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How Clinton and Trump plan to boost Detroit and other distressed cities

Donald Trump and Hillary Clinton, presidential candidates
Getty Images
Donald Trump and Hillary Clinton, presidential candidates

In visits to the Detroit area last month, Hillary Clinton and Donald Trump pledged to inject new life into the region, unlocking new jobs and growth in areas evolving after manufacturing losses.

In Warren, Michigan, Clinton described a budding "comeback" there, pledging to spread the "revitalization" to areas of the state that have not yet recovered from the auto industry's drubbing during the recession. Trump, just days earlier in Detroit, discussed an American Dream that "long ago vanished" for many in the city, outlining crime and unemployment problems that he, not Clinton, was equipped to fix.

The reality for Detroit and other former manufacturing hubs in swing states like Ohio and Pennsylvania sits somewhere between the candidates' depictions. Both Trump and Clinton chose the Detroit area to make their speeches, as it not only represents a shifting U.S. economy but also sits in a state that will help to determine who controls the White House.

"The one thing that Trump's overlooked is there's been a turnaround in Detroit recently," said Stephen Spurr, an economics professor at Wayne State University in Detroit, who noted that the city still faces hurdles in crime, infrastructure and education.

The comments the candidates made about the Motor City provide a blueprint of their campaign messages and how they would address economic growth throughout the country. While their economic visions contrast, some of their plans for renewal do overlap.

The Detroit area's unemployment rate of about 6 percent is worse than about 5 percent for the U.S., but has fallen from more than 7 percent in January 2015, according to the Labor Department. The area's unemployment rate sits lower than it did in January 2006 before the financial crisis.

Detroit still lags the recovery seen by the broader U.S., but its economy has shifted in recent years. "Professional and business services," "trade, transportation and utilities" and "education and health services" now employ more people than manufacturing, the Labor Department said. Total nonfarm payrolls in the Detroit area increased 2.3 percent in July from the previous year.

So how would both candidates try to boost growth? Clinton wants to raise additional government cash through tax increases on the wealthy, aiming to put $10 billion into what she calls "Make it in America" manufacturing partnerships. She proposed to invest in job training for displaced manufacturing workers, simplify tax filing for small businesses and expand broadband access.

Trump's renewal efforts focus largely on unlocking growth through across-the-board tax cuts. He supports income tax reductions for all tax brackets, as well as a reduced 15 percent corporate tax rate and end to the estate tax on the wealthy. He also wants to renegotiate the North American Free Trade Agreement and end the Trans-Pacific Partnership, claiming trade changes will save millions of American jobs.

Most independent analyses have raised concerns about the American deficit growth under Trump's tax plan, even after economic growth is taken into account.

Spurr also identified infrastructure as a key need for Detroit, and both candidates have pledged to inject money into that. Clinton said in her Warren speech that she wants to create an infrastructure bank, claiming "$25 billion in government seed funding could unlock more than $250 billion and really get our country moving on our infrastructure plans." She would also use tax hikes on the wealthy to fund that investment.

Trump has repeatedly pledged to boost infrastructure spending, but his method of payment is less clear. He said in Detroit that the "new wealth" created by the tax cuts will help to boost investment in infrastructure and the military.

Spurr said he sees flaws in Clinton's plan, but believes it would prove more effective than Trump's. In particular, he said he does not think Trump's tax cuts can be implemented without stifling social services or ballooning the national deficit.

So who has made strides in Michigan and the Rust Belt overall? Clinton will likely win the heavily Democratic Detroit, and has a 5-point advantage in an average of recent polls of Michigan, according to RealClearPolitics.

Trump has an average 2-point lead in Ohio in recent polls, while Clinton holds a 1.8-point average advantage in Pennsylvania.

Tune in to CNBC at 1 p.m. ET on Monday, when "Power Lunch" heads to Detroit to get a read on Motown's revival, the auto industry and Michigan's economy in this election year. Quicken Loans founder and developer Dan Gilbert will be co-host.