As the hype over debate season builds, the truth is that debate performance is often extremely relative. This highlights one of the inherent flaws of campaigning–we cannot tell how the candidate will perform once he or she is actually president and makes substantive policy decisions.
Fortunately, there are organizations far from the ideologically biased world of campaigning that make politically neutral predictions about a president’s policy proposals. Credit rating agencies are in the business of measuring credit worthiness alone, meaning that they can give us a rough picture of how certain sectors would be affected by a Donald Trump or a Hillary Clinton administration.
Debate season vs. reality
Everyone has a rating that indicates their creditworthiness, from individual consumers to state government to sovereign countries. The common denominator is that we all borrow money and need a score so that people who lend us money know how risky we are as borrowers. Not surprisingly, political changes can affect this rating. Moody’s, one of the three big three credit rating agencies, released a humdrum analysis that goes straight to the point: What would the candidates’ policy proposals actually do in the real world?
While Moody’s and other credit rating agencies are far from perfect (they messed up big time right before the Great Recession), it is interesting to see what they see what they think. This specific analysis from Moody’s covers a few important sectors: universities, not-for-profit hospitals and state governments.
Universities
If Trump were to eke out a win, his plan to “disincentivize companies” from relying on H1-B visa immigrant workers heavily affects universities. International students often pay full tuition to study here, with the goal of joining the American labor force. Job prospects for international students would be dim, and universities would lose a ton of money in tuition dollars. Moody’s labels a Trump presidency as a credit negative for universities.
Moody says that Clinton’s presidency would be good for universities as the “proposal could increase the number of international students in STEM (Science, Technology, Engineering and Math).” Additionally, these foreign students could see an “easier pathway to obtaining green cards.” More international students increases tuition revenue, hence why Clinton’s plan is a credit positive for universities.
State Governments
Medicaid is essentially free healthcare for the needy, and millions depend on it. The federal government currently picks up a hefty part of the tab, meaning states only pay a fraction of the actual cost.
The Donald wants to “convert Medicaid into a block grant” (money that is awarded from the federal government to lower levels of government), which would limit the funds available for Medicaid. This would likely leave states with huge funding holes, hence why Moody’s labels a Trump administration a credit negative for state governments.
Clinton’s plan would unload a bunch of people onto Medicare, which is a federally funded healthcare program for seniors. Her plan would lower Medicare eligibility to 55, which would amount to significantly less Medicaid expenditures for states. This makes her proposals a credit positive for state governments.
Not-For-Profit Hospitals
Trump wants to repeal the Affordable Care Act, popularly known as Obamacare. The uncertainty over millions of people’s health care coverage makes this a credit negative for not-for-profit hospitals. Clinton wants to expand the Affordable Care Act. More coverage translates into a credit positive for not-for-profit hospitals.
Takeaway
Many of Trump’s policy proposals, while they may appeal philosophically to many, will cause serious disruptions across several sectors. In the entire report, the only credit positive policy proposal from a theoretical Trump administration was taking down the barriers to import prescription drugs, something that the Clinton camp intends to do as well.
Trump is an appealing candidate to millions of Americans because he’s a political outsider, but many of his policy proposals will be politically difficult to enact. The presidency is still subject to checks and balances by design from the other branches of the federal government. Many of these proposals will be hard-sell to all the entrenched interests that stand to lose big.
Then again, that’s exactly why Trump appeals to so many — shaking up the system is precisely what millions of voters crave.
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