THE PLANK SEPTEMBER 18, 2008
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And now, for something new, John McCain is attacking Barack Obama over his big-spending ways:
The text of this new advertisement, for those who don't want to sit through the cilp, goes like this:
When our economy's in crisis, a big government casts a big shadow on us all.
Obama and his liberal Congressional allies want a massive government, billions in spending increases, wasteful pork.
And, we would pay--painful income taxes, skyrocketing taxes on life savings, electricity and home heating oil.
Can your family afford that?
I have no idea whether this is an actual television advertisement or one of those spots, distributed over the internet, designed to generate media coverage. I also have no idea whether this ad resonates politically.
But the arguments themselves are worth scrutinizing because they are consistent with McCain's broader rhetoric. He and his supporters are constantly attacking Obama as an irresponsible tax-and-spender. Today in Iowa, as a matter of fact, McCain is lashing out at the "big spending, greedy, do nothing, me first, country second crowd in Washington."
If you follow politics closely enough to read this publication, then you're already familiar with the dishonesty of McCain's claim on taxes. The vast majority of taxpayers would get a larger break under Obama's reforms than they would under McCain's. Only the very wealthiest Americans would see more tax relief from McCain. (For more on this, see here and here.)
So let's look instead at the other charge--the one that almost nobody challenges, not even Obama himself, because the subject remains so politically troublesome for Democrats. It's this idea that Obama wants to go on a spending binge--and that this binge will leave Americans worse off.
Is that really so?
Look closely at what Obama has proposed this election cycle. According to various press accounts, Obama's top four spending initiatives are, in order, his plans to achieve universal health coverage or something close to it; to invest in alternative energy development; to increase foreign aid; and to boost spending on education, particularly early childhood education. (Wonky side note: Not all of this "spending" is actually spending per se; sometimes it comes in the form of tax breaks.)
Health care is by far the most expensive of these proposals. Obama's aides calculate it would cost $65 billion a year. (Count me among those who think the final plan will cost even more.) The rest are in the range of $10 to $25 billion a year. McCain and, more generally, conservatives would have you believe that money is simply wasted. By that, presumably, they mean it's being spent in ways that don't benefit you--or in ways that are inefficient.
That's simply not the case.
Anybody who has no health insurance, has too little health insurance, or has health insurance that might not be around tomorrow will benefit from Obama's health care plan, which--if enacted--would guarantee coverage, with generous benefits and at affordable prices, to every single American regardless of income and pre-existing medical conditions. What's more, creating a universal health system--or even moving towards one, if that's all Obama's plan ends up doing--would be good for the economy. It would help put in place mechanisms, like institutions that scrutinize new treatments for effectiveness, that would help tame runaway medical spending. It would let people move more freely from job to job, which should--at least in theory--allow them to maximize their productive potential. And it would provide businesses with a great deal more predictability about their employee health costs, something most corporate executives would appreciate.
Obama's investments in alternative energy would have a similar effect. It would create jobs, particularly in areas of the country hard hit by manufacturing layoffs, and--over time--it would reduce the dependence on petroleum. Again, that's something that benefits everybody, not just individually but on a grand, collective scale as the easing of the energy crunch rippled through the economy. As for education, it's hard to think of investment that has greater potential to produce higher economic growth over the long term than making sure all kids know how to read, write, and count. On an individual level, parents confident of high quality public schools in their neighborhood won't have to contemplate shelling out tuition for private school--or moving to more expensive neighborhoods.
(Foreign aid, I suppose, is the exception here. Justifying it purely on economic grounds is tough. But there are plenty of valid reasons to increase foreign aid--not least among them, the potential to ease suffering and buy some goodwill in areas that might otherwise be fertile ground for tomorrow's terrorists.)
Conservatives like McCain naturally believe that the free market, left to its own devices, would handle these tasks better. And they're entitled to their opinions. But the fact that people want--and need--these sorts of initiaitves ought to make everybody else skeptical of such arguments. If the free market could provide everybody with affordable health care, why would we have 45 million Americans uninsured--and another 25 million (at least) underinsured? If the free market could wean us off peteroleum dependence, why are we all now sweating out $4-a-gallon gas prices? If it could educate every youngster, why are so many kids growing up illiterate?
There's a reason McCain uses the word "spending." It's easier to oppose than universal health care, investment in green technology, and good schools. Here's hoping the voters grasp that they mean the same thing.
--Jonathan Cohn
12 comments
Obama, by contrast, is in many ways a continuation of Bush. Like Bush (only far more so), Obama is fine with tariffs and subsidies. Like Bush, he wants to send jackbooted thugs into every meatpacking plant in America to rid the American workplace of anyone who happens to have been born on the wrong side of an imaginary line. Like Bush, he wants a more progressive tax code. (It is one of the great myths of 21st century that the Bush tax cuts made the tax code less progressive; the opposite is true. If you are in the bottom 38% of taxpayers, you now pay zero income tax—and therefore have an incentive to support any spending bill that comes down the pike.) Like Bush, he wants more regulation, not less.
www.theatlantic.com/.../mccain-economics
- jacobt1
September 18, 2008 at 11:50pm
Criminy Jacob. Get a hobby.
One article by the guy who compared John Edwards to David Duke over his opinions on trade, you swallow every argument. I can't wait to see you defending Sarah Palin's forein policy.
- mjhniner
September 19, 2008 at 1:01am
Hey Jacob, has this week's economic news really not taught you that deregulation ain't all it's cracked up to be? Stop drinking the McCain Cultist Kool-Aid and face the facts.
- rozenson
September 19, 2008 at 1:53am
I'd rather have universal health care than bail out Wall Street companies that run themselves into the ground.
- kirkaracha
September 19, 2008 at 1:55am
"Like Bush, he wants to send jackbooted thugs into every meatpacking plant in America to rid the American workplace of anyone who happens to have been born on the wrong side of an imaginary line."
Is that a reference to immigration? I honestly don't know. Does Bush and Obama really care about their thugs' footwear?
(Reads Jacob's link... Hey, I recognize some of this language... Wha?)
Jacob, you lifted your entire argument from the link you linked to. I agree with you (or rather, Steven Landsburg) that McCain's instincts on trade policy are better than Obama's. However, you've (Jacob) conveniently left out the very next sentence, "But there's a lot about economics that McCain just doesn't get," and after, you (Steven) rail against McCain's energy plan. I'm glad you're able to see both sides of the issue, Jacob (Steven).
If you're the same person, I respect your decision to, in your own words, "support John McCain. With trepidation." If you aren't the same person, however, Jacob, I'd advise you to get your own ideas.
- bigfish
September 19, 2008 at 7:43am
Well, on trade, frankly, the folks who are advising Obama are a lot more laisse
- dbhuff
September 19, 2008 at 8:49am
Well, on trade, the folks who are advising Obama are a lot more free-trade than the candidate has been on the stump. I'm guessing some of that is rhetoric to pander. Be that as it may, if we have learned anything this week, it is that unrestrained capitalism fails utterly and spectacularly, that the government will be left using our tax money to bail out all the rich people who took a flier on debt instrument leverage 1000x, and that the collateral damage among folks who's retirement savings are evaporating or who's college fund just floped into the community college zone but had nothing to do with the shenanigans that got us in trouble is significant. Suppose we had Private Savings Accounts right now? Suppose the market had cratered when Jacob was about to retire? I'm guessing that's a non-starter right now. The markets have had to learn this again (seems to happen on a 20 year cycle or so) that you can't have a portfolio effect if the failure of one aspect means all parts of the portfolio go down. Insurance that depends on the very market they are insuring for instance...
Meanshile, we've spent that last 20 years as a country learning how to build better web sites, flip more burgers, and create fancy pieces of paper to trade on Wall Street. While our country's R&D has shrunk to the smallest percentage of GDP in the industrial age, and has shrunk in actual dollars for the same 20 years. Anyone who believes this is a recipe for the 'great American economy' to continue to dominate the world had better check to see where some of the latest developments are coming from: India, China, even old Europe, is starting to make us look weak in the next generation of technologies. That's another thing 'free markets' have wrought.
- dbhuff
September 19, 2008 at 9:01am
But we don't have unrestrained capitalism, and haven't for decades. You don't want private retirement accounts? Wonderful, what will you want when SS and Medicare eat over 50% of the budget? Our present course is unsustainable, and we all know it.
I'm unclear on your R&D comments. Is that gov't R&D, private, or both? In any case, how exactly did we get to a $14 trillion economy, and the leading exporter in the world?
All is not lost, Huffy.
- butchie b
September 19, 2008 at 1:39pm
butchie - I've always figured you for someone with a little more imagination that that. We both know that there are numerous approaches to resolving SS & Medicare's solvency woes without using private accounts (and I note that you carefully chose not to comment on what would have happened to everyone who wants to retire in the next 5 odd years were their SS accounts heavily invested in private accounts after recent events).
You could start with reducing benefits, raising the qualifying age, raising (or eliminating) the FICA cap just to name some really obvious ones.
As for leading exporter in the world - by what measure? I had understood for some time that Germany (a small country of 80 millions which I am repeatedly told should be pitied for it's inefficient and wasteful socialised systems) was the leading exporter until recently dethroned by China (wonder whose buying all that stuff?). However if you want to lay claim to the world's leading debtor nation, or worst trade deficit in developed countries, they're clear open and we're already there. Know they don't sound quite as good though, a bit like reality.
- Nari224
September 19, 2008 at 3:12pm
Yes, Nari, you COULD do many of those things. My point is that most people who don't want private accounts are generally silent about the painful measures they would recommend.
If someone needs to retire in 5 years, the majority of their money should NOT be invested in stocks. A private account in bonds and cash may be just fine.
Having lived in Germany for 8+ years, they are not to be pitied, but rather admired for many aspects of their socierty. That whole Turk thing is a problem, no?
In any case, average unemployment under W has been less than under Clinton, but that never gets talked about somehow. Speaking of reality.
- butchie b
September 19, 2008 at 3:34pm
I think dbhuff's R&D figures were for government R&D. But R & D are really quite separate things. In particular, the private sector does a lot less of the R than they used to -- basic research is largely just a government role these days, because it doesn't bring short-term profits. Another factor is that R&D trends look a lot different depending on whether or not you count military/defense R&D or not.
For a view on how government-sponsored research is going (it's not pretty), check out the editorial in the latest issue of Science: www.sciencemag.org/.../1605
As for private retirements and silence, the silence of those who oppose privatization of Social Security is matched by the silence of privatization supporters on the reality of what happens in any transition of the system. No easy long-term solution no matter what you do.
- JEFF FREY
September 19, 2008 at 5:54pm
Government interference in the markets, not deregulation, is responsible for the current financial crisis. Congress mandated affirmative action in lending. Billions on billions were loaned to unqualified home buyers. The result should have been foreseen, but as always political correctness trumped rationality, and nobody said anything.
White guilt has already destroyed the educational system. Now it has wrecked the financial system as well. Way to go, liberals.
As for Obama's spending proposals, they are a monument to human stupidity. Free health care, free housing, free lunch. If you believe that BS I have a bridge for sale.
- bulbman1066
September 20, 2008 at 12:21am