California Forum

Both Clinton, Trump focus on middle class; that has Wall Street worried

Donald Trump and Hillary Clinton would take the economy in different directions, but they have one thing in common – their focus on the middle class has Wall Street concerned.
Donald Trump and Hillary Clinton would take the economy in different directions, but they have one thing in common – their focus on the middle class has Wall Street concerned. The Associated Press

Amid partisan furor over clashing red and blue visions of America and the uproar over Donald Trump’s hassling a Gold Star Muslim family, it’s easy to miss what the two rivals have in common – a focus on inequality as the driving issue of the campaign and on the need to offer a better deal to the middle class.

This year, the captains of industry and finance have been sidelined, and they know it.

“Everything has been upended,” John Engler groused to a New York Times business analyst. Engler is CEO of the Business Roundtable, organ of America’s 200 most powerful corporate CEOs. “We’re now faced with two candidates who, when it comes to the United States economy, have diametrically opposite viewpoints from us. It’s a cause for great concern.”

The grand prize this year is an aroused Middle America – the rebellious legions mobilized by Bernie Sanders savaging a system selfishly rigged by the rich; angry, blue-collar Americans betting on Trump to settle scores with business bosses whose honeymoon with globalism left Main Street in the dust; Hillary Clinton’s millions of single moms struggling to juggle part-time jobs and others demanding equal pay; or the fleet of new college grads fishing for steady work in a gig economy while buckling under the weight of $1.2 trillion in student debt.

In fact, what we may be witnessing is the twilight of an era. For nearly four decades, the business establishment has captured policymakers in both parties with the laissez faire creed of Chicago University economist Milton Friedman, who preached the imperatives of an untrammeled free market and the single-minded pursuit of “shareholder value” as the formula for creating prosperity for America.

But this year, corporate trickle-down economics are not selling so well. They’re not even being marketed by either candidate.

Small wonder. Corporate profits may be running strong and the stock market hovering near record highs. CEO pay at major companies runs close to 300 times the salaries of average workers, according to the Economic Policy Institute. But the household income of a typical American family, adjusted for inflation, is lower now than in 1999, and at $7.25 an hour, the federal minimum wage is poverty pay, 30 percent below the inflation-adjusted level in 1968.

With Americans in a sour mood over these gaping inequalities, both Clinton and Trump cast themselves as Champion of the Middle Class. Clinton declares that her primary mission is to create an economy that “works for everyone, not just those at the top.” Trump egotistically boasts to Middle America, “I am your voice.”

The question, of course, is: How serious are they and what can they deliver?

Curb banks, bolster Social Security

Trump and Clinton both target Wall Street. They have gone on record against trade deals that have hollowed out a newly vocal working class. Astonishingly, both Republican and Democratic party platforms call for tougher regulation of America’s mega-banks, restoring Glass-Steagall, the New Deal law that walled off the casino of Wall Street investment banking from the commercial banks the rest of us use.

On Social Security, both Trump and Clinton defy House Speaker Paul Ryan and other small-government Republicans who want to prune and privatize the nation’s retirement system. Trump pledges to protect it. Prodded by Sanders, Clinton says she’ll expand it.

Different paths on jobs and taxes?

But on jobs, taxes and the minimum wage, Trump and Clinton part company. Trump would cut taxes on the rich and on corporations. Clinton would raise taxes on the top 1 percent to 2 percent. Trump would keep the federal minimum wage at $7.25; Hillary would raise it to $12.

On jobs, Trump’s formulation is to “bring jobs back from China, Mexico, Japan, Vietnam” and somehow to repatriate the $2.5 trillion in profits that American multinationals have stashed overseas and get them to invest it at home.

Trump claims he’ll give American workers a boost by renegotiating NAFTA, President Bill Clinton’s trade agreement with Mexico and Canada. And if the Mexicans won’t play ball, he’ll pull out of NAFTA as well as keep the U.S. out of President Barack Obama’s proposed Pacific Rim trade pact. To stop America’s job drain to China, Trump vows a crackdown on China’s currency manipulation, its subsidies to Chinese exporters and any cheating on global trade rules. And if Beijing won’t behave, Trump threatens tariffs and other retaliation.

By contrast, the cornerstone of Clinton’s job strategy is a home-grown partnership. In her first 100 days, she promises to launch the largest investment of public and private capital in 60 years to modernize America’s transportation system – the biggest since President Dwight Eisenhower got Congress in 1954 to fund the interstate highway system. Cost in the trillions, jobs in the hundreds of thousands or more, her campaign says. Plus investment, Clinton says, in the U.S. communication grid, green energy and high-tech R&D.

Will either candidate’s strategy work?

Trump’s trade-war scheme gets poor grades from economists and business leaders such as billionaire investor Warren Buffett, CEO of Berkshire Hathaway, and former New York Mayor and multibillionaire businessman Michael Bloomberg.

Speaking as a political independent at the Democratic convention, Bloomberg mocked Trump’s business skills. Trump, he said, has left behind a trail of bankruptcies, lawsuits, angry shareholders and “contractors who feel cheated and disillusioned customers who feel ripped off. Trump says he wants to run the nation like he’s run his business? God help us!”

A more detailed analysis by Moody’s Analytics, which is partly owned by Buffett’s holding company, forecast that if Trump were to carry out his tax cuts and tariff wars, economic inequality in the U.S. would worsen, about 3.5 million Americans would lose their jobs, home prices would fall, and the stock market would plummet.

“It will be a difficult four years for the typical American family,” Moody’s concluded.

Hillary Clinton’s plans for a massive infrastructure push have won more credibility among economists and even business leaders. But her plan faces formidable political obstacles. Republican leaders in Congress have consistently opposed President Barack Obama’s efforts to fund a major push on America’s infrastructure.

Unless Democrats win control of Congress in November, the Clinton job strategy may be stuck in a new round of gridlock. So, if middle class voters want a better deal from Washington, D.C., they had better pick their party and vote down ticket as well as for the top spot so they can get a government that can carry out the policies that Americans vote for.

Hedrick Smith is author of “Who Stole the American Dream?” and executive editor of the website Contact him at