Mark Zandi of Moody’s Analytics discusses the economic plans of the two U.S. presidential candidates.

Behind the circus atmosphere of this year’s election stand two competing sets of economic proposals that would have very different — and serious — effects on the nation and the world.

The Republican nominee, Donald J. Trump, has proposed major tax cuts that observers say would incentivize work, but force hard choices of deep cuts in government spending or a ballooning deficit. He has floated the idea of imposing steep tariffs on goods from China and Mexico, and proposed major limits to immigration.

The Democratic nominee, Hillary Clinton, goes in the other direction, proposing raising revenue largely through taxing the very wealthy, and offering an array of tax relief proposals for the middle class.

The candidates will compete for the hearts and minds of an electorate that has seen an economy that has recovered from the Great Recession, but has been transformed in structure, from old-style manufacturing to high-tech industry and services. Some have been left behind along the way, namely the factory workers of the Rust Belt, where Trump has found support.

“Right now, we have an economic problem in the U.S. We are a consumer-driven economy, but the middle class is suffering.” –Mauro Guillen

Economic growth during the Obama years has been slow, in stark contrast to the momentum and heights of the 1990s and the years leading up to the recession. Nevertheless, job growth in recent months has been good, and the unemployment rate stands at an impressive 4.9%.

The engine of economic growth in recent years has been the American consumer, says Wharton management professor Mauro Guillen, who is also director of The Lauder Institute.

“Right now, we have an economic problem in the U.S. We are a consumer-driven economy, but the middle class is suffering,” he said.

Talk on Taxes

Clinton’s plan is aimed at delivering relief to those middle-class voters, with proposals like helping people afford child care, making college more affordable and making it easier to deal with the burden of college debt. She has proposed raising the minimum wage from $7.25 to $12 an hour, and making health care more affordable. (Trump this summer proposed a $10-an-hour minimum wage, and making child care expenses tax-deductible).

Clinton has proposed a $275 billion investment in infrastructure and the accompanying jobs.

She has outlined how she would pay for these programs, supporting the “Buffett Rule,” named after Warren Buffett’s contention that millionaires and billionaires shouldn’t pay a smaller percentage of their income in taxes than middle-class households. She would require Americans who make more than $1 million pay at least 30% of their income in taxes. Americans making more than $5 million a year would see a 4% surcharge.

And Clinton has proposed closing the “carried interest” tax loophole that allows private equity fund managers to pay a lower tax rate on their earnings, by executive order if necessary.

The Tax Policy Center has estimated that the top 1% of U.S. households – those making $730,000 per year and above — would see at least $78,000 more per year in taxes under Clinton’s plan.

Jennifer Blouin, a Wharton accounting professor, says Clinton’s plan “seems more fiscally sound” than Trump’s, but that Clinton “is going to have a heck of a time getting any of these changes through a Republican Congress.”

Trump has outlined plans to adjust tax brackets. Currently, a married couple making $485,450 and over would be taxed by the federal government at 39.6%, according to the Tax Policy Center. Trump would cut this top rate to 33%, according to his August 8 economic speech in Detroit. That’s a change from his previous stance of 25%.

The corporate tax rate is currently 35%. Trump would shrink it to 15%. He would eliminate the opportunity to defer taxes on profits made overseas.

The Tax Policy Center said last winter that under Trump’s plan, everyone would see their taxes cut, but the top 0.1% would see a cut of $1.3 million per year. The Center also said Trump’s tax plan would reduce federal revenues by $9.5 trillion over the first decade alone. That’s expected to increase by less under his revised plan, though it’s unclear by how much.

“The plan would improve incentives to work, save and invest,” the Center reported. “However, unless it is accompanied by very large spending cuts, it could increase the national debt by nearly 80% of gross domestic product by 2036, offsetting some or all of the incentive effects of the tax cuts.”

A Republican Congress would be happy to pass Trump’s tax plan, but it would mean such a large budget deficit that it would need to be scaled down significantly, says Joao Gomes, professor of finance at Wharton.

“For a candidate for the presidency to propose tax breaks and to not say where he would cut spending, is not a serious proposal.” –Mauro Guillen

Although simplifying the tax code is a great idea, and is likely to add to economic growth, the main purpose of Trump’s proposal is to reduce the size of various government programs, Gomes notes. Clinton’s plan, meanwhile, is about finding extra income to pay for an expansion of government programs, says Gomes, who called Clinton’s plans far less ambitious than Trump’s.

Guillen notes that President Ronald Reagan proposed spending cuts along with his tax breaks, whereas Trump has said the details of his spending cuts will come later, he says.

“For a candidate for the presidency to propose tax breaks and to not say where he would cut spending, is not a serious proposal,” Guillen says.

In a recent interview on the Knowledge at Wharton show on Wharton Business Radio on SiriusXM Channel 111, Mark Zandi of Moody’s Analytics noted that Trump “wants to … cut taxes, actually quite massively, so about a trillion dollars in tax cuts each and every year. And most of that goes to very high-income households. And he’s not clear about how he’s going to pay for that.”

Currently, the estate tax affects estates worth more than $5.45 million, or $10.9 million for married couples. Clinton would reduce that threshold to $3.5 million and $7 million. Trump, meanwhile, would eliminate the tax entirely.

Eliminating the estate tax would only help the wealthiest Americans, Guillen says. “There has to be some taxation of intergenerational wealth transfer,” he notes. “Otherwise, we’d get back to the situation where the rich always get richer, from one generation to the next.”

Tariffs and Trade

Trump’s America-first, hard-line approach to trade deals has been well documented, while Clinton has been critical of the North American Free Trade Agreement that her husband, Bill Clinton, signed into law more than 20 years ago. Both candidates have said they oppose the Trans-Pacific Partnership trade proposal.

But Guillen says free trade has been good for the American consumer. It’s reduced the cost of everything we buy, and improved the variety and quality of goods and services, he notes.

Free trade has benefitted people who have certain skills, while hurting those with other skills, Guillen says. It’s been particularly bad for people in the Rust Belt states, especially those in their 40s or 50s, who would have a hard time simply retiring, he adds. But that’s a relatively small slice of the workforce, he notes.

“It’s better to lock in the gains, and try to come up with programs to help those affected find new jobs,” Guillen said.

Zandi says the tariffs Trump is proposing would “be very difficult to digest” because they would mean higher prices, and it’s not clear that production would shift to the United States.

Trump’s stance on immigration has been a big part focus of campaign media coverage, namely his pledge to build a wall on the border with Mexico, and to make that country pay for it. Guillen calls his proposals “very extreme,” noting that net migration from Mexico has come down to zero; most immigration has been from Central America, he says. NAFTA has helped make Mexico a stronger economy that has reduced illegal immigration into this country, he notes.

“There’s no winning strategy, there’s only alternate ways to make people mad.” –Mark Pauly

Zandi says passing immigration reform like what passed the Senate in 2013, and which Clinton supports, could have an energizing effect on the economy, increasing growth, expanding the tax base and helping pay for underfunded entitlement programs.

Health Care

Clinton has proposed patching up some elements of Obamacare, by adding more generous coverage for prescription drugs and capping prescription drug spending, says Wharton health care management professor Mark Pauly. She’s also embraced the “public option,” as well as buying into Medicare at age 55, in response to the challenge from Bernie Sanders, he notes.

Trump proposed to abolish Obamacare and replace it with a high-deductible health insurance plan with health savings accounts, says Pauly. Americans could fully deduct their premiums from their taxes, Pauly says. For lower-income Americans, states would be given a block grant of Medicaid, and state officials would be able to choose how to use it.

The plan is ironic, because even though the regulatory burden would disappear, as well as the individual and employer mandate, the remaining plan would still look a lot like Obamacare, Pauly says.

Historically, health care has been Clinton’s issue, but she gave it only a sentence in her acceptance speech at the Democratic convention, Pauly says. Both candidates have been avoiding speaking on this topic, because they know there isn’t much to be gained by doing so, he notes.

“There’s no winning strategy, there’s only alternate ways to make people mad,” Pauly adds.