Posts Tagged ‘obama’
I’ve been hearing lots of speculation and commentary that the healthcare bill is primarily what is to blame for tomorrow’s shocking GOP victory, and that Democrats would be well-advised to dump the legislative effort and focus on other things.
Needless to say I don’t agree.
If voters are really that pissed off about ObamaCare, aren’t they simply going to vote for the real McCoy, a Republican, no matter what? Why even consider voting for a member of the party that came pretty damned close to shoving Socialist medicine down our throats when we can have real, manly, rugged individualist proponents of freedom like Scott Brown?
Seems to me savvy Democratic law-makers will quite rightly recognize that some of the angst on display in Massachusetts flows from the perception that the Democrats are ineffective. What we see on display is a preview of what it will be like for Democrats to go before the national electorate without a substantive accomplishment under their belts, exactly like in 1994. Passing a bill will remedy this.
It’s also clear to me that the perception of what ObamaCare is now, before it is enacted, is likely to be significantly more negative than the perceptions of what the legislation actually is, once it’s passed, and people are protected by guaranteed issue and community rating, and death panels mysteriously fail to materialize. As a number of pundits have noted, there is very little support in Massachusetts for getting rid of that state’s existing universal health care bill. Turns out voters like health care security once they possess it.
Amity Shlaes — writing with a chip on her shoulder apparently acquired because of criticisms made by a certain Nobel-winning economist who knows more about the dismal science than she’ll ever forget — makes a fool of herself with a piece she subtitles “Massive Government Spending is No Solution to Unemployment.”
Paul Krugman of the New York Times has been on the attack lately in regard to the New Deal. His new book “The Return of Depression Economics,” emphasizes the importance of New Deal-style spending. He has said the trouble with the New Deal was that it didn’t spend enough.
He’s also arguing that some writers and economists have been misrepresenting the 1930s to make the effect of FDR’s overall policy look worse than it was. I’m interested in part because Mr. Krugman has mentioned me by name. He recently said that I am the one “whose misleading statistics have been widely disseminated on the right.”
Mr. Krugman is a new Nobel Laureate, teaches at Princeton University and writes a column for a nationally prominent newspaper. So what he says is believed to be objective by many people, even when it isn’t. But the larger reason we should care about the 1930s employment record is that the cure Roosevelt offered, the New Deal, is on everyone else’s mind as well. In a recent “60 Minutes” interview, President-elect Barack Obama said, “keep in mind that 1932, 1933, the unemployment rate was 25%, inching up to 30%.”
The New Deal is Mr. Obama’s context for the giant infrastructure plan his new team is developing. If he proposes FDR-style recovery programs, then it is useful to establish whether those original programs actually brought recovery. The answer is, they didn’t. New Deal spending provided jobs but did not get the country back to where it was before.
The very subtitle of Ms. Shlaes’s piece gives away the inanity (or disingenuousness) of her piece, because “massive government spending” is exactly what finally enabled America to return to prosperity after the ravages of the 1930s. In fact, Franklin Roosevelt responded to the critics parroting the conventional wisdom of his day (sound familiar Ms. Shlaes?) by becoming a deficit hawk after his first term. Thus during FDR’s second term the federal deficit declined precipitously via tax hikes and budget curbs — in fiscal 1938 the government was very nearly in (PDF warning) surplus — and lo and behold the economic growth of his first term promptly evaporated and the depression entered a temporary period of intensification. It was not until after Pearl Harbor — when deficit spending by Washington skyrocketed (it reached over 30% of GDP in 1943) that the country finally made a permanent break with depression.
Now, I don’t think Mr. Obama or anybody else is suggesting borrowing on quite so massive a scale. I suspect deficit spending will likely peak somewhere north of 10% of GDP over the next year or two. But if we’re to heed the lessons of FDR’s day our course is clear: a massive stimulus plan along the lines of what Krugman and others are proposing is our best insurance against depression. An absurd emphasis on fiscal rectitude during times like these is surely a recipe for disaster. Fortunately, it appears the new team taking charge in Washington has read its history books.
Commenting on John McCain’s enthusiastic pro-Nafta speech this week north of the border, John Ibbitson writes:
Mr. Obama, on the other hand, is a NAFTA skeptic. “NAFTA and its potential were oversold to the American people,” his website declares. “Obama will work with the leaders of Canada and Mexico to fix NAFTA so that it works for American workers.” When Austan Goolsbee, Mr. Obama’s chief economic adviser, reportedly told Canadian diplomats that Mr. Obama’s statements on NAFTA were mere campaign rhetoric, the ensuing controversy embarrassed both the candidate and the Canadian government. Mr. Obama does appear to be trying to distance himself from some of his earlier tough talk, telling Fortune magazine that some of his trade rhetoric was “overheated and amplified.” But his support for increased trade ties with Canada is lukewarm at best, and he could actually prove hostile to the bilateral trading relationship.
I think the significant majority of Canadians who feel Obama’s politics more closely match their own political ideals (and therefore are inclined to favor his candidacy over McCain’s) are right not to worry too much about the Illinois senator’s nods to the protectionists and anti-globalists in the Democratic party. Nearly all parties of the left in rich democracies count within their ranks substantial numbers of people opposed to the further integration of the global economy. And the thing is, a number of states Obama either badly wants to win (Ohio) or absolutely must win (Pennsylvania) are home to large number of culturally conservative unemployed/marginalized blue collar workers who may abandon the culturally liberal Obama if they perceive he’s an excessively enthusiastic fan of free trade.
I believe it’s clear Obama knows the path to securing the living standards of working people lies in strengthening the safety net and not in erecting barriers to trade.
This is simply American presidential politics 101. There’s no serious prospect of an Obama administration’s igniting a trade war between the US and Canada. And in the unlikely event that a President Obama were to broach the subject of labor standards and worker protections with Ottawa (over the Nafta issue), Canadians would have nothing to worry about, since any resulting action would mean it is the US that would be beefing up its standards to match the practices of the more Western European-style Canadians.
On the topic of the Obama’s and McCain’s views on taxation, Clive Crook writes:
With their fixation on the fate of the Bush tax cuts, both of them are missing the main point: comprehensive reform is needed–and needed so badly it may be unavoidable. The key is to broaden the income-tax base. Income-tax rates are moderate in the United States by international standards, but the income-tax base is narrow, so the total raised is less than you would expect. Raising significant amounts of additional revenue–which is going to be necessary, even if no new spending is undertaken–would push income-tax rates quite high. The country needs to broaden its tax base and simplify the rate structure, and much the best way to do this is as part of a thorough overhaul of the code. A lot of what should be done is neither liberal nor conservative. Ordinarily one thinks of a trade-off between equity and efficiency. At some point, those choices do have to be made, but the United States is not at that point. The current system is so inept, so complicated, and so replete with unintended consequences that it is easy to devise a win-win alternative–fairer and more conducive to growth at the same time. Yet neither Obama nor McCain gives any sign of embracing comprehensive reform. Quarreling over the fiscal legacy of the Bush administration is more to their liking. So much for post-partisan politics.
Although I couldn’t agree more that the country badly needs reform of the tax code, I strongly suspect neither Obama nor McCain is so much “missing” this point as avoiding it, for reasons of politics. Any reform of the tax code that is sufficiently radical to do any real good will require a bloody political fight.
I don’t see much prospect of any decent reform plan getting enacted under a McCain presidency, given the likely composition of the Congress (though you never know, and of course McCain has shown some proclivity for working with Democrats). I reckon Obama is the more plausible agent of change in this regard. If I were he I’d avoid getting into specifics with respect to tax reform ideas if such an agenda were part of my plans (one can only hope tax code reform is part of his plans). Obama displayed admirable unwillingness to pander to the electorate on gasoline taxes — an unwillingness that probably helped him finish off Hillary Clinton. But I don’t think he can count on a similarly happy outcome flowing from the effects of candor on the tax code in general, at least to the extent that any substantive reform cannot wholly ignore the mortgage interest deduction