She knows them; they know her.

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The Clinton-Ryan Compromise

Paula Dwyer writes editorials on economics, finance and politics for Bloomberg View. She was London bureau chief for Businessweek and Washington economics editor for the New York Times, and is a co-author of “Take on the Street: How to Fight for Your Financial Future.”
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Can she get anything done? That’s the question now that nearly every poll shows Hillary Clinton winning the presidency and the Republicans holding on to the House, albeit with a weaker hand.    

Even if the Democrats take control of the Senate -- a strong possibility though not a certainty -- House Republicans could block Clinton’s agenda of taxing the wealthy to finance new spending plans; liberalizing immigration, and tightening gun controls.

A Democratic Senate would quickly confirm her choices for judges, including filling the long-vacant Supreme Court seat for which President Barack Obama nominated Merrick Garland in March. She would also have slight leverage on some routine spending bills. She could follow Obama’s lead and use executive actions to expand gun control limits, for example, or stop corporations from moving their tax headquarters abroad. Accomplishing much more is wishful thinking.

But there might be one way out of the gridlock for both parties. It begins with corporate tax reform, which both Republicans and Democrats claim they want. A consensus has even emerged around lowering the top rate to about 25 percent from 35 percent, and closing off numerous credits and deductions that both parties view as corporate welfare.

Why would Clinton agree to lower corporate taxes when she has been campaigning for corporations “to pay their fair share” and her left-wing supporters could accuse her of selling them out? One reason: Ending the taxation of overseas earnings and coaxing home some $2 trillion in profits with a lower rate, possibly 10 percent, would raise about $250 billion in extra revenue. Clinton and congressional Republicans could informally split the one-time revenue windfall.

Clinton hasn’t said which of her dozens of proposals are top priorities, but she has emphasized the need to create jobs and stimulate the slow-growing economy. She could do both with her proposed five-year plan to repair U.S. infrastructure.

So let’s assume she would devote $50 billion from her share of the $250 billion windfall on roads, bridges, airports and mass transit, half of which could be devoted to setting up an infrastructure bank to finance public and private construction projects well into the future. She could claim to be putting unemployed blue-collar men back to work.

Republican voters care about this, as House leaders know from Donald Trump’s takeover of their party this year. She could also say she’s improving the productivity of the rest of the labor force by reducing time wasted in traffic jams or sitting on airport runways.

The $75 billion Clinton has left could be a down payment toward her middle-class program of child tax credits, child-care aid and paid family leave. (She would have to find ways to pay for them in subsequent years.) Alternatively, she could devote the funds to fixing and enhancing Obamacare (her campaign says it would cost $45 billion a year), or to financing her higher-education proposals, including free community-college tuition (at $50 billion a year).

Sure, Paul Ryan, if he is still leading the House, could balk. But the speaker wants to prove that his party can govern, not just obstruct, and he could claim to have cut corporate taxes by the most in history.

Ryan could also achieve other parts of his agenda, which, like Clinton’s, includes infrastructure spending and enhanced child-tax credits. He could even devote part of the Republicans’ $125 billion to deficit reduction, drawing a distinction between conservatives’ fiscal priorities and Clinton’s.

Campaign advisers say Clinton is more likely to establish relationships with Republican leaders than Obama did. He had a visceral dislike for the petty squabbles among members of Congress. Clinton, by contrast, sees those squabbles as opportunities to do deals.  

Will this fantasy of bipartisan deal-making ever come to pass? Maybe not. But if the 2016 election has taught the leadership of both parties anything, it’s that voters want some sign their government works for them.

  1. Although this is not a formal process, it happens all the time. When Republicans sought to lift spending caps to put more money into the military, for example, Obama wouldn't allow it unless he got equal amounts for domestic discretionary programs.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Paula Dwyer at pdwyer11@bloomberg.net

To contact the editor responsible for this story:
Katy Roberts at kroberts29@bloomberg.net