so there is appetite.

Steve Pomeranz : Okay, well but the big question is how is it going to paid for, and this is one of the big differences-

Heather Long:     Yeah.

Steve Pomeranz : …between Trump and Hillary’s plan.  Let’s stick on Hillary for right now.  She wants to boost government spending pretty dramatically and she, like you mentioned, she intends to tax the rich and redistribute the wealth to benefit the middle class and the poor, and she also wants to give…you know she has initiatives helping families.  We’ll get into that in a minute, but let’s talk about how, in effect, she plans to pay for this.  Maybe we can talk a little bit about Trump’s tax proposals as well.

Heather Long:     Sure.  It’s basically she said she won’t raise taxes on people earning $250,000 or less.  So a pretty high cut off for middle class there.  That’s kind of the number that she stuck with, really since her first campaign in ’08.  Who’s she going to tax?  Well, people, she would raise the tax rate on people who make a million or more so it’s called the-

Steve Pomeranz : Well, she’ll make sure that the minimum tax they pay is 30%.

Heather Long:     That’s right.  That’s right.

Steve Pomeranz : Okay.  That’s the-

Heather Long:     Which is basically raising it.  Yep.

Steve Pomeranz : …The Buffet Rule, so called, is called that because Buffet basically asked why he is paying less tax rate than his secretary.

Heather Long:     Then the other piece of that is there’ll be an additional, you might call it a surcharge, a luxury surcharge on people who earn 5 million or more a year.

Steve Pomeranz : You know, I mentioned that to somebody…and I’m an investment advisor and I deal with high net-worth individuals, and they ask me, “Well, how many people do you know that make over $5 million in income a year?” I don’t know any, personally.  Do you know any people who make over 5 million, so that is a fairly esoteric part of the economy, and she wants to charge them a surcharge of 4%.

Heather Long:     That’s right.  That’s right. That’s where a lot of the income’s coming from.  On the democratic side, they’re also interested— another thing, it’s sometimes called the death tax or the estate tax that can also help raise a decent amount of revenue, if you tweak that and raise those rates or lower the threshold for …

Steve Pomeranz: The threshold, yeah, right now the threshold’s at about 5.5 million per person.  She wants to reduce it to 3.5 million, and she wants to raise the tax on that excess from 40% to 45%.

Heather Long:     Exactly, and that’s really…a lot of times when people talk about inequality in America, they talk about this, they really go after this estate tax, this notion of passing property or passing assets from one generation to the next. And it’s one thing for all of us to compete against each other in our jobs and our incomes and our investments, it’s another thing when you start off with a big, big nest egg or a big, big pocketbook to begin with.

Steve Pomeranz: On the other side of the coin, people complain that this money has already been taxed and now the government is taxing it again.  So that’s…

Heather Long:     Exactly.

Steve Pomeranz : …the argument on the other side of the coin.
What plans, what programs, other than rebuilding roads and bridges, does Hillary have in mind for these excess revenues that will be coming in?

Heather Long:     I talk a lot about four key ones.  One is this notion of a paid family leave, so giving new parents time off, but they would still be paid so you wouldn’t lose your job if you have a baby and you need to take some time off.  Preschool’s a big one for her.  Again, every 4-year-old in America would have access to a free preschool program.  One that she’s kind of adopted from Bernie Sanders is this concept of debt-free college.  It’s a little bit—read the weeds a little bit there—it’s not free college, she’s saying that there would be an option, such as going to community college or going to a state university that would, between the tuition you pay, the grants you might get, the financial aid, and you might probably have to work a job on campus.  If you put all that together, you could graduate without debt.

Steve Pomeranz: It’s not a free lunch, basically.

Heather Long: That’s right.  I think people don’t realize that the student and probably the family would still have to make some contribution.  From working over the summer at a summer job, from having an on-campus job, so you know, it’s not like, oh, suddenly it’s all free.

The last one that people don’t really talk about as much, but it could have an interesting impact, that’s she wants to expand social security a little bit.  Obviously, she’s very concerned about women, and there’s a situation in America where there are a number of widowed women, older women, they’re outliving their spouses, and when their husbands die, they only get a fraction of the payment, social security payment, that they were getting.  It’s causing a number of these elderly women to fall into poverty, so she’s advocating that they ensure the widows would still receive the payment they would have received while their husband was still alive.

Steve Pomeranz : I think she’s planning to have that paid for by increasing the threshold of payroll taxes on those making over, I think it’s $250,000.  In other words, today you only pay payroll taxes to social security up to about $118,000 and after that, you pay no more social security tax.  I think she wants, if I’ve got this right, I like to get your opinion on this, but I think she says that’ll still be in place until you make $250,000 and then you’ll start paying once again.

Heather Long:     Exactly.  You’ve got it right.  I think the big takeaway here is, overall, a lot of Hillary Clinton’s plans for the tax code are really tweaks to existing thresholds, existing policies.

Steve Pomeranz : She hasn’t said anything about tax brackets.  Right now we have about five or so tax brackets.  I know Trump mentioned bringing the tax brackets down to three with a lower top bracket, but I haven’t seen anything that Hillary’s put out that’s actually stated what the tax brackets would be.  I’m assuming they’ll stay the same but have these extra surcharges based upon income levels.

Heather Long:     Yeah, that’s basically correct.  Her policies do specify the tax brackets.  You can go to like Tax Foundation has analyzed her plans and it shows you.  It’s a pretty similar breakdown to what currently exists in terms of the tax brackets.  Again, I think you make a good point, that while Trump clearly wants to simplify the tax code, and you can argue if that’s a good thing or not for inequality or the middle class or otherwise.  I think it’s pretty clear that Hillary Clinton would make it a more complicated tax code, in some regards, by introducing these new fees and surcharges and also introducing some new tax credits.  Again, it’s meant to tax the rich and help the middle class and poor, but it is a more complicated system to do that.

Steve Pomeranz : I think a number of independent organizations have basically said that her plan is revenue plus.  In other words, that there will be enough revenue created to pay for these.  However, of course, they don’t really address if, in fact, these new taxes would cause a drag or what the economic effect might be on them, as well.  In terms of pure numbers, Tax Policy Foundation and Tax Policy Center have basically said that it was net positive with regards to the national debt.  Is that right?

Heather Long: You got it.  I would just have an asterisk there that those analyses were done several months ago and they’re very valid, but, since then, she, like most candidates, has continued to promise more, promise some more spending.  I think people sort of say she’s a lot closer to revenue neutral, but whether or not she has a surplus certainly remains to be seen.

Steve Pomeranz : Okay.  My guest has been Heather Long, CNN senior markets and economy writer.  Heather Long, thank you so much for joining us.

Heather Long:     Thank you, take care.

I've been an investment strategist and adviser for over 35 years, leading with a mission of unbiased advice to educate and protect listeners on my weekly radio show on NPR affiliates nationwide. I have been named a “Top 100 Wealth Advisor” by Worth Magazine and “Top Advisor” by Reuters.