Wednesday, April 23, 2008

Campaign Frustrations (Part 1)

(HT to Greg Mankiw for the articles today).

A good NY Times article by David Leonhardt on McCain's economic adviser, Douglas Holtz-Eakin. Eakin is a smart, honest guy but economists are frustrated with McCain's proposals that would balloon the deficit.

As Mr. McCain’s plan currently stands, The Economist magazine concluded that it “will not come anywhere close to paying for the tax cuts.” Most telling, I spoke over the past week with several other economists who admire Mr. McCain and have advised him over the years. None would defend his current fiscal package (or be quoted).

In this U.S. News Q&A, Holtz-Eakin does a good job answering questions and explains the hopes/plans McCain has of cutting pork barrel spending to help keep spending down by the amount he cuts taxes. It's as thorough and on-the-record as any interview with any candidate's adviser.

What is the key to dealing with healthcare?
The fundamental problem with healthcare is rising costs. The focus on the Democratic side is covering everybody. That's a laudable goal, but the reality is even if you were to snap your fingers and cover everybody who was uninsured ... and in exchange for their insurance you had them pony up $3,000 apiece, you would raise $150 billion, which is a lot of money, and now everyone would be in the system and given 6 to 8 percent cost growth a year, you would chew up that $150 billion within a year, and now everybody is in and it's getting more and more expensive every year and that is why companies drop insurance and people can't buy insurance. The Democratic formulation solves the wrong priority first.

This jives with what I've heard from doctors-- universal health care won't keep costs down.

McCain is at least honest about NAFTA, even to his detriment in "blue-collar" states.

Conservative David Brooks had a good editorial last week on the subject of how the Democrats do America a disservice in attacking trade deals like NAFTA.

Barack Obama delivered a speech in Pittsburgh on Monday on the economic stresses facing American workers. In the speech, he devoted one clause in one sentence to the single biggest factor affecting the workplace: technological change. He then devoted 45 sentences to one of the least important: trade deals.

Economists differ over how much outsourcing will change the American job market in the future, but there is little evidence that trade has been a major cause of job loss or even wage stagnation so far. As Robert Z. Lawrence of the Peterson Institute for International Economics wrote in a recent study: “The recent increase in U.S. inequality ... has little to do with global forces that might especially affect unskilled workers — namely, immigration and expanded trade with developing countries.”

And yet all Democratic domestic policy discussions have to start with trade and, in 99.9 percent of the cases, end with trade.

So, good for McCain for telling the truth about NAFTA and jobs. Shame on him for not coming up with any headlines other than the stupid repeal of the gasoline tax for the summer. Shame on him for not explaining how it's not a contradiction that he wants to fight the deficit yet make it worse at the same time.
You must do better, Senator!

1 comment:

justin said...

I liked both of those articles ( I hardly ever disagree with Brooks). He is by far one of my favorite writers.