This year’s historic presidential election, starring two of the most polarizing candidates in memory, has taken on a populist tone as the major-party candidates appeal to working- and middle-class voters.
Yet business is paying attention to Donald Trump’s and Hillary Clinton’s positions on jobs and the economy — particularly regarding corporate taxation and global trade — since the outcome in November will determine the direction of some business decisions.
Some Michigan political leaders already have taken sides. Three former governors — Democrats Jennifer Granholm and James Blanchard, and Republican William Milliken — are backing Democratic nominee Clinton. Sitting Republican Gov. Rick Snyder has declined to endorse Republican nominee Trump, though Lt. Gov. Brian Calley, Attorney General Bill Schuette and Michigan Republican Party Chairwoman Ronna Romney McDaniel have.
Former GOP presidential nominee Mitt Romney has said publicly he will not vote for either candidate. The West Michigan-based DeVos family, among the state’s top
Republican donors, has not given money to Trump and has not donated to any candidate since the spring primaries, according to Federal Election Commission records.
Michigan business groups, too, are mostly are staying out of the fray. That includes Business Leaders for Michigan, the Detroit Regional Chamber and the Small Business Association of Michigan, whose leaders said they generally don’t endorse presidential candidates.
“I think there’s certain elements of each one of the candidates that are appealing and certain elements of both candidates that the business community in general probably finds terrifying, and that’s why you don’t see a lot of business leaders just kind of saying, ‘I’m with Trump’ or ‘I’m with Clinton,’ ” said Sandy Baruah, president and CEO of the Detroit chamber.
Executives he has talked to appear to be split, Baruah said, with two-thirds having “found a way” to vote for Trump or Clinton and a third either undecided or planning a write-in vote. Trump pitched tax simplification, which corporate leaders support in concept, Baruah said, though Clinton “provides stability.” The main reason he said he has heard for business support of Trump is the likelihood the next president will appoint a U.S. Supreme Court justice to replace Antonin Scalia, who died in February.
“Under normal times, I find business leaders for the most part willing to ... state publicly who they’re voting for and why,” he said. “This year, obviously, it’s very, very different.”
Some leaders in the region heard from the candidates first-hand last week; Southeast Michigan was the backdrop for both major-party presidential candidates as they unveiled their respective economic agendas during campaign stops, outlining their differing views of American tax and trade policies.
On Aug. 8, Trump stood at a lectern at Cobo Center in Detroit, where he proposed massive business tax cuts to 1,500 members and guests of the Detroit Economic Club and threatened to pull the U.S. out of global trade deals if the terms aren’t renegotiated. The crowd of business executives cheered his tax proposal, though the response from Detroit appeared more tepid concerning trade.
Clinton took a different tack than the New York businessman; she stumped Thursday at a tooling and engineering firm in Warren, surrounded by workers and an invite-only crowd of 500. She proposed imposing an “exit tax” on companies that move their profits overseas while investing in infrastructure projects and offering tax credits to encourage corporate profit-sharing and skilled trades apprenticeships.
Clinton also formally took a stand against the Trans-Pacific Partnership, saying: “I will stop any trade deal that kills jobs or holds down wages.” Trump also opposes the TPP.
That Trump and Clinton chose metro Detroit to unveil their jobs proposals was strategic and symbolic, several political analysts said, especially since they easily could have chosen to give the speeches in the Rust Belt swing states of Ohio and Pennsylvania.
It could signal that Michigan will be significant come November, though that’s especially true for Trump, who is trailing in recent polls and whose campaign believes it needs to win Michigan to help secure victory for the GOP in the general election. State and national political observers, though, have Michigan leaning or likely Democratic. The state hasn’t gone for a Republican presidential candidate since George H.W. Bush in 1988.
Clinton also has a commanding lead in the fundraising race in the state; she has taken in $2.7 million from Michigan donors, compared with roughly $242,000 for Trump, FEC records show.
Neither campaign commented for this story.
“There is symbolism that you can’t overlook” about offering their jobs plans in Detroit, said Geoffrey Skelley, a political analyst with the University of Virginia Center for Politics in Charlottesville, Va.
In May, a poll of 300 business owners and managers commissioned by Crain’s and law firm Honigman Miller Schwartz and Cohn LLP found low support for both Clinton and Trump. Roughly one-third of respondents had a favorable opinion of both candidates, while Clinton was more unpopular (a 61 percent unfavorable rating) than Trump (55 percent).
If the election were held that day, 41 percent of survey respondents would vote for Trump, while 36 percent would pick Clinton. Nearly a quarter were undecided. Of course, it was around that same time that Trump was challenging Clinton fiercely in national polls, a huge difference from the significant lead Clinton has taken in those same polls since the national conventions.
John Rakolta Jr., chairman and CEO of Walbridge Aldinger Co., introduced Trump and his running mate, Indiana Gov. Mike Pence, to the Detroit Economic Club during last week’s event at Cobo Center.
Rakolta, the Trump campaign’s Michigan finance chairman, said he supports the Republican nominee and said he believes his economic plan “has far more probability of being successful and returning the economy back to a growth rate that would, in almost all cases, substantially help the middle class.”
Here’s how the two nominees compare on the economy:
Tax policy: Trump would cut the corporate income tax rate from 35 percent to 15 percent, an effort to discourage companies from shifting their profits overseas, a practice known as corporate inversion. Trump also would reduce the number of income tax brackets from seven to three and eliminate a carried interest deduction and the estate tax. Clinton would implement what her campaign calls a “fair share surcharge” on millionaires’ income to make sure that tax breaks don’t disproportionately favor the wealthy, and charge an “exit tax” to companies that choose to move profits overseas, where they are untaxed.
Higher education: Clinton supports making college debt-free. Trump did not mention higher education or job training during his Detroit address.
Wages: Clinton supports a higher, “living” federal minimum wage. Trump did not mention wages in his Detroit address.
Child care: Trump would allow all Americans to fully deduct the average cost of child care on their income taxes. Clinton proposes 12 weeks of paid family and medical leave and expanding access to affordable child care, including by expanding a child tax credit.
Carbon emissions: Trump would end what he calls the “Obama-Clinton war on coal,” which he claimed cost the U.S. 50,000 jobs, by reinvesting in coal mines. Clinton supports reducing carbon and methane emissions by investing in clean energy, while pushing for guaranteed health and pension benefits for miners who worked for now-bankrupt coal companies.
Stand on trade
In a relatively new move, Clinton came out against the Trans-Pacific Partnership trade deal, after initially supporting it early in the campaign.
Charles Ballard, an economist at Michigan State University, said while Clinton did not spend a lot of time elaborating on her decision to withdraw support for TPP, it stood out in her speech Thursday.
“She used to be in favor of it, but pressure from both (Bernie) Sanders and Trump caused her to change her mind,” Ballard said. “She was under a lot of pressure to clarify that, and she did.”
The accord is designed to level the playing field for trade among the nations by opening trade and creating consistent environmental and labor standards. For U.S. exporters, the TPP would make 18,000 tariffs disappear.
But for Southeast Michigan’s automotive industry — which dominates the list of the state’s largest exporters — that headline-grabbing figure is unlikely to move the needle much on trade, as Crain’s reported in October. That’s partly because the economics of manufacturing have changed. Over the past two decades, the industry has pushed hard to build parts where the final product is sold. That shift is not only to avoid tariffs but, more importantly, to avoid exchange rate fluctuations during shipment and excessive freight costs.
The TPP would affect trade in as much as 40 percent of the world economy. TPP countries include the U.S., Japan, Canada, Mexico, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam. It is expected to boost the world economy by $223 billion per year, or about 0.3 percent of last year’s global GDP, by 2025, according to the Peterson Institute for International Economics, a Washington, D.C., think tank.
However, U.S. companies aren’t expected to feel the greatest economic impact, according to the study. Some business groups have come out in favor of the agreement, while some big companies aren't satisfied that it will expand trade opportunities.
Dearborn-based Ford Motor Co. is not supporting the accord. In January, Ford said it would close all operations this year in Japan and Indonesia because it saw “no reasonable path to profitability” in the two countries.
Ford CEO Mark Fields told Bloomberg last month that TPP did not do enough to prevent currency manipulation from Japan, so it would not support the agreement.
“We’re against TPP not because we’re against free trade; we’ve been free traders forever,” Fields told Bloomberg. “But when you look at some of the countries like Japan — they have (manipulated currency) in the past, and we just want to make sure we’re competing on a level playing field.”
Both presidential candidates now support walking away from TPP, though Clinton has not gone as far as Trump, who also is calling for renegotiation of the North American Free Trade Agreement.
Clinton said Thursday she would hire a “chief trade prosecutor” and triple the number of enforcement officers to crack down on countries that break the rules, even proposing targeted tariffs on bad actors.
“The auto companies, in particular, are in a really tough spot, because (Trump has) directly gone after Ford and he’s made the assertion that he’s going to force them to close their plants overseas and bring the jobs back,” said Susan Demas, editor/publisher of Lansing-based political newsletter Inside Michigan Politics.
“When he talks about trade, they are really affected if he were to make good on that sort of bombastic rhetoric,” Demas said. “I’m not sure that it would be terribly easy for a lot of executives at the Big Three to fully board the Trump train, but other business executives — I think a lot of them, frankly — are willing to roll the dice despite his many, many drawbacks.”
One other possible hurdle for the auto industry: Trump called for a temporary moratorium on new regulations under his presidency. What remains unknown is whether this includes new regulations from the National Highway Traffic Safety Administration, which dictates the use and rules for new automotive technology. The industry has spent billions on new technology, such as autonomous driving, that are awaiting final rules from NHTSA.
Richard Wallace, director of transportation systems analysis for the Ann Arbor-based Center for Automotive Research, said any plan to curtail future NHTSA regulations will impede road safety.
“On the safety side, I have some strong concerns,” Wallace said. “Given that we do not yet have a (vehicle-to-vehicle communication) mandate, and perhaps still won’t by 2017, this could fall under such a moratorium and that could jeopardize rollout of cooperative active safety and ultimately cost lives .”
Senior reporter Dustin Walsh contributed to this report.