MS. DIANE REHMThanks for joining us. I'm Diane Rehm. In a speech last week in Michigan, Hillary Clinton said she wanted America to have an economy that worked for everyone, not just those at the top. But her plan was clouded by tax returns that shed new light on the Clintons and their wealth. Emails from the state department also raised questions about its relationship with the Clinton Foundation.

MS. DIANE REHMHere in the studio, David Wessel of the Brookings Institution, Jared Bernstein of the Center on Budget and Policy Priorities, Douglas Holtz-Eakin of the American Action Forum and Abby Phillip, national political reporter at The Washington Post. Throughout the hour, I'll look forward to hearing your comments, questions. Join us on 800-433-8850. Send your email to drshow@wamu.org. Follow us on Facebook or send us a tweet. Welcome to all of you .

MR. JARED BERNSTEINGood morning, Diane.

MR. DAVID WESSELThank you, good to be here.

MR. DOUGLAS HOLTZ-EAKINGood morning.

REHMAbby Phillip, if I could start with you, before we get to Hillary Clinton's economic plan, emails released show or imply some connection between the state department as she was secretary of state and the Clinton Foundation. Outline that for us.

MS. ABBY PHILLIPWell, it certainly seemed to indicate that during her time as secretary of state, top aides to President Bill Clinton and the Clinton Foundation would sort of facilitate meetings between top donors of the Clinton Foundation and sort of diplomats in the sort of diplomatic world, people who -- the Clintons' aides, Huma Abedin being the principle among them, would be able to sort of make connections for these big donors.

MS. ABBY PHILLIPNow, the key here is two things. One, it seems to confirm that there was a relationship between top foundation donors and the state department when Hillary Clinton was there, but none of the emails indicate that Hillary Clinton was a part of those conversations. She certainly didn't personally facilitate them herself, but there was clearly a culture there that she allowed to exist throughout her time as secretary of state.

REHMHow do you react to that news, David Wessel?

WESSELYou know, it's interesting. I think that if she were running against somebody else, these sort of attacks and these sort of skirting the rules would be devastating. But it's hard for Donald Trump to make the stuff stick just with, like, with her tax returns. So she made a lot of money and she could say, I'm being transparent. He says he made a lot of money, but he won't show his tax return. So I think she gets -- it makes it hard for her political opponents to use this.

WESSELHowever, it is the reason that polls show that people kind of have an uneasy feeling about Hillary Clinton and Bill Clinton. They don't consider them trustworthy. They act as if somehow there's a set of rules that apply to everybody, but not to them. And I think these kind of revelations reinforce that view.

REHMAre we looking at broken rules, Doug Eakin?

HOLTZ-EAKINI don't think we've gotten any clear sort of breaking of the rules past the emails. I really think that it's hard for anyone who has ever held a position in the federal government to imagine that she didn't understand that you do not set up your own email server. You use the state department email. There are extensive briefings and guidelines and booklets and so that, to me, has been a clear violation. I don't think we learned anything new about her, her character, the way they conducted business from this most recent round of releases.

REHMDo you agree, Jared?

BERNSTEINYeah, I agree with everything that's been said thus far, which is actually somewhat unusual at this point. And I think the key point there is that to people outside the Beltway, outside a pretty narrow band of us who pay closer attention to this than normal people, it's just more noise. It doesn't change anything. There's nothing new. There's no indictments. It's more precisely the kind of noise that I think people are pretty sick of and I think David's point is well taken.

BERNSTEINIt is extremely hard for anyone to get on a high horse about Hillary Clinton when Donald Trump's on another horse.

REHMSo what are we looking at...

BERNSTEINThere's something good in that.

REHMOkay. So Abby, what did we learn from the release of Hillary Clinton's most recent tax returns?

PHILLIPWell, we learned that she and Bill Clinton are quite wealthy.

BERNSTEINNews flash.

PHILLIPAnd -- right. And it's funny because I was talking -- I was in a red state in Texas last week talking to some voters and one of them said to me, you know, it just seems like you have to be rich to be president these days and that's how voters kind of feel about the choices that they're facing right now. The tax returns really confirm that you're dealing with, you know, Hillary Clinton who is wealthy and Donald Trump who is wealthy. We saw about ten -- a billion -- or sorry, 10 million in charitable donations, most of which went to the Clinton Foundation.

PHILLIPSo it seemed very much that a lot of these endeavors, the speaking, the books, all of that seemed to sort of pass through to the Clinton Foundation. You know, you could argue the Clinton Foundation does charitable work. That's their core operation. So it's not sort of anything nefarious, but it does seem to suggest that they were very much in the business of trying to make as much money as possible in as short a time as possible in part to sort of facilitate the operation of their foundation.

REHMDoug.

HOLTZ-EAKINI'd agree with that. I think the troubling part to most people with the caveat that Jared had, which is most people are not paying that much attention to this, but when they do it's the using your government connections to get the speeches, to collect a lot of money and the notion, then, that you're blurring the lines between what's public service and what's your private life. That's the issue.

BERNSTEINSo I agree with that and I always kind of scratch my head. What could you possibly tell me in a speech that's worth $250,000? I mean, that has to be a really great speech. And so, obviously, it's not so much what you're saying, it's the kind of influence. So then, where I go from that and where I would recommend other people go who are trying to figure out what to make of this, is actually look at the candidate's policies, say, vis a vis Wall Street in the case of Hillary Clinton because she's gotten big paychecks for giving speeches to them.

BERNSTEINAnd that would suggest that there's a kind of an entree there that would be, I think, a very unfortunate and potentially damaging to the economy, given how much Wall Street has wreaked havoc on the macro economy over the years. Well, in fact, if you look at her agenda, it's actually quite tough on Wall Street. She wants to not just keep Dodd-Frank, but to beef Dodd-Frank up. She wants to improve this think called the vocal rule that makes it harder for banks to go bust and then the rest of us to bail them out through FDIC insurance.

BERNSTEINShe wants to get tough on derivatives and a lot of these kind of financial innovations. So I think that's an important and an interesting contrast that is relevant information in sort of sousing this out for voters.

REHMWhat are the other parts of her economic plan, David?

WESSELWell, let me just say I think it's interesting what you say, Jared, is that it leads me to believe that if Hillary Clinton's elected president, particularly with Elizabeth Warren in the Senate, that she will have to go out of her way to prove that she's tough on Wall Street, which will be important when she puts forward nominees for Treasury secretary or the Federal Reserve. So Hillary Clinton's economic plan, I would say, has a number of pieces.

WESSELOne is she's very concerned about inequality and she wants to use the tax code and spending to reduce inequality in the United States. She's made a big pitch, as has Donald Trump actually, that in order to get the economy going again, we have to spend a lot of money on infrastructure.

REHMRight.

WESSELThird, in contrast to Donald Trump, she really does believe that regulation can be used to steer the economy to a better place. And fourth, while Donald Trump's economic plan, from the way I look at it, would, if implemented as described, mean a huge increase in debt, Hillary Clinton isn't doing anything about the long term debt problem, but she's trying to say I won't make it any worse by having -- everything is matched with a little bit more here and a little bit less there.

REHMWhat would her tax code look like?

WESSELA little bit like a theme park. There's a tax credit for every social issue you can think of. Apprenticeships, a little tax credit, childcare, a little tax credit, make companies share more with their employees, a little tax credit, discourage companies from moving overseas, a little tax credit. So if you believe that our tax code is too complicated and we should broaden the base, lower rates and make it simple, I don't think Hillary Clinton is your candidate.

WESSELShe would, as I said, limit almost all her tax increase to people above $250,000 a year. It would be interesting to see if she can stick to that. And she has an approach to taxes that involves basically twisting the dials of the existing tax code a little bit, rather than making wholesale changes.

REHMWould she not increase taxes on upper income level people?

BERNSTEINShe would. She would increase taxes only on households about $250,000, which is about the top 5 percent of households, but she has what is commonly called a Buffet tax, which is ensuring that millionaires pay more than 30 percent of their income in taxes, which, by the way, she passes the Buffet rule on her tax return because she paid about -- the Clintons paid about a third of their income.

BERNSTEINShe has a surcharge for folks above $5 million so that's another 4 percent there and the revenues that she raises, and David's right, her plan has been scored to actually reduce the budget deficit over ten years. It raises about $1 trillion to help fund some of the programs that we've heard about so far. Anyway, these taxes would fall exclusively at the top of the scale.

REHMJared Bernstein of the Center on Budget and Policy Priorities. When we come back, we'll talk about Hillary Clinton's plans for corporate taxes, which indeed would make a big difference. Stay with us.

REHMAnd welcome back. We're talking about Hillary Clinton's recently announced economic plan, which includes a great deal of money for infrastructure. We've talked about individual taxes. I want to ask you, Douglas Holtz-Eakin, about her plan for corporate taxes.

HOLTZ-EAKINWell, the basic plan is make them pay more. She's been quite specific about, in particular, an exit tax, a penalty for firms who choose to put their headquarters abroad, as opposed to having them in the U.S. And then she has said she's going to pay for her infrastructure initiative with an unspecified business tax reform, corporate tax reform. So there's something there. It's got to be a tax increase, because she's got to pay for the infrastructure, but she hasn't laid out the details.

HOLTZ-EAKINI think if you step back, I want to do back to something that David Wessel said, the striking thing is that there is no plan to take care of what she would inherit from Barack Obama, which is $9 trillion in deficits over the next 10 years, trillion-dollar deficits on her watch if things are left unchanged. That seems like a big omission to me, and I -- I also worry whether these tax increases that she's laid down is where it ends because while she's promised $1.3 trillion in taxes, she's got a lot more than that in spending promises.

HOLTZ-EAKINI mean, she's got a free college proposal that they have yet to put a price tag on that's going to be at a minimum $500 billion, probably a lot more. Eighty percent of students would be eligible for free college. It's an enormous price tag. They're not talking about. So I don't think this really adds up, and if you really do want to pay for all of it, you can't get it out of the top five percent. You're going to end up seeing it in the middle class.

REHMAnd by the way, we are going to do a program on plans for college education tomorrow. Go ahead, Jared.

BERNSTEINSo I used to work for Joe Biden, who used to say to me, don't compare me to the almighty, compare me to the alternative. And here if you're worried about our fiscal accounts, Donald Trump should scare you, and Hillary Clinton should reassure you in the following sense. Doug is right that she doesn't make an effort to bring the debt down from its current level. However, neither does she add to it. She raises, and her plans are actually quite clearly articulated in this point, the revenue she needs, over $1 trillion over 10 years, to pay for her plans.

BERNSTEINNow if she doesn't get that revenue out of this Congress, and one could imagine that's going to be an extremely heavy lift, she can't do her plans without adding to the deficit, but her numbers add up. Donald Trump adds about $10 trillion to the deficit over the first 10 years and $30 to the deficit over 20 years. So there is absolutely no question in the mind of any objective analyst who looked at this who would be worse for our fiscal accounts.

REHMDavid Wessel?

WESSELSo I agree that the contrast between Hillary Clinton and Donald Trump is stark, but as we get closer to the possibility of a Clinton election, it seems to me it's fair to say what is her economic philosophy, what is she doing here in and of itself, without saying it's better than Donald Trump. And I think that Doug mentioned one thing. She -- Hillary Clinton clearly does not believe that you can get businesses to invest more by cutting their taxes. I think there's a debate about whether that would make a difference, but it's worth noting.

WESSELThere's plenty of evidence that you can cut business taxes and not get investment. There's some evidence on the other, depending on how you do it. The second thing is that I'm actually interested in what candidates say they absolutely refuse to do because what you propose you can always say, well, I had this college plan, but now I'm in office, and it's going to only apply to 30 percent of the people, we're going to phase it in over the next 125 year or whatever.

WESSELIt's when you rule something out altogether, as she's done in the Trans-Pacific Partnership, that I think that it's much harder for them to back out of, as we saw with George H.W. Bush with his read my lips, no new taxes.

BERNSTEINJust, sorry, a quick, factual point. Hillary Clinton has never said that she would raise the corporate tax rate. She hasn't really talked about her corporate rate tax. But I would predict now, right now, here on air, that when she does come out with a corporate tax rate, she will lower the corporate tax rate, and she'll try to close loopholes, broaden the base, lower the rate. I don't know that, but that's my suspicion.

BERNSTEINJust want to make -- make that clear because a couple of times it's been suggested that she plans to raise corporate taxes, and that's not true.

HOLTZ-EAKINWell, there's the corporate taxes, total dollars raised, and she does plan to raise those. She's promised to pay for her infrastructure...

BERNSTEINYou mean loophole closing?

HOLTZ-EAKINRaising money somehow. She hasn't said. You're saying...

BERNSTEINI'm talking about the rate.

HOLTZ-EAKINYou're saying she's not going to raise the rate.

BERNSTEINShe hasn't said it yet.

WESSELShe could have a lower rate and close loopholes, right?

WESSELIf you're going to pay for something with business tax reform...

HOLTZ-EAKINYou're going to raise money, taxes.

WESSELThen you have to get them to pay more.

HOLTZ-EAKINI think the important -- I mean, if you step back, and I think David Wessel's point is a good one, which is we should be able to know something about the philosophy, and I think what's emerged in terms of her philosophy is pretty clear, and it is I have given up on economic growth as a path to prosperity for Americans as a whole. There's nothing in this that's going to fundamentally change the page of economic growth that we've experienced in the past seven years and that is projected to continue.

HOLTZ-EAKINSo instead she is going to tax people wherever she can and hand the money out to other people. It's a transfer-driven economic program and one that she would say would reduce inequality.

WESSELWell let ask you (unintelligible) infrastructure, that might be a plus, and secondly she's in favor of immigration reform, and you and I knew that that could be a plus.

BERNSTEINThat would work, that would work, yes, I agree with that.

REHMAbby?

PHILLIPI would also add that if you look at what she's doing, so much of it has to do with helping transition parts of the economy into a sort of like 21st-century economy, which is something that was sort of neglected, in part because of the economic downturn. So when you -- you know, her manufacturing plan, these sort of little bits on tax credits for apprenticeship programs, the student loan stuff, it seems to me that she's trying to deal with the economic uncertainty, which has a lot to do with her own political future but trying to address that for parts of the economy who feel like they don't know where their future is.

PHILLIPAnd that may not be sort of a macro plan for, you know, where does the deficit go over 30 years, but I think it does sort of address something that Barack Obama was not able to really do in the last eight years, which is really rethink sectors of the economy and getting sort of workers into the 21st century, and that's -- that's a pretty sort of -- you know, she addresses it in bits by bits, but I think it's part of the overall...

REHMJared.

BERNSTEINSo I think it's very important to organize the conversation and not make sweeping statements, and I would definitely disagree with Doug that she wants to, quote, tax people wherever she can. I mean, she's actually been very clear in saying that she would not tax households below $250,000, which by the way is about 95 percent of households. So that was inaccurate.

BERNSTEINBut secondly this business about growth, I think the issue there is if you actually look at the -- probably the most important thing for growth that Hillary Clinton does, and by the way Donald Trump doesn't, was mentioned by David, which is not to try to deport 11 million people and in fact to pursue a comprehensive immigration reform that makes our system more welcoming. We have a problem with our labor force growing too slowly, and Mark Zandi, who is a macroeconomist who ran these numbers for both plans through his model, which is a pretty traditional macroeconomic model, actually found that Clinton's plan, in part by dint of this immigration reform, raised growth, increased jobs, over 10 million over four years, whereas Trump's actually led to a recession and reduced growth.

BERNSTEINNow you will probably -- I never know what really makes a recession or not, I've been studying this stuff for decades, but if you really were able to take 11 million people out of the labor force, yeah, that would hurt.

REHMDoug?

HOLTZ-EAKINFirst of all, Jared's exactly right, you want to deport 11 million people, you're going to create a recession greater than the great recession we just went through. It's a horrifically bad economic idea. I would also concur that a good immigration reform is fundamentally pro-growth and something that, as a matter of the economic stuff we've got to favor in a heartbeat. I don't think it's politically very realistic given recent events, but that would be great.

HOLTZ-EAKINHere's the problem. If you take even the Zandi study that Jared mentioned and take out the immigration reform, median household income declines. I mean, the combination of the higher taxes, the continued high regulation and the absence of anything that helps the economy grow, it ends up backfiring.

BERNSTEINWell, I mean, I simply don't believe that's the case, and in fact...

HOLTZ-EAKINIt's in the study.

BERNSTEINIf you -- if you look at the most recent data on median household income, it's actually finally beginning to grow. Now it took way too long to get there, but in fact, you know, we're creating something like 200,000 jobs a month, the unemployment rate is low, inflation is low, so that's happening already. The worst thing we could do for the economy is try to implement this massive deportation and at the same time, remember those tax plans don't hit the median household. They only hit households in the top five percent.

WESSELSo let's say -- let's say Hillary Clinton is president, and we don't have to worry about Donald Trump anymore. Are you satisfied that she has a formula to get the rate of growth of the U.S. economy, faster productivity growth, better labor force growth? Does it hang together for you?

BERNSTEINIn the near term I don't know of any policy kind of tweaks that would make that happen because it's just -- we don't really know what determines the near-term growth rate of productivity. In the longer term, yes, I think there's something there, and it comes through two channels, one, infrastructure investment, and two, access to higher education.

REHMWhat about the issue of poverty? What did she say or not say about dealing with that?

PHILLIPWell, there's just not much in the plan on the whole about poverty. And I mean, I think this is an omission that is beyond her. It goes across the political spectrum. But there is no real talk -- there's a lot of talk about the middle class, no real talk about poverty. And over the last eight years, there have been a lot of debates about programs that are targeted to address poverty, including the food stamp program and how we pay for it and, you know, in what ways it's paid for and how much it's funded.

REHMSo you heard nothing new from her on that?

PHILLIPIt's nothing new on those -- on those questions. And -- but I will say that there -- you know, she has some bits in her plan about, you know, urban reinvestment and rural reinvestment, and the details are a little bit murky. They involve sort of like community redevelopment programs of that sort. But those -- you know, I think that you could argue that those programs are kind of like a mixed bag. It's unclear how well they work, and the implementation is such a hugely important part of it, and so the relief for the poor has to go through so many layers of bureaucracy that it's unclear how that would work out.

BERNSTEINWell look, you're right, Abby, very much so, that she doesn't necessarily connect the dots to some of her policies and helping the poor, but I wrote down four that will very much target the poor and I think the effective anti-poverty policy. She wants to increase the child tax credit, which right now is about $1,000 for -- per kid, and she wants to make it more refundable so that people who don't have a federal tax liability will get more of it. That's definitely going to help the poor with kids.

BERNSTEINShe wants to expand the earned income tax credit, a hugely important anti-poverty program for low-wage work. She wants to raise the minimum wage, another stark difference with her opponent. That helps low-wage workers. And she wants to implement a child care plan, again different from Trump's, that actually is more tilted towards the low end, whereas his is tilted towards the higher end.

REHMWhat more could be done, what more should be done, to help those in poverty, Doug?

HOLTZ-EAKINWith poverty, the dividing line is work. And so if you want to alleviate poverty, you have to on the economic side have people work, and all of our social safety nets and all of our policy should be pro-work. The EITC, for example, rewards work. It's been a very effective anti-poverty weapon. The minimum wage interferes with work. And so I've been opposed to minimum wage increases, in part because they're poorly targeted, they don't go to people in poverty uniformly, and because they get in the way of the work. We should just think about work.

HOLTZ-EAKINThe second is the tougher one for everyone, which is there's a lot about this which is past the economics, and there's a -- basically a best practice in life which says finish school, get a job, if you want to get married, get married, then have kids. Do it in any other order, you have a one-way ticket to poverty, and that message has to be sent to Americans.

REHMWhat about the infrastructure program? How much would that help?

HOLTZ-EAKINOkay, I just have to get this off my chest. I've done a lot of professional research on infrastructure, and this issue comes up again and again and again, going back to Reagan, public works, everything. Never promise that it'll work fast. Jared's lived through. Never promise it'll work fast because it won't. And secondly, don't overpromise what it'll do. If you look, for example, at a CBO study of the return to federal infrastructure investment, they say suppose you spend $50 billion a year for 10 years, $500 billion, and you deficit finance it, you borrow to do it. You will lose ground, not gain.

HOLTZ-EAKINSuppose you cut other spending to pay for it, then you can get ahead, but for that -- all that $500 billion, you only get about $20 billion of GDP in a $16 trillion economy. Yes there's a place for good infrastructure, no it's not a magic bullet.

REHMDouglas Holtz-Eakin, he's president of the American Action Forum, and you're listening to the Diane Rehm Show. Jared, you wanted to jump in.

BERNSTEINYeah, I think that the -- I think we all consider the Congressional Budget Office to be the best scorekeeper there is in town, but I think on infrastructure they are too negative, and I think part of that has to do with the fact that they're kind of giving you an average over a bunch of years about the rate of return on infrastructure investment, which is a completely reasonable thing for them to do.

BERNSTEINBut where infrastructure investment can really help you on the growth side is when your infrastructure is really deteriorated. So this is not an average situation. We've been ignoring this for too long. Anyone who doesn't believe that could've ridden in with me today on the D.C. Metro, which, you know, if you ignore your transportation systems for 20 years, guess what, they break.

BERNSTEINAnd so this is a huge drain on productivity growth, and I think Hillary Clinton's plan is not only a smart plan, but I'll bet you, and I'm saying this on air, so I'll come back and defend it if I'm wrong, I'll bet you that this is something that she can actually accomplish in her first 100 days because there are a lot of Republicans who recognize -- business-oriented Republicans who recognize that this investment in our public infrastructure is really hurting us.

BERNSTEINIt's not just roads and bridges and tunnels, by the way. She's also talking about clean energy, broadband. It's a wide-ranging program I think would be very helpful.

REHMAll right, I want to turn to some -- another area before the break, and that is what's her view on globalization, David Wessel.

WESSELWell she has a history of being, as the Trump people call her, a globalizer. Bill Clinton was a very progressive governor of Arkansas. I remember going to talking to him and Hillary Clinton when they were in Arkansas and talking a lot about what international trade could do for the economy of Arkansas. In the current political climate, she has refused to make an affirmative case for globalization with the exception of immigration. So she's kind of being very feisty, I'm going to get tough on the Chinese, and I think -- I understand why she's doing it.

WESSELIt's clear that the public has great anxiety about globalization and that we have -- it's been clear that the growth of trade from China has had a lot -- a big impact. It was a lot bigger impact on some communities and workers than had been anticipated. But I am a little disappointed that she seems to act as if somehow the president of the United States can put up her hand and hold back the tide of globalization as opposed to making the case that there are ways in which globalization are good for our economy and our people and good for people in other countries. She's found that politically unappealing.

REHMAnd how did she manage to reverse herself on the Trans-Pacific trade agreement?

WESSELShe took the sentence that she said before, and she inserted the word not in it.

REHMAnd that's it?

WESSELI mean, I think she's -- one of the reasons she's having trouble convincing people of this is because she was for it before she was against it.

REHMRight.

WESSELAnd so people feel that she doesn't have her heart in it. Now in her last speech she was pretty emphatic. It's going to be pretty difficult for a President Hillary Clinton to say I changed a couple of words in the TPP, and now it's a wonderful treaty.

HOLTZ-EAKINI thought the speech was really interesting because she had some moments that I didn't expect that were spectacular. I thought the piece where she talked about how difficult it would've been for her father, a small businessman, to do business with someone like Donald Trump was extremely powerful and compelling, and I thought her body language on the TPP was horrid. She was saying those words, but it didn't look like she wanted to at all.

REHMAll right, we'll take a short break here. When we come back, time to open the phones, read your email. I do hope you'll join us.

REHMWelcome back. We've gotten lots of tweets wanting us to clarify some of the Clinton's donations. They point out the difference between the Clinton Family Foundation, to which the Clintons donated one million dollars in 2015 and the Clinton Foundation. So, the Clinton Family Foundation acts as quote, a clearing house for the family's personal philosophy. The Bill, Hillary and Chelsea Clinton Foundation is the international charity that focuses on AIDS, HIV, global health, climate change, economic inequality and childhood obesity.

WESSELRight. So, the Clinton Family Foundation gives donations to other charities like the Methodist Church and Yale University and the Museum for African Art. And it's important because the one that's getting all the controversy, the one where -- that Abby talked about where people, donors to the Clinton Foundation, that's the Bill, Hillary and Chelsea Clinton Foundation, that's the one that's messed up with the State Department. So that's not where the charity went that she showed on her tax returns.

REHMAll right. I'm going to open the phones now. First to Christina. She's in Chapel Hill, North Carolina. You're on the air.

CHRISTINAYes, good morning and thank you for taking my call.

REHMCertainly.

CHRISTINAWell, we've been listening to your show and we are extremely disappointed with the people on the panel. Why are we disappointed? It's because they're laughing, they're having a great time, which is nice, but they don't even talk about what's really going on in the US. The huge poverty level. It's shocking. We are not at all wealthy. We are probably considered, well, low middle class in terms of wealth. So, we have to, for instance, use public transportation to get anywhere.

CHRISTINAWe went with the July 4th celebration, we took the Greyhound bus and saw hundreds and hundreds of Americans with - looking tired, missing teeth, carrying black garbage bags because they cannot afford suitcases. I mean, this is the real America. This, unfortunately, is what's happening and the people on the panel today just seem to make light about poverty, oh, about the Clintons. And all they're going to do.

REHMAll right.

CHRISTINAThey have no idea what's going on.

BERNSTEINYeah. I, I, I think that, first of all, these are very stressful times. And a lot of what the caller says, absolutely resonates. She's talking about a two America scenario that, and talking about it vividly. But given the extent of how stressful these times are, if we, on the panel, who often disagree, can sometimes talk about this in a way that's maybe disagreeing without being disagreeable, I happen to think that's a good thing. And I don't -- I will not be cowed if I occasionally say something humorous.

BERNSTEINSo it doesn't at all mean that I'm disagreeing or disparaging. Now, in the context of her substantive claims, in fact, we did talk about poverty. And we could talk more about poverty. I think that, as Abby said, and I'd love to hear her weigh in more on this, I think it's, as Abby said, the candidates don't connect a lot of what they're doing to poverty. In party, because the poor don't vote as much. And they're trying to pick off the, kind of, middle, working class vote.

BERNSTEINNow, I think that's a political decision that's very unfortunate from the perspective of what the caller said. But I think there's some truth to it. I think if you look at Hillary Clinton's agenda, child tax credit, earned income tax credit, a higher minimum wage. Help with childcare, you do see a robust anti-poverty agenda. But it is true that she's not selling it that way, and I think that's partly political.

REHMAbby.

PHILLIPAnd I would just add, very quickly, that some of -- I often have questions about the extent to which some of these sort of tax credits and the sort of complexity of the way that you get the relief really blunts the impact for lower income Americans. I think it's one thing to talk about it, it's another thing to know whether it will actually help people because they might be able to, to, to avail themselves of what's there.

REHMDoug.

HOLTZ-EAKINI want to build on something Jared said, which is I do think that's how the Clinton campaign thinks about their policy structure. They have constituencies, they want to get those votes, they design policies that appeal to them, they sell them that way. What's interesting to me is Donald Trump is campaigning as a Democrat. He doesn't look anything like a traditional Republican candidate, where there's a lot of thematic importance on economic freedom and the openness to commerce .

HOLTZ-EAKINAnd, you know, thematic presentation. He's going right down the same constituencies. We've got some disgruntled blue collar workers, I'm going to be against trade and against immigration. I've lost the establishment Republicans. I'll embrace the House Tax Plan. The women seem to not like me. Let's have a child tax credit. He's doing exactly the same thing. It's, I think, surprises Democrats who are not used to this, and it drives the Republicans crazy.

REHMAll right. To Baton Rouge, Louisiana. Bridget, you're on the air.

BRIDGETGood morning, Diane. Good morning, panel.

REHMHi.

PHILLIPHi.

HOLTZ-EAKINHi.

BRIDGETI'm calling from the very wet, southern Louisiana.

BERNSTEINYeah, sorry about that. I hope you don't have water in your living room there.

REHMGosh. Yeah.

BRIDGETNo, we're good. We're good. I just want to say one thing about the Clinton Foundation. Hillary putting back into her own foundation to do good, to me, is not a bad thing. We see a parallel with Trump, in that he has used his own facilities to have rallies and events and then his campaign is paying into the Trump business for those rallies. So I think, I think that's an issue. Another thing is at least we get to see Hillary's taxes. You know, we're not seeing Trump's.

REHMNot yet.

BERNSTEINCan't argue with that.

PHILLIPAnd I think to...

BERNSTEINSorry. Go ahead, Abby.

PHILLIPTo add to that, just real briefly, we also know that Donald Trump has not given any of his money, as far as we can tell, to charitable causes of any kind, including his own foundation.

HOLTZ-EAKINSo, I just, that's a great point, Abby. And I just would like to underscore one thing the caller said. It just occurred to me the other day. I was talking to somebody with knowledge of foundations. And it just occurred to me for all that I've heard about the Clinton Foundation, and I'm not talking about the family foundation, just to be clear. And all the scandals that have come up, I really didn't know what they did. And I finally asked somebody, what do they do?

HOLTZ-EAKINAnd it turns out that they do a lot of great stuff. They've contributed to AIDS in Africa, to really impoverished places, particularly overseas, and I do think that's admirable. I'm not defending any practices that are, you know, in the news and controversial. But it is -- the caller does make, I think, a fair point.

REHMDavid, how do the Clinton plans differ substantially from those of the Trump plans? Economically.

WESSELWell, as I said earlier, Donald Trump would make the -- if you take him at his word, which is a difficult thing to do, because the word changes so often, would make for the deficit to be a lot bigger. Hers would mean that we wouldn't deal with a long term deficit problem. We would make it much worse. Secondly, she would use the tax code to reduce inequality. And he wouldn't. And thirdly, he really does argue, and there are House Republicans who agree with him, is the best way to prosperity is to cut the amount of taxes that business pay so they'll be more willing to hire and invest. And she doesn't share that philosophy.

REHMAll right. Here's a Facebook comment from Stefan. Why not cut some of our bloated defense budget to help pay for some of the other programs and lower the deficit? You don't hear a lot about the military in these speeches.

WESSELI think the reason is that the world seems to be a very dangerous place and people who used to think that we could cut the defense budget a lot are shying away from it.

HOLTZ-EAKINIt -- it's down 25 percent in real terms in the past five years. And the reality is that even if you think the world's not that dangerous and you believe there's a lot of bloat there, there's not enough money there to really deal with the deficit problems. The bulk of the spending, over two thirds, is in the Social Securities, Medicares, Medicaids, Affordable Care Acts of the world. Those large entitlement programs. That's the only way to deal with the spending in the federal budget. The defense and non-defense annual spending has become a small side show.

BERNSTEINSo, let me...

WESSELBut don't you think that if we -- people were convinced that the defense budget were more efficiently spent, they would be more...

BERNSTEIN...sure.

WESSEL...willing to go along with some of the changes in entitlement and taxes. Perhaps.

BERNSTEINLet, let, let me say something a little controversial here. I am not the slightest bit worried about the budget deficit. I am not worried in...

WESSELNot the slightest?

BERNSTEIN...not the slightest bit worried about the budget deficit in the near term.

WESSELOh, okay.

BERNSTEINAnd by the near term, I mean the next few years. What -- here's the thing. People who worry about this stuff have told us for years that if we don't cut the heck out of our fiscal accounts, don't lower our budget deficit, don't lower our debt, then we're going to be punished by high interest rates. Because public borrowing is going to crowd out private borrowing. There will be competition for loanable funds and the interest rate will get bumped up.

BERNSTEINNot only has that not happened, but when governments have followed this advice, it's called austerity, basically cut your budget deficit and hope that the markets reward you with low rates, it's really been punishing to these economies. It's raised unemployment. It's disinvested in infrastructure. It's led to, you know, countries that have been massively hurt.

WESSELOkay, but Jared...

BERNSTEINBut, let me finish. I'll finish in a second. So, I'm not saying that over the long run, which in Washington is the 10-year budget window, you don't have to pay for what you spend. You do. But in -- but this deficit hysteria has been economically hugely destructive.

WESSELI don't see any deficit hysteria in the United States at the moment.

HOLTZ-EAKINNone.

WESSELIt's not really an issue.

HOLTZ-EAKINI think all of the deficit hysteria is sitting right here, Jared.

BERNSTEINIt's me. It's me.

REHMNow, wait a minute. Donald Trump has talked about the deficit.

HOLTZ-EAKINOh, but he's -- he's a completely implausible source, because his program is a joke.

WESSELHe understands the virtue of debt. Jared probably likes his, his, no. No, I think that the, the way I think about it is you're absolutely right that there is not an urgent need to deal with the short term budget deficit. In part, because the economy has gotten better, in part because Obama raised taxes, in part because Republicans restrained spending. The deficit has come down quite a bit. And it is not a problem today, tomorrow, and it won't be next year and the year after. The issue is can a new President responsibly say I am not going to deal with a long term thing.

WESSELI am going to deal with -- I'm going to do some more borrowing now, do some infrastructure, get the economy growing.

HOLTZ-EAKINPaid for.

WESSELAnd deal with the deficit later. Or, is that -- and there's different views on that. Some people think the longer you wait, the harder it's going to be. Other people think that given how slow the economy's growing now, how low interest rates are and are projected to be, we can afford to wait a while longer.

REHMAbby.

PHILLIPDonald Trump doesn't really connect the deficit to, you know, defense spending, but what he does say is that he wants to get America out of foreign wars in order to reinvest in America, which is something that you don't often hear from a Republican. But what that tells me is that he intuits about the electorate that he's going after, these sort of blue collar, middle class workers. That they are actually concerned about what we're spending elsewhere and what we're not spending at home.

PHILLIPHe's not necessarily connecting it how we, sort of, get in a better fiscal picture over the long term, but it's this sort of near term anxiety about, kind of like wasting money in Afghanistan and Iraq that he is addressing in a way that you don't, you know, other -- the Republicans on the panel can speak to this more, but you don't often hear...

WESSELRepublican.

PHILLIPRepublican.

REHMAbby Phillip.

PHILLIPDidn't want to call him out that way.

REHMNational...

HOLTZ-EAKINThat's good.

REHM...political reporter for the Washington Post. And you're listening to The Diane Rehm Show. And to a caller in Indianapolis. Dave, you're on the air.

DAVEHello, thanks for having me on.

REHMSure.

DAVEHey, my question is why is it that everyone is talking about tying lower corporate taxes to spur reinvestment, when in fact, is it not true that reinvestment into your own company would be either taxed more favorably or not taxed at all? So that the exact opposite could be true, a higher corporate tax rate could encourage reinvestment to gain the more favorable taxes or perhaps even a lower tax rate would encourage them to sit on their money and distribute it to their stock holders?

REHMDoug.

DAVEWhat's the truth here?

HOLTZ-EAKINSo, there are two different phenomena. One is you have a domestic corporation make some money and retains the earnings and then has a choice of what to do with it. Once it makes the money, it gets taxed and it can retain what's left over and either choose to invest or distribute it as dividends, whatever it may be. So I don't think there's a particular role there for the tax rate in changing their decision making. The real issue at the moment is the fact that, internationally, the US has retained a system of trying to tax our companies' profits worldwide.

HOLTZ-EAKINSo if you make money in Brazil, it's subject to US tax, Germany, US tax. All the other major competitors have gone to systems where you only pay tax on what you earn in the country. So we go to Brazil, we can meet with a German firm, the German firm pays the Brazilian tax. They're done. Our firms pay the Brazilian tax and then when they bring the money back, they pay a second tax up to the highest rate in the world, 35 percent. And that has all sorts of bad impacts on where companies locate.

HOLTZ-EAKINHow they allocate their money. And I think the heart of the argument should be about a tax reform, not necessarily just slashing taxes, but a tax reform that gets rid of these incentives to park money outside US, and instead, bring it back and re-invest it here.

WESSELThe only thing I'll say there is that when these multi-national corporations, GE and Apple, all the -- when they make earning abroad, Doug said that they're taxed at the US rate, they're only taxed at the US rate when they bring those earnings back.

HOLTZ-EAKINYeah, that's what I said.

BERNSTEINAnd they -- they don't do that. They quote defer those earnings, so they sit over there tax, so if you actually look at the taxes they pay, it's not that 35 percent statutory rape, it's an effective rate that is an actual rate that's at least 10 points lower than that. And if you start to talk about these multi-nationals, it's in the single digits.

HOLTZ-EAKINBut, but that's the point. The tax system gives them terrible incentives.

BERNSTEINNo, we agree.

HOLTZ-EAKINAnd they don't bring the money back. Fix the tax system, and we'll see that money in America. That's what we should do.

REHMHow likely are you (unintelligible) with either candidate, how likely are you going to get the Congress to agree on a tax revision plan?

WESSELWell, I think there's substantial interest on both -- among both Republicans and Democrats to deal with the business taxes. There have been proposals floating around. I think if the environment were different, if everybody was not for something because their party was for it and against it because the other party was against it, it might get done. So, here's a scenario you have to think about. Hillary Clinton is elected President. The Republicans keep the House. Paul Ryan is the Speaker.

WESSELWe don't really know what's going to happen to the Senate. But there may -- it may, the optimistic view is after the election, politicians having seen how angry Americans are that Washington can't work look for someplace to get something done. And that Hillary Clinton and Paul Ryan, for their own political interests, see that and they look for things where they might be able to do business. And the business tax reform, though it's very complicated, because there are winners and losers and the business community is really split.

WESSELAnd there's all sorts of details about pass-throughs and international corporations and all that, but of all the things on the table, that's the one where there's been a lot of ground work done, and they might actually do it.

REHMVery briefly.

HOLTZ-EAKINAnd I would add to the list, Senator Schumer, who will be the leadership of the Democrats, has been on board with this common idea. And generally linked it to infrastructure investment. And so, there is a place where everybody can get what they want.

REHMWell, I like ending, for a change, on an optimistic note.

BERNSTEINThat's great.

REHMDouglas Holtz-Eakin, Abby Phillip, Jared Bernstein, David Wessel, thank you all so much.

WESSELThank you, Diane.

PHILLIPThank you.

BERNSTEINThank you.

HOLTZ-EAKINThank you.

REHMAnd thanks all for listening. I'm Diane Rehm.