To win the nomination, Clinton tacked way left on trade and ratcheted up her anti–Wall Street rhetoric. But insiders and experts say her policies are pro-growth. A clear-eyed look at her plan.
our months before she jumped into the presidential race, Hillary Clinton spent a lunch hour in a Midtown New York City conference room huddling with a dozen of the world’s leading economists and left-leaning policymakers. The group—assembled by former Loral CEO Bernard Schwartz, and which included former Federal Reserve chairman Paul Volcker, former Fed vice chairman Alan Blinder, and Nobel Prize winner Joseph Stiglitz—had a straightforward task: to help the already odds-on Democratic nominee forge a strategy for accelerating the American economic recovery. Clinton knew the challenge would define her candidacy, and, if all went well, her presidency itself. But the solutions weren’t obvious. The recovery, then five years old, had both found its footing and revealed its fundamental weakness. Corporate profits and the stock market were soaring again, but wages remained stalled, fueling widespread frustration that good times had returned only for those at the very top.
As the mandarins who gathered at the Loews Regency Hotel that day went around the room offering the soon-to-be-candidate their thoughts, a theme emerged. The next President, they agreed, should focus on a handful of initiatives—making a major investment in revitalizing the nation’s aging infrastructure, strengthening federal support for research and development, cutting red tape for small and medium-size businesses, and encouraging skills training for workers. The proposals shared a focus on economic growth. Just as notably, they leaned away from an emphasis on wealth redistribution, or “fairness” in the argot of a newly ascendant left. Clinton appeared to be sold. “It was clear she’s very much oriented toward the creation of an economy based on investment and growth,” Schwartz says.
But if Clinton’s instincts were pulling her toward a market-friendly plan, the electorate was tugging hard in the other direction. The primary campaign quickly exposed the depth of popular disgust toward the establishment and its consensus-oriented prescriptions. Republican voters rejected a deep bench of professional pols in favor of Donald Trump and his border wall. And Democrats packed stadiums for Sen. Bernie Sanders, the rumpled Vermont socialist who promised a massive wealth transfer from point-one-percenters to the middle class. Clinton, the peerless insider, was in peril of getting stuck in an evaporating middle. Instead, she demonstrated early she was attuned to the demand for a shake-up. She wouldn’t go Full Bernie, but she did aim to split the difference. Last summer, in her first big economic address, Clinton called for building a “growth and fairness economy.” Growth and fairness: “You can’t have one without the other,” she said. Her speech married appeals for the growth proposals hashed out at the Regency klatch with liberal priorities like a minimum-wage hike, expanded child care, and profit-sharing for workers. Clinton also launched a broad critique of corporate short-termism, the first of many digs at companies, which she claimed were too often grabbing at quick returns at the expense of longer-term value.
Clinton has spent the campaign since then toeing a thin, jagged line. The self-styled pragmatic progressive has called for rewriting the rules of the economy while also extolling the virtues of incremental movement on time-tested ideas. So far, somehow, she’s getting away with it. The Sanders revolt rumbled all the way into the Democratic convention in late July, but polls show those voters have rallied to Clinton, and progressive-movement leaders now give her the benefit of the doubt. In her acceptance speech at the convention, Clinton served them up some red meat, pledging to raise taxes on “Wall Street, corporations, and the super-rich.” And she declared that “American corporations that have gotten so much from our country should be just as patriotic in return. Many of them are. But too many aren’t.” Business-friendly types backing her zeroed in on another line, however: “My primary mission as President will be to create more opportunity and more good jobs with rising wages right here in the United States.”
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Jonathan Cowan, president of the center-left think tank Third Way, called that the “great prize” in her speech, since it laid out the organizing project of her presidency. “In a Democratic acceptance speech at a Democratic convention, with Bernie Sanders in the room, she did not say it will be income inequality or unrigging the American economic system,” Cowan says. “She said it will be more jobs and higher incomes. I don’t know what more you’re supposed to ask her. That’s centrist economics.”
As the race between Clinton and Trump tightens in the weeks before the election, many corporate leaders and other voters are asking the same thing: Who will be better for business? In a May cover story (see “Business the Trump Way”), Fortune took a deep dive into the real estate mogul’s record and his stated plans for the economy. And now we’re doing the same for Clinton. In this case, frankly, there is more of a public record to plumb. Business leaders, indeed, know more about Clinton than arguably any other candidate in recent memory, thanks to the quarter-century she has spent in the public glare, not to mention her personal outreach to many of them over that time. What gaps still exist they could fill by extrapolating from the first administration in which she served as a governing partner—her husband’s—which were surely the salad days for relations between Democrats and the private sector.
Then again, this election has confounded expectations at every turn, with its featured players tacking left and right in so many zigs and zags it’s tough to know what anybody thinks anymore. Trump has enabled the dynamic by conducting a nearly substance-free campaign, creating a vacuum in which Clinton can be most things to most people. But the Democratic nominee has also embraced the opportunity, indulging a penchant for opacity—the same instinct that helped spawn the State Department email scandal dogging her bid. So we set out to answer what Clinton will mean for business and the economy by interviewing dozens of industry leaders, political watchers, and economists. The Democratic nominee herself wouldn’t talk to us, but we reached many in her inner circle and went over her economic plan with experts of all stripes. What emerges from this investigation is a profile of a candidate who, despite adjusting for the demands of her assertive left flank, remains moored to a qualified faith in business as a guarantor of prosperity.
For its part, the campaign has emphasized the point by showcasing the business leaders it has brought into the fold. Jake Sullivan, a senior Clinton policy hand, told them in a recent phone briefing that Clinton’s focus will remain on getting the economy growing faster. The call was part of a concerted effort by the Clinton camp to poach corporate executives and Republicans that has been gaining steam all summer. Sectors that typically shower campaign cash on the GOP nominee instead are backing Clinton over Trump by eye-popping margins (see chart below). This one-sided giving may say as much about who corporate leaders think will win as it does about who they want to win, but Clinton’s overwhelming support from industry here is telling nonetheless.
And the campaign continues rolling out endorsements from CEOs and Republican eminences. Many were driven to the Democrat initially by fear of a Trump win, then found themselves drawn in by an economic approach that resonated as reasonable. “I think she genuinely, actually likes business,” says Hewlett Packard Enterprise (HPE) CEO Meg Whitman, one of the campaign’s highest-profile Republican recruits to date. “She understands the role we play. Generally speaking, she has a bias toward seeing how we are part of the solution as opposed to part of the problem.”
A reckoning is fast approaching. If Clinton wins, before she’s sworn in she’ll begin making key appointments to her administration—an exercise that the left has decided to make a test of her commitment to change. Clinton will flunk it, in their eyes, if she hires too many retreads from Wall Street and beyond. Then, should she win in November, she would have to navigate the lame-duck debate over the Trans-Pacific Partnership, the sprawling, 12-nation trade deal she helped launch as secretary of state but opposed on the campaign trail amid rising populist hostility toward free trade. President Obama is gearing up a post-election blitz to salvage the pact, a gambit that could force Clinton to take a public stand against the man she aims to succeed. Then, say those who know her well, Clinton would likely launch her presidency by diving headlong into a burst of legislative dealmaking on her tax and spending initiatives (see chart below), an immigration overhaul, and an expansion of a social-welfare program such as universal prekindergarten. Here, business leaders have good reason to believe that despite Clinton’s leftward feints, she would be a sensible operator, if not an outright ally.
f Clinton wins, she’ll come to office with a dubious distinction. With Republicans on track to keep control of the House—the Senate remains a toss-up—Clinton would be the first Democratic President since Grover Cleveland in 1885 to assume the presidency without an all-Democratic Congress. The fact is more than good barstool trivia. Consider President Obama’s first two years: Huge Democratic margins in both chambers allowed him to plow a historically ambitious agenda into law—including the $787 billion stimulus package, a bailout of Detroit automakers, Wall Street reform, and his signature transformation of health care—despite programmatic Republican opposition. By contrast, even if Clinton were to win in a landslide, she would almost assuredly have to wrangle with GOP leaders on Capitol Hill to get anything done.
In her loftiest expectations, say insiders, Clinton’s presidency would open with a bang by securing congressional approval for a massive investment in restoring the nation’s crumbling infrastructure. Clinton has called the state of disrepair of U.S. roads, bridges, airports, and railways a “national emergency,” and experts agree. The quality of American infrastructure slipped from fifth worldwide in 2002 to 16th last year, according to the Council on Foreign Relations—and that rank will likely slide as spending fails to keep up with maintenance needs and an ever-expanding demand for more capacity. Clinton is calling for investing $275 billion in the effort over five years, with most of that spending going directly into transportation and other projects, and another $25 billion in capital for an infrastructure bank that would provide loans (and guarantees) to private-sector builders. Fixing broken roads and bridges is part of the aim; the spending would also provide construction jobs and contribute to faster economic growth.
Clinton aides acknowledge that the proposal is hardly new. A big down payment on infrastructure upgrades helped form the spine of Obama’s reelection pitch in 2012. But he couldn’t find sufficient Republican support to move it off the blocks in his second term. What’s to suggest Clinton will fare any better? For one, our infrastructure has only deteriorated over the past four years. “The fact that these challenges have not been addressed creates some political space to do something now,” says Jacob Leibenluft, a former top economic adviser to Obama now working for Clinton.
Yet GOP buy-in for a 12-figure spending initiative will be anything but automatic. To bring the opposition to the table, Clinton has signaled a willingness to pair the program with a corporate tax code simplification. Her old New York colleague, Sen. Chuck Schumer, was negotiating with Republicans on just such a package as recently as this spring. And if Democrats retake the upper chamber, he’s expected to ascend to majority leader.
Protesters show their opposition to the Trans-Pacific Partnership during the first day of the Democratic National Convention in Philadelphia in July.Photograph by Jabin Botsford—The Washington Post/Getty Images
The precise contours of a deal remain unknown. But the plan would center on forcing home at a discounted tax rate the $2 trillion in overseas profits that American companies have stashed abroad. Depending on the rate, that alone could yield the revenue to fund the infrastructure spending. Policymakers couldn’t stop there, however. They’d need to solve the rest of a tax code Rubik’s Cube to keep businesses of all sizes from revolting. Big business without overseas profits would demand that corporate rates come down across the board—a move that would create winners and losers as negotiators scrubbed preferences in the code to pay for the rate reductions. Small businesses that pay taxes through the individual side of the code would then demand their own relief. And so on.
Even if Clinton could somehow satisfy all these competing business interests, the tax holiday at the heart of the deal would alienate liberals, who would almost certainly view it as an unacceptable giveaway to a handful of rich multinationals. “It’s critical that we end all tax subsidies for corporations to outsource jobs,” says Damon Silvers, the AFL-CIO’s director of policy, noting that simply ending the companies’ ability to defer paying taxes on their offshore earnings would raise more than $500 billion, “money we need for infrastructure.”
Though Clinton hasn’t yet spelled out how she would tackle a full tax code rewrite, she has pointed to ways she’d seek to wield the code as both a carrot and a stick. On the reward end, for example, she supports tax credits for businesses that hire apprentices and share profits with workers, and she has proposed eliminating capital gains taxes on small-business stock held for more than five years. On the bludgeon side, she wants to crack down on corporate inversions by forcing companies that shift their headquarters abroad to pay an “exit tax” on their foreign earnings—and she’s calling for closing the loophole that allows multinationals to shift profits to lower-tax locales, a practice known as earnings stripping.
Tax code changes require congressional cooperation, of course. If Clinton can’t get that, she might use her executive authority to go around Congress and push changes through new rulemaking. Consider Wall Street reform. The Democratic nominee has laid out a plan for keeping a tight leash on the finance industry she once represented in the Senate—and, if elected, she could presumably push through much of her agenda without help from Capitol Hill. On her wish list? Shoring up the Volcker Rule, which aims to ban the biggest banks from making risky bets with taxpayer-backed deposits; imposing new reporting requirements on private equity firms and hedge funds; and prosecuting executives responsible for corporate wrongdoing.
In the primary fight, the left attacked Clinton for seemingly being more interested in protecting Goldman Sachs’s bottom line than the public interest—a perception fed by her refusal to release transcripts of speeches she gave at financial institutions. But her Wall Street agenda has earned her plaudits from reform advocates. Dennis Kelleher, president of the nonprofit Better Markets, points to her push for restoring the derivatives-trading provision as a testament to her commitment. “She not only didn’t need to do it, there are only a few of us who know what the damn thing is,” he says. “She seems to be intent on regulating both the biggest banks and the shadow banking system quite aggressively.”
That said, Wall Streeters keep pouring money into her campaign coffers. The securities and investment industry has shelled out $47.5 million for her campaign and the outside groups supporting it, compared to just $346,000 for Trump, according to the Center for Responsive Politics. One explanation: Financiers at least can count on Clinton, unlike Trump, to be a steady hand that won’t roil markets. “The markets really punish unpredictability,” says MGM Resorts (MGM) CEO Jim Murren, another Republican executive backing Clinton. “It’s unsettling, and it creates vast gaps in valuations.” They also know her from her eight years representing New York in the Senate. “She understands the importance of capital markets and the importance of what we do,” says one industry source close to the campaign, who also contends that Clinton’s reform priorities have remained largely consistent over time: “Politically, rhetorically,” says the source, Clinton’s anti–Wall Street commentary is sharper, “but so are the times. People are pissed.”
Businesses, meanwhile, are angry and frustrated about something else: excessive regulation. During his first seven years in office, President Obama finalized a record-high 392 rules that had significant economic impact. To win over corporate interests (to say nothing of Republicans), Clinton would have to demonstrate some regulatory restraint, should she make it to the White House. In August she hinted she might just do that—to an extent—calling for an easing of rules on community banks and credit unions so as to boost the capital available to small businesses.
Progressives remain wary enough on this front that a constellation of outfits on the left is coordinating an effort to police Clinton’s political appointments. Activists from labor and other groups are scouring state and local governments and nonprofits to find candidates for the roughly 4,000 agency and department posts Clinton would need to fill. Their rallying cry, supplied by Sen. Elizabeth Warren (D-Mass.): “Personnel is policy,” meaning if the next administration draws its regulators from the sectors they’re meant to oversee, even the best-intentioned reform plans will be doomed from the start. “We want to see proven, constructive skepticism of the industries they’re going to be regulating, which isn’t to say they can’t have had ties in their entire lives, but they have to show a willingness to regulate in the public interest,” says Jeff Hauser, executive director of the Revolving Door Project. But sources close to the campaign say Clinton is unlikely to be cowed by the pressure: She will ultimately surround herself with whomever she wants, says one insider: “She has to be sensitive to the realities, but I don’t think she’s going to be paralyzed by them.” Meanwhile, lobbyists are all but taking it for granted that Clinton will find a way to reverse the Obama administration’s ban on their ilk serving in executive branch posts.
linton wasn’t always so dexterous dealing with big business. In her formative policymaking experience, helming her husband’s drive for health care reform in 1994, Clinton learned in searing fashion what can happen when a political leader fails to win over deep-pocketed industries. Then First Lady, she declined to negotiate with the insurance lobby after it aired its iconic “Harry and Louise” ads opposing the reform drive. The administration soon found itself facing an assault from insurers and an array of other industry groups that helped sink public support for the plan. Summing up the defeat in her 2003 book, Living History, Clinton wrote, “The people who financed the Harry and Louise ads may be better off, but the American people aren’t.”
By the time she won elected office in her own right, Clinton had adopted a wholly different approach. In the Senate she sought out Republicans who had been enemies of her husband and tried to find common ground for bipartisan legislative projects. In New York she courted business leaders both in the city and upstate, earning goodwill by fighting on their behalf to cut through red tape and offering counsel. Her ties, for example, to Corning—an industrial technology company that has leaned Republican since its 1851 founding—remain strong enough that employees have contributed $214,000 to her presidential campaign. Clinton forged the relationship as the Empire State’s junior senator, when she secured hundreds of millions of dollars in federal aid to outfit buses and trucks with emissions-reducing technology that Corning (GLW) pioneered. Around that time, she went to bat for the company in a tariff fight over fiber-optic products it was selling in China. Clinton personally sought President George W. Bush’s help and successfully resolved the issue. And she continued her advocacy for Corning after she reached the State Department, intervening in a 2012 dispute between the Chinese government and the company over its intellectual property.
Conservative critics have highlighted Clinton’s mutually beneficial relationship with Corning as evidence of a pattern of corrupt coziness between the Clintons and their corporate supporters. They point to the fact that the company donated at least $100,000 to the Clinton Foundation and paid the former secretary of state $225,500 for a speech she delivered in 2014. At least as significant, however, is what Clinton’s long-running advocacy for the company’s interests in China reveals about her view of American power and the role that business plays in projecting it around the globe.
Two projects defined her tenure at the State Department: Pivoting the focus of U.S. diplomacy away from Europe and the Middle East toward Asia in recognition of the region’s rising status as an economic powerhouse; and a more basic effort to elevate commercial considerations in the day-to-day conduct of the department’s mission, a practice she termed “economic statecraft.” She executed the second in some small ways, including by toting a list of American companies facing market-access problems to every meeting she held with a foreign counterpart. (“That practice wasn’t new,” notes Robert Hormats, who served as undersecretary of state for economic, business, and agricultural affairs, “but it had usually been done at lower levels, not by the secretary of state.”)
The two projects converged in an exceedingly ambitious undertaking hinted at by Clinton’s Corning work. She became one of the Obama administration’s leading advocates for the Trans-Pacific Partnership, the mega-trade pact designed to interweave Pacific Rim markets representing 40% of global economic activity. Australia, Japan, Singapore, and Vietnam were all included—China was not. Beyond creating new opportunities for American exporters, the deal aimed to check China’s influence in its own backyard. The TPP “would link markets throughout Asia and the Americas, lowering trade barriers while raising standards on labor, the environment, and intellectual property,” Clinton wrote in her 2014 book, Hard Choices. Further, she called it “a strategic initiative that would strengthen the position of the United States in Asia.”
Her enthusiasm wouldn’t last. In October of last year, with Sanders rising in the polls on a message that emphasized his opposition to the TPP, Clinton announced that the final version of the package didn’t meet her standards, and she’d be opposing it too. She has grown more categorical since then, declaring in August: “I oppose it now, I’ll oppose it after the election, and I’ll oppose it as President.” Campaign officials confirm that Clinton means what she says: Under no circumstances would she support the pact, they say. Yet in a testament to Clinton’s Rorschach quality as a candidate, pro-trade Democrats and business leaders backing her don’t quite believe it. “She’s an internationalist at heart,” says Rep. Ron Kind (D-Wis.), chairman of the pro-trade New Democrat Coalition. “She knows there’s an important leadership role to play, especially in the Pacific Rim area. I haven’t met a President yet who doesn’t see the need to move forward on trade agreements.” Adds HPE’s Whitman, “Maybe she’ll try to renegotiate that deal to fix some of the things she thinks are not perfect about it. I don’t think she’s fundamentally against free trade.”
As someone committed to economic growth, she can’t be. As someone who hopes to win a presidential election dominated by anti-globalism, she has to be. The ultimate question for business-minded voters is whether she can be both and succeed.
A version of this article appears in the September 15, 2016 issue of Fortune.