Posts Tagged ‘Obamanomics’

Health Care’s Place in Obamanomics

Tuesday, November 25th, 2008

This tidbit from James Pethokoukis’s blog over as USN&WR makes me want to read Douthat’s and Salam’s new book:

Another interesting healthcare reform option is highlighted by Ross Douthat and Reihan Salam in the book Grand New Party. Uncle Sam would require individuals and families to put 15 percent of their income into health savings accounts. If you run out of money before year-end, the government steps in. If you don’t, you get the money back or it rolls over into a retirement account.

This idea seems to have promise – though without seeing the ancillary details, there are some glaring issues with it on process grounds, even as you can see the proposal working out ratehr well under most circumstances in the world. It seems to penalize those with families, by reducing their retirement funds; those without an income would not have to face the trade-off that seems essential to their system working – choosing between retirement savings and health care; and preventive medicine would seem to be discouraged, although it is seen by most wonks as the surest way to reduce overall health care costs. Why get a regular check-up if you’re depleting your retirement savings to do so?

The plan seems designed mainly to tackle two political problems – the lack of health insurance for many Americans; and the moral hazard of having unrestricted access to health care. It’s rather ingenious, even if I’m not sure that the second factor should be taken too seriously. People want to avoid going to the doctor – or at least I do. This policy almost seems designed to create a massive sociological experiment. Aside from short-term medical emergencies, people would be forced to create health care and retirement strategies that balanced their long-term financial needs with their short-term health care decisions. Should I get the botox, or save more for retirement? Should I schedule this regular check-up? Should I spend money on these various preventive steps and live longer – or save more so I can spend my fewer years in a splendid retirement?

I’m sure it’s worth checking out the book just to see what other ideas Salam and Douthat have to reinvigorate conservatism.

But for now, Obama’s plan – or some variation between the rather similar Clinton, Obama, and Edwards plans – is the right way to go. It’s the shortest route to improving our current mess.

The core problem we need to solve though isn’t that our health insurance system as currently instituted is flawed, but that health insurance as the primary means of dealing out health care is flawed. Politically, the Obama/Clinton/Edwards path of patching up the current system is the only feasible one at the moment – to improve the status quo marginally. But there are far too many perverse incentives – for health insurance companies, for patients, for doctors in a health insurance system.

Of course, James Pethokoukis has greater things on his mind than our rotten health care system. He seems to be concerned that if Obama is able to pass a program that actually gives substantial benefits to Americans, it will move America to the left. Which is why he has now declared that it is the responsibility of the Republicans to stop this idea or face destruction. After all – the average American hasn’t seen much improvement in their lives as a result of the government in a long time. His theory is, once a competent liberal is able to pass a plan that substantially improves a problem in the lives of many Americans, then people will abandon the anti-government rhetoric of the conservative movement and abandon the program of incessant and regressive tax cuts.

The fear of socialism lingers like a spectre.

So, Pethokoukis proposes Republicans do anything they can to stop “Obamacare,” in order to save themselves. His little speech reminds me of a football coach trying to psych his team up for the game. But he’s playing with fire.

In light of this market disaster, this financial earthquake, some necessary changes are required to be made to our grand social bargain. Free trade is a good thing – but it creates chaos in it’s wake. The financial crisis is just the latest symptom. Obamanomics is a pragmatic, liberal approach to treating the core disease – which is not free trade or globalization, but destabilization. Obamanomics does not ideologically prescribe government intervention as Reaganomics proscribed it. Rather, it is a series of pragmatic first steps. It does not have as it’s goal the creation of some Great Society as previous versions of liberalism did; and it also does not merely try to find a Third Way between the Left and Right as Clinton did.

The key factor in understanding Obamanomics is that it does not force it’s values in the hoped for end result, but instead in the processes of getting there. Rather than imagining a perfect world and attempting to bring America to this goal, Obamanomics tries to improve what is already here, especially by instituting processes that inherently reflect core values like transparency, accountability, fairness, a long-term strategic orientation, and an aversion to government coercion.

Obama & Trade

Thursday, November 13th, 2008

I’ve heard from a few people that there is a growing concern that Obama is anti-free-trade.

This concern has a basis in Obama’s record – mainly from his rhetoric in Ohio during the primary fight with Hillary Clinton and to some extent the fact that he is a Democrat and needed the support of the labor unions. But to a large degree the exaggerated fears of many businessmen comes from comments made by the Republicans during the campaign – as John McCain’s campaign was first (ridiculously) calling Obama “the most protectionist candidate that the Democratic Party has ever fielded” before his campaign went on to call Obama a supporter of comprehensive sex education for kindergartner, a Marxist, a socialist, and a friend to terrorists.

This has led to a series of conflicting impressions of Obama and his position on trade – from statements during the Ohio campaign that “we can’t keep passing unfair trade deals like NAFTA that put special interests over workers’ interests” to his later point – when asked about his rhetoric about NAFTA during the Ohio campaign that, “Sometimes during campaigns the rhetoric gets overheated and amplified.” Indeed – despite the appeal of populist protectionist rhetoric (some 60% of Americans think free trade and NAFTA have been bad for people like them), Obama chose to attack protectionism in the general campaign: “[n]ot only is it impossible to turn back the tide of globalization, but efforts to do so can make us worse off.” At least in part, Obama’s friendlier stance towards free trade has to be understood as a tactical move on his part as he was certain to be to the left of McCain on this issue. McCain has never even made an issue out of any labor or environmental protections relating to the issue and would have had serious problems with economic conservatives if he moved to the left on this issue as they never trusted him to begin with.

Even aside from the change in rhetoric, there is considerable evidence that has led numerous reasonable observers to believe Obama is, in fact, in favor of trade even as he is concerned with some of free trade’s side effects on American workers and the economy. Obama, for one, described himself as a “pro-growth, free-market guy.” Even the arch-conservative Weekly Standard was forced to concede in the midst of the general election campaign that Obama’s two main economic advisors Jason Furman and Austan Goolsbee, while liberals, were “centrist, pro-free traders.” George F. Will, my favorite columnist and a paleo-conservative – described Goolsbee as the best sort of liberal economist his conservative leanings could imagine:

Goolsbee no doubt has lots of dubious ideas – he is, after all, a Democrat – about how government can creatively fiddle with the market’s allocation of wealth and opportunity. But he seems to be the sort of person – amiable, empirical and reasonable – you would want at the elbow of a Democratic president, if such there must be.

Naomi Klein attacked these two herself as ideologically impure in a piece in The Nation magazine – and while I find Klein to be provactive, I think a pro-free trader could hardly have a better endorsement than an attack by Klein.

Obama’s official position on trade has remained consistent – even as his focus has changed over the course of the campaign. What has struck me about all of Obama’s positions is the extent to which they begin with an appreciation of conservative ideas – as his health care plan works within the market rather than by goverment fiat; as his stance on affirmative action reflects traditional concerns about whether we are trying to ensure the equality of oppurtunity or equality of the ends. His views on trade seem similar – as he embraces free markets and free trade – but wants to mitigate the negative side effects.

The Council on Foreign Relations, a group with a considerable interest in free trade, vouched for Obama’s support:

Sen. Obama (D-IL) generally supports free trade policies, though he has expressed concern about free trade agreements that do not include labor and environmental protections.

Tim Hanson and Nate Weisshaar of the Motley Fool probably best described the most reasonable concerns about Obama’s record on trade in their piece asking “Will Obama End Global Trade?” (the answer was, “Nope.”):

While Obama’s campaign literature will tell you that his goals are fairer trade, more assistance for displaced American workers, and greater global environmental protections, there is some global worry that an Obama administration might impose and sustain protectionist policies in order to reward labor union support for his campaign and get our economy back on its feet.

As private sector labor unions have been decimated in the global economy, and as Obama and the liberal consensus views them as part of the solution rather than a major problem, it’s hard to see exactly what steps Obama can take to rejuvenate unions.

In the end, the best way to understand and predict Obama’s trade policies is as part of his view of economics in general. Obama’s economic positions are consistent with a broad Democratic consensus that has emerged in the past decade – bringing together the two warring sides of the Clintonian era, short-handed as Robert Rubin versus Robert Reich for Clinton’s Labor and Treasury Secretaries. The Rubin school believed in expanding free trade, reducing deficits, encouraging overall growth without regard to it’s distribution, and deregulation. The Reich school believed in protecting labor unions, mitigating the effects of globalization through an expanded safety net and job-retraining programs, environmentalism, and was concerned with inequality. Over the past decade, many figures on both sides of this ideological divide have found worth in the ideas of their one-time competitors – as David Leonhardt’s New York Times Magazine piece called “Obamanomics” explained.

This Democratic consensus views free trade as a positive force in the world – but one that has numerous side effects that are negative. The role of government in this picture is to try to mitigate the negative effects of free trade – especially those temporary effects of the transition to a more globalized economy. Most of Obama’s domestic agenda is designed to accomplish these purposes – from the investment in a green energy industry to investment in infrastructure to health care reform to financial reforms. His nuanced position on trade reflects this same desire – to mitigate the destabilizing effects of globalization while acknowledging it’s benefits.

A Skeptic’s Case For Barack Obama

Tuesday, November 4th, 2008

When Barack Obama first announced he was going to run for president I was very skeptical – both about whether he was seasoned enough or whether this was his moment. It took me six months of reading, researching, and reflecting to finally come to decide that Obama was my choice.

I doubt anyone reading this blog over the past year would consider me to be a skeptic of Obama. But I did start out as one – and despite my strong support for Obama, I still remain one. Electing anyone as president is a risk – and those of us who are skeptical, who are less than completely taken with a candidate, who can sees the flaws along with the great opportunity – can be tempted to throw up our hands in despair and suggest – as many do – that each election is merely a choice between the lesser of two evils. But by giving up our place in politics, we cede power to those whose secular or religious convictions are certain – allowing them to drag us from one extreme to another.

There are serious issues we need to deal with as a nation in the next four years, issues which have been festering for far too long untended – global warming, terrorism, islamist extremism, the challenges of globalization, the fiscal instability, our deteriorating infrastructure, growing executive power. We need a president who can focus the country on these tasks and finally set us on the right path again.

Here are the reasons why I believe Barack Obama is the leader we need to set us on that path:

  1. Ideological Agnosticism.
    Despite the recent claims of Obama’s secret Marxist tendencies, his secret socialist tendencies, his secret terrorist sympathies, and the other extreme ideologies he is imputed to secretly profess, he is in fact a pragmatist – describing himself at one point as ideologically agnostic:

    I’m a Democrat. I’m considered a progressive Democrat. But if a Republican or a Conservative or a libertarian or a free-marketer has a better idea, I am happy to steal ideas from anybody and in that sense I’m agnostic.

    You can see this in Obama’s clear appreciation for Ronald Reagan and his belief in the power of markets (as you can see in his health care proposal [PDF] and his cap-and-trade proposal to combat global warming [PDF].) You can also see it in how he was able to find common cause and team up with one of the most conservative members of the Senate, Tom Coburn, on a bill to promote transparency in earmark spending.

  2. Post-partisanship.
    It’s a buzz word that most people have a sense of but not a clear understanding of. For Obama, post-partisanship is a campaign and governing strategy that focuses on long-term challenges, especially those with technocratic answers – such as global warming, health care, the financial crisis, and infrastructure development – while striving to minimize and find common ground on divisive social issues – such as abortion, gun rights, and gay marriage. Notice that in Obama’s convention speech he does not use the standard rhetoric about abortion or guns – but instead strives to move past these issues:

    The challenges we face require tough choices. And Democrats, as well as Republicans, will need to cast off the worn-out ideas and politics of the past, for part of what has been lost these past eight years can’t just be measured by lost wages or bigger trade deficits. What has also been lost is our sense of common purpose, and that’s what we have to restore.

    We may not agree on abortion, but surely we can agree on reducing the number of unwanted pregnancies in this country.

    The reality of gun ownership may be different for hunters in rural Ohio than they are for those plagued by gang violence in Cleveland, but don’t tell me we can’t uphold the Second Amendment while keeping AK-47s out of the hands of criminals.

    At the same time, Obama’s post-partisanship can be seen in his many attempts to encourage dialogue with and respect for ideological conservatives – and his reluctance to criticize the Republican party as a whole.

  3. Process Revolution.
    Lawrence Lessig, a Constitutional law professor, suggests that throughout American history there have been a number of unusual “revolutions whose purpose was not to tear down the existing social and governmental structures, but to amend them in discrete ways.” He cites the Second Constitional Convention and the post-Watergate reforms as clear examples – and he suggests as a result of Bush’s legacy, we may be on the verge of another “process revolution.” Many of Obama’s proposals focus on reforming processes rather than achieving certain ends. For example, he proposes to increase transparency for all aspects of government and to allow citizens a more active role in responding to and shaping government policy. Neither of these changes in process necessarily further liberal goals – but they both help reform government in general.
  4. His Campaign.
    As Peter Beinart wrote earlier this year:

    It is this remarkable hybrid campaign, far more than Obama’s thin legislative resume, that should reassure voters that he can run the government.

    The almost flawless manner in which Obama has run his campaign has helped assuage any doubts I had about Obama’s executive leadership capability. Add to that the fact that his opponent also has no relevant executive experience, and for me, the choice became more clear. Obama proved that he could win, that he was willing to fight hard, and if necessary dirty, but that he preferred the high road – and managed to – in Peggy Noonan’s phrase – take “down a political machine without raising his voice.”

  5. Obamanomics.”
    The term sounds hokey – but it refers to the Democratic consensus about the economic steps that need to be taken to get America on the right track economically – especially to reduce the middle class squeeze and to deal with the root causes of the financial crisis. The steps Obama proposes are not radical – they are moderate. You might almost call them “tinkering.”
  6. The Right Temperament.
    Conservative columnist and curmudgeon George F. Will clearly sees that one of the candidates has the wrong temperament – as he described McCain’s reaction to the current financial crisis:

    Under the pressure of the financial crisis, one presidential candidate is behaving like a flustered rookie playing in a league too high. It is not Barack Obama…[The more one sees of McCain’s] impulsive, intensely personal reactions to people and events the less confidence one has [in him] …It is arguable that McCain, because of his boiling moralism and bottomless reservoir of certitudes, is not suited to the presidency. Unreadiness can be corrected, although perhaps at great cost, by experience. Can a dismaying temperament be fixed?

    Another conservative columnist Charles Krauthammer admitted, while endorsing McCain, that Obama has “both a first-class intellect and a first-class temperament.” It is noteworthy that even these conservative stalwarts cannot avoid noticing that Obama’s steady, patient, consistent, even temperament.

  7. A Commander-in-Chief.
    The War on Terrorism, against international islamist extremism, is one of the core issues this election is about. It is impossible to project who will be able to handle the pressure of the commander-in-chief role well – except perhaps for those with relevant experience, such as high-level generals. But even that is no guarantee (see Grant, Ulysses.) Temperament is very important when choosing a commander-in-chief – but so is judgment. Obama has consistently shown good judgment regarding the War on Terrorism – most especially by opposing the War on Terrorism as a “dumb war” and by focusing on Pakistan and Afghanistan. And unlike either John McCain or George Bush, Obama has made it clear that he will not be outsourcing his responsibilities to a Secretary of Defense or to generals. As he told General Petreaus in Iraq: “My job as a potential Commander in Chief is to view your counsel and interests through the prism of our overall national security.” As a reader on Andrew Sullivan’s blog wrote:

    We can’t let it be assumed that McCain is stronger on national defense (including counter terrorism) just because he talks with more bluster than Obama. Seven years ago the world was shocked but united by 9/11. It was an environment in which the US could have led the world not just in acting militarily against terrorists, but actually eliminated terrorism by making it too politically costly. But then Bush muddied up the waters. We need a president who understands that mistake.

    A victory by John McCain will make Al Qaeda’s job easier. A victory by Obama will make it harder.

  8. Restoration.
    After September 11, 2001, the Bush administration began a systematic attempt – perhaps initially begun in good faith – to consolidate power in the executive branch, to ignore the rule of law and the Constitution, to torture American-held prisoners, and even to commit war crimes – while in the meantime undermining the entire international system created mainly by America and playing into Al Qaeda’s plans to draw us into conflicts in the Middle East. John McCain was one of the heroes who stood up to the Bush administration and against some of it’s worst excesses. He eloquently stated:

    The enemy we fight has no respect for human life or human rights. They don’t deserve our sympathy. But this isn’t about who they are. This is about who we are. These are the values that distinguish us from our enemies, and we can never, never allow our enemies to take those values away.

    And he’s exactly right. We must fight the War on Terror in a way consistent with our values – as Israel learned during the intifada and England learned during The Troubles, it is easy to let fear become the rationale behind policy (which is precisely what the “One Percent Doctrine” entails) – but in the end, you end up losing both your values and making the situation worse. McCain, despite some fine rhetoric, is not the candidate to restore American values – as he balked at preventing the CIA from torturing and called the Supreme Court decision supporting the ancient and basic right of habeas corpus the worst decision in the Court’s history. Obama does not have a perfect record on these issues – but he has made it a major theme of his campaign to restore our American values and the rule of law. Andrew Sullivan explained how he had watched America turn away from it’s values and that:

    until this unlikely fellow with the funny ears and strange name and exotic biography emerged on the scene, I had begun to wonder if it was possible at all. I had almost given up hope, and he helped restore it.

  9. Tinkering.
    Nassim Nicholas Taleb, an author, former Wall Street trader, economist, and philosopher who predicted the current financial crisis believes the best approach to action is something he calls “tinkering”:

    Taleb believes in tinkering – it was to be the title of his next book. Trial and error will save us from ourselves because they capture benign black swans. Look at the three big inventions of our time: lasers, computers and the internet. They were all produced by tinkering and none of them ended up doing what their inventors intended them to do. All were black swans. The big hope for the world is that, as we tinker, we have a capacity for choosing the best outcomes.

    “We have the ability to identify our mistakes eventually better than average; that’s what saves us.” We choose the iPod over the Walkman. Medicine improved exponentially when the tinkering barber surgeons took over from the high theorists. They just went with what worked, irrespective of why it worked. Our sense of the good tinker is not infallible, but it might be just enough to turn away from the apocalypse that now threatens Extremistan.

    Tinkering is the best we can do in a world we only imperfectly understand. Anyone looking at Obama’s policy proposals can see that he is a tinkerer rather than a revolutionary. For example, he seeks to build upon our current health care system rather than demolish it as McCain does in one manner and socialists do in another.

As I wrote before: Obama is a liberal pragmatist, with a conservative temperament, who seeks to understand the world as it is, to identify our long-term challenges, and to push (to nudge it) in a positive direction by tinkering with processes and institutions and creating tools to get people more involved in the government.

These are my reasons, as an initial skeptic, that I support Obama.

These are not reasons to be complacent if he does, in fact, win. But they are reasons to be satisfied – if only for one night – that our country is moving in the right direction again.

A year ago today…

Wednesday, September 17th, 2008

A year ago today, long-shot candidate Barack Obama gave a speech at Nasdaq calling on Wall Street to support his program to revitalize our economy:

Seventy-five years ago this week, Governor Franklin Delano Roosevelt took his campaign for the presidency to the Commonwealth Club in San Francisco.

It was a time when faith in the American economy was shaken – a time when too many of our leaders clung to the conventional thinking that said all we could do is sit idly by and wish that our problems would go away on their own. But Franklin Roosevelt challenged that cynicism. Amid a crisis of confidence Roosevelt called for a “re-appraisal of values.” He made clear that in this country, our right to live must also include the right to live comfortably; that government must favor no small group at the expense of all its citizens; and that in order for us to prosper as one nation, “…the responsible heads of finance and industry, instead of acting each for himself, must work together to achieve the common end.”

This vision of America would require change that went beyond replacing a failed President. It would require a renewed trust in the market and a renewed spirit of obligation and cooperation between business and workers; between a people and their government. As FDR put it, “Faith in America, faith in our tradition of personal responsibility, faith in our institutions, and faith in ourselves demands that we all recognize the new terms of the old social contract.”

Seventy-five years later, this faith is calling us to act once more…

In recent years, we have seen a dangerous erosion of the rules and principles that have allowed our market to work and our economy to thrive. Instead of thinking about what’s good for America or what’s good for business, a mentality has crept into certain corners of Washington and the business world that says, “what’s good for me is good enough.”

…The quick kill is prized without regard to long-term consequences for the financial system and the economy. And while this may benefit the few who push the envelope as far as it will go, it’s doesn’t benefit America and it doesn’t benefit the market. Just because it makes money doesn’t mean it’s good for business…

In this modern, interconnected economy, there is no dividing line between Main Street and Wall Street. The decisions that are made in New York’s high-rises and hedge funds matter and have consequences for millions of Americans across the country. And whether those Americans keep their homes or their jobs; whether they can spend with confidence and avoid falling into debt – that matters and has consequences for the entire market.

We all have a stake in each other’s success. We all have a stake in ensuring that the market is efficient and transparent; that it inspires trust and confidence; that it rewards those who are truly successful instead of those who are just successful at gaming the system. Because if the last few months have taught us anything, it’s that we can all suffer from the excesses of a few.

[And after outlining his economic agenda, summarized here by me, and in the speech by the Senator – and fleshed out more in this speech several months later.]

I ask for your support for this economic agenda, both in this campaign and if I should get the chance to enact these policies as your President. I will not pretend it will come without cost, but I do believe we can do achieve this in a fiscally responsible way – certainly more so than the current Administration that’s given us deficits as far as the eye can see.

I know some may say it’s anathema to come to Wall Street and call for shared sacrifice so that all Americans can benefit from this new economy of ours. But I believe that all of you are as open and willing to listen as anyone else in America. I believe you care about this country and the future we are leaving to the next generation. I believe your work to be a part of building a stronger, more vibrant, and more just America. I think the problem is that no one has asked you to play a part in the project of American renewal.

I also realize that there are some who will say that achieving all of this is far too difficult. That it is too hard to build consensus. That we are too divided and self-interested to think about the responsibilities we have to each other and to our country. That the times are simply too tough.

But then I am reminded that we have been in tougher times and we have faced far more difficult challenges. And each time we have emerged stronger, more united, and more prosperous than the last. It is faith in the American ideal that carries us through, as well as the belief that was voiced by Franklin Roosevelt all those years ago this week: “Failure is not an American habit; and in the strength of great hope we must all shoulder our common load.” That is the strength and the hope we seek both today – and in all the days and months to come.

At this time last year, John McCain wasn’t talking about economics, despite the growing sense of a forthcoming crisis on Wall Street. He was talking about Iraq – predicting that the troops would be home soon. His only mention of economics during this week last year that I have been able to find was in discussing Iraq.

Lies About Obama’s Tax Plans

Friday, September 5th, 2008

I just received another one of those mass emails being used to spread lies about Obama. I’ve interspersed the text of it with data contradicting the claims:

INTERESTING DATA JUST RECEIVED ON TAXES

Spread the word…..

This is something you should be
aware of so you don’t get blind-sided.
This is really going to catch a lot
of families off guard. It should
make you worry.

Proposed changes in taxes after 2008 General election:

CAPITAL GAINS TAX

MCCAIN
0% on home sales up to $500,000
per home (couples) McCain does not
propose any change in existing
home sales income tax.

OBAMA
28% on profit from ALL home sales

How does this affect you?
If you sell your home and make a profit, you  will pay 28% of your gain on taxes.
If you are heading toward retirement
and would like to down-size your
home or move into a retirement
community, 28% of the money you
make from your home will go to taxes. This  proposal will adversely affect the elderly who are counting on the income  from their homes as part of their retirement income.

This claim about Obama taxing profits on home sales comes from nowhere. Any gains on the sale of one’s principal residence is not taxed under section 121 of the Internal Revenue Code. Neither McCain nor Obama has proposed to amend this section.

DIVIDEND TAX

MCCAIN 15% (no change)

OBAMA 39.6%

How will this affect you?
If you have any money invested in stock
market, IRA, mutual funds,
college funds, life insurance, retirement  accounts, or anything that pays or reinvests dividends, you will now  be paying nearly 40% of the money earned on taxes if Obama become president.
The experts predict that ‘higher
tax rates on dividends and capital gains would crash the stock market yet  do absolutely nothing to cut the deficit.

As for Capital Gains taxes in general, Obama is proposing to raise the capital gains tax rate from 15 percent to 20 percent for those American families making more than $250,000.00 per year or singles making over $200,000.00 per year. Those families or singles making less than these respective amounts will not have a tax increase. Further, IRAs and college funds are exempt from taxation entirely – and neither candidate is proposing to change this.

INCOME TAX

MCCAIN (no changes)

Single making 30K – tax $4,500
Single making 50K – tax $12,500
Single making 75K – tax $18,750
Married making 60K- tax $9,000
Married making 75K – tax $18,750
Married making 125K – tax $31,250

OBAMA
(reversion to pre-Bush tax cuts)
Single making 30K – tax $8,400
Single making 50K – tax $14,000
Single making 75K – tax $23,250
Married making 60K – tax $16,800
Married making 75K – tax $21,000
Married making 125K – tax $38,750

Under Obama your taxes will
more than double!
How does this affect you? No explanation needed. This is pretty  straight forward.

This claim is worse than all those above – because Obama is actually proposing to lower taxes for all of these groups listed. Here’s a site which provides an Obama tax cut calculator. I can’t vouch for its accuracy, but it seems to be based on the Tax Policy Institute’s analysis of both candidates’ plans. The email also inaccurates states that Obama plans to revert to “pre-Bush tax cuts” which is only true for those making over $250,000.00. As Obama said in his speech on Thursday night:

I will cut taxes for 95 percent of all working families. Because in an economy like this, the last thing we should do is raise taxes on the middle class.

Sarah Palin in her speech this past Wednesday made the same claim the Republicans keep making:

Taxes are too high, and he wants to raise them. His tax increases are the fine print in his economic plan. And let me be specific: The Democratic nominee for president supports plans to raise income taxes, and raise payroll taxes, and raise investment income taxes, and raise the death tax, and raise business taxes, and increase the tax burden on the American people by hundreds of billions of dollars.

As Politifact.com writes – Palin’s claims are deliberately misleading. This email is worse than misleading – it is entirely fase.

This little list conveniently does not include those making over $125,000.00. It is this group of people – especially those making over $250,000.00, and even more, those making over a million dollars a year – to whom the profits of the past eight years has gone. The economy has been growing for eight years while the income of those in the middle class has decreased by approximately $2,000.00 when accounting for inflation since Bush took office.

INHERITANCE TAX

MCCAIN 0% (No change, Bush repealed this tax)

OBAMA Restore the inheritance tax

How does this affect you? Many families have lost businesses,  farms and ranches, and homes that have been in their families  for generations because they could not afford the inheritance tax.
Those willing their assets to loved
ones will not only lose them to
these taxes.

As for this section – again, falsehoods galore. According to FactCheck.org:

The claim that Obama proposes to “restore the inheritance tax” is also false, as are the claims that McCain would impose zero tax and that Bush “repealed” it. McCain and Obama both would retain a reduced version of the estate tax, as it is correctly called, though McCain would reduce it by more.

The tax now falls only on estates valued at more than $2 million (effectively $4 million for couples able to set up the required legal and financial arrangements). It reaches a maximum rate of 45 percent on amounts more than that. It was not repealed, but it is set to expire temporarily in 2010, then return in 2011, when it would apply to estates valued at more than $1 million ($2 million for couples), with the maximum rate rising to 55 percent.

Obama has proposed to apply the tax only to estates valued at more than $3.5 million ($7 million for couples), holding the maximum rate at 45 percent. McCain would apply it to estates worth more than $5 million ($10 million for couples), with a maximum rate of 15 percent.

Again – this email is counting on people accepting its’ allegations without checking them and hoping that stereotypes about liberals are strong enough that people will accept these charges.

NEW TAXES BEING PROPOSED BY OBAMA

* New government taxes proposed on
homes that are more than
2400 square feet

* New gasoline taxes (as if
gas weren’t high enough already)

* New taxes on natural resources
consumption (heating
gas, water, electricity)

* New taxes on retirement accounts
and last but not least….

This section is even more fanciful than the rest. Obama has never proposed taxes on water. He isn’t proposing to increase gasoline taxes. He isn’t proposing to increase taxes on retirement accounts. The taxes on homes with more than 2400 square feet – neither the number nor general idea can be found anywhere aside from in references to this email.

The one thing that is partially true is that Obama – and McCain – are proposing to create a “cap-and-trade system” which would impose a cost on businesses’ carbon emissions. Although neither McCain nor Obama call these costs “taxes” they can reasonably be called that. Further, Obama, though not McCain, plans to offset any potential increase in costs for consumers with a refund from a windfall profits tax.

* New taxes to pay for socialized medicine so we can receive the same  level of medical care as other third-world countries!!!

This final claim is way over-the-top. Obama’s plan calls for every American who wants to preserve their health insurance plan to be able to keep it. His plan even includes incentives that reward employers that do provide health insurance and penalizes employers that do not (with exceptions for small businesses.) In addition to this, Obama’s plan will open up the government health care plan used by members of Congress to allow consumers – in a free market – to opt into it. Obama’s plan is designed to create incentives within our current system to gradually close the huge holes in insurance coverage and over time bring down costs. It’s a conservative plan, in the best sense of that word.

John McCain’s health care plan is radical. McCain says he wants to:

Reform The Tax Code To Offer More Choices Beyond Employer-Based Health Insurance Coverage

In other words, McCain wants employers to stop providing health insurance coverage. He proposes to include the cost of health care in each employee’s taxable income – and to offset this by offering a $2,500.00 tax rebate for individuals and $5,000.00 for families. This isn’t enough to purchase health insurance coverage in many states, so in addition, McCain proposes to effectively deregulate the insurance market and allow insurance to be sold across state lines – eliminating the consumer protections states provide, including protections for those with pre-existing conditions.

The theory behind the McCain plan is that we already have too much health insurance coverage and are going to the doctor too often because we don’t have to pay every time we do. So he proposes that every individual – or family – purchase individual or family health insurance – a radical change, and one that places much greater power in the hands of the insurance industry. As a matter of fact, it would be accurate to say it is exactly what the health insurance industry is asking for.

Conclusion

So, there we have it. An email full of lies deliberately designed to mislead those Obama’s plans are designed to help. Obama’s plans – which are the fruit of a kind of Democratic consensus that has emerged in the past ten years on how to deal with the destabilization that has come from globalization. Obama is asking that those individuals who have gained the most from our society and economy should give a bit more in this time of need. All McCain and Palin and the Republicans offer is more tax cuts for the richest indivudals and the biggest corporations (tax cuts that go further than Bush’s tax cuts in favoring the wealthy) – for which their only defense is to make the false claim that Obama is planning on raising everyone’s taxes.

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Obamanomics

Tuesday, August 26th, 2008

In the past ten years, a Democratic consensus has emerged from opposing poles represented by Robert Rubin, Secretary of the Treasury under Clinton, and Robert Reich, Secretary of Labor under Clinton.

The consensus stems from a shared conclusion:

In the past generation, the American economy has been benefiting the vast majority of Americans less and less; and the trends that are causing this cannot be stopped.

There are many factors that have caused, worsened and continued to escalate this core problem:

  • the demise of America’s manufacturing base;
  • the increasing gap between the pay of CEOs and top corporate officials and the average worker;
  • the way the tax code has begun to tax labor at a far higher rate than it taxes capital;
  • the shrinking of organized labor;
  • the increasing instability due to globalization.

All of these are the symptoms and all of these are the causes.

Our economic system is breaking – the middle class is being squeezed; we are transferring a tremendous amount of our wealth to autocracies and our rivals around the world because of our dependence on oil; budget deficits are burdening our government which now practices a nefarious for of socialism, only for the rich; globalization is creating insecurity; our society is becoming more stratified1, with many traditionally class-conscious European countries becoming more socially mobile; our infrastructure is eroding.

Barack Obama’s answer to this – accepting the Democratic party consensus – is a mix of short-term and long-term measures.

  • To alleviate the squeeze on the middle class as certain industries leave America looking for cheaper labor, he proposes to create jobs with infrastructure improvements and to push the development of a green energy industry.
  • To aid small businesses and to reduce the instability created by the greater turnover in jobs in a globalized marketplace, he proposes a universal health care plan that combines a government plan open to all citizens, various incentives for businesses to offer coverage, and various incentives for individuals to get coverage on their own.
  • With regards to taxes, he proposes tax cuts (graph) to those who need it and tax increases to those who have benefited most from our society – those making over $250,000.00.
  • To prepare the next generation for the globalized marketplace, Obama proposes various improvements to education.
  • Barack Obama is also the only candidate who has pledged to protect the foundation of the internet. (John McCain has recently come off the fence to support a policy that directly undermines the architecture of the internet since it began.)

For a more in-depth and reflective look at Obamanomics, check out David Leonhardt’s cover story this weekend in the New York Times Magazine.

Addition: What Obama and the Democrats have been struggling with is a way to frame this in a visceral way that can be easily understood. Here’s my proposition:

McCain and the Republicans want to give big corporations whatever they want – even if it hurts American in the long term. (Offshore drilling; telecom immunity; free trade without sensible provisions regarding labor and environmental regulation; tax cuts on corporations and the wealthy while the government needs more income; opposing the protection of the basis of the web, net neutrality, so that internet providers can make a bigger profit.)

Obama and the Democrats want corporations to do well, but at the same time, they want to protect American society from the destabilizing forces of globalization and to protect what has made America the most prosperous nation on earth – including a stable middle class and social mobility – both of which we are in danger of losing due to reckless Republican policies.

That’s the narrative – it’s not class warfare. It’s about protecting what has made America great against the forces of globalization, overly greedy corporations, and rapid change.

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