June 16, 2008
Column: Orthodox responses to taxing issues
Barack Obama and John McCain both expect the ailing US economy to work to their advantage in November. Mr Obama promises to make things better. Mr McCain says they will get better by themselves and he will not make them worse in the meantime. These are the customary postures of the two parties. For a fight between an insurgent Democrat and a maverick Republican, the economics in this election is sadly orthodox.
Mr Obama offers the usual Democratic remedies for middle-class anxieties and grievances: new tax breaks and spending programmes, higher taxes for the rich, sabre-rattling on trade, calls for stricter regulation of finance and so forth. Mr McCain, likewise sticking to his party’s script, says that with the economy in a hole, this is no time to be raising anybody’s taxes, restricting trade or doing anything else to get in the way of American enterprise.
The remainder of this column can be read here. Please post comments below.
Clive, “Mr Obama, for all his talk about reopening the North American Free Trade Agreement, is unlikely to raise new trade barriers or roll back the deregulatory trend of the 1980s and 1990s” makes me scratch my head as a reason to support Sen. Obama.
So, since his policy is backwards and wrong, the fact that it will likely be opposed by sensible people means that it is not very harmful. Even though Sen. Obama has voted against lowering trade barriers on every occasion that the issue has come up in the Senate, you still think he is unlikely to block trade.
Even though he voted against the Colombia Free Trade agreement, which did not even effect US Imports (there was already no tariff there), on US Exports (there is a tariff on Colombian imports of US Goods), you seem to think that there is little difference between Sen. McCain (one of the best on free-trade) and Sen. Obama (one of the worst Senators on free-trade).
You seem to share The Economist position that “we can only hope that Sen. Obama is not serious” on trade issues. Somehow hoping that a President does not enact the policies he campaigns for seems like a weak response to Sen. Obama’s trade demagoguery.
JBP
Posted by: John Powers | June 16th, 2008 at 1:20 pm | Report this commentWay to stay positive Clive!
Posted by: Sade | June 16th, 2008 at 2:22 pm | Report this commentJohn, You make a fair point, of course. The hope that Obama is insincere, and will not follow through on his anti-trade rhetoric, would be a bizarre reason to support him. His statements on the subject are a negative so far as I am concerned, as I have argued in many previous articles. There is no question in my mind that on this important aspect of policy McCain is the better candidate. But the fact remains that I don’t think Obama will be as bad on trade as he implies, and this leads me to discount McCain’s advantage on trade to some moderate degree. In general I don’t think it’s wrong to look at what candidates are likely to do as well as what they say they will do–so long as they are not given a free pass for advocating stupid policies.
Posted by: Clive Crook | June 16th, 2008 at 2:32 pm | Report this commentClive,
Well, his voting record and his campaign show differently. What leads you to think that “Obama will be as bad on trade as he implies”? Should voters look forward to Sen. Obama not following his track record and campaign on other issues? Maybe he will actually become pro-life and sympathetic to Wal-Mart shoppers, but he has no record to show that.
If Sen. Obama as President turns 179 degrees away from his current voting and campaign, then I probably would vote for him too, but I know why anyone should think he is going to make that change.
JBP
Posted by: John Powers | June 16th, 2008 at 4:07 pm | Report this commentThis is doubtless one more example of my eagerness to post comments far outrunning my knowledge of economic issues, but I have a queation for Clive Crook, John Powers and anyone else who cares to answer: Does the fact that a particular presidential candidate may want to look carefully at a trade agreement to see if it supports the basic values of a civilized nation mean that he (or she) is necessarily “against” free trade?
Or is not this term itself an expression of the same kind of economic fundamentalism implied in the often bandied about but possibly meaningless expression: “free markets”? Is is not almost a cliche that the capitalism which almost everyone this side of Kim Jong Il now supports is a mixed one, which could not work at all without government involvement at many levels?
Is someone who insists on provisions against child labor, slave labor or environmental destruction in a trade agreement necessarily an opponent of free trade? And what about the fact that China, one of the world’s great examples of the supposed benefits of free trade, would have no economic miracle, nor its customers inflation suppressing cheap imports, without China’s brutal repression of labor unions?
Posted by: algasema | June 16th, 2008 at 5:55 pm | Report this commentMr. Cook,
Posted by: Michael D. Johnson | June 16th, 2008 at 7:16 pm | Report this commentI think prospect theory illustrates why Mr. McCain’s plan will be the harder of the two to implement. Everyone with the sense God gave an ant knows that when the tax breaks go, so will employer sponsored healthcare. What are the odds that corporations will give employees enough monetary compensation to make them “whole”? It will be quite amusing to see a 21st century Harry and Louise campaigning against the Republican plan.
Roger,
Sen. Obama (and Clinton) looked carefully at the Colombia agreement and made exactly the wrong decision for the American Worker. Either he is not capable of careful looking, or makes very bad decisions. If Sen. Obama wants to “bandy about free markets”, he could occasionally vote in favor of enterprise, rather than being a dogmatic Leftist on trade.
Michael,
From what I have read, McCain doesn’t propose eliminating the tax break for employer provided healthcare, but extending that same break to individuals, sole proprietors, the unincorporated etc. I don’t see that as being much of an incentive for corporations to drop healthcare. A corporation must provide healthcare to attract workers, regardless of whether an individual can also deduct his expense.
JBP
Posted by: John Powers | June 16th, 2008 at 8:20 pm | Report this commentThat is from the Wall Street Journal assessment of the candidates plans: “Replace exclusion from income for employer sponsored insurance with refundable credit of $2,500 for individuals and $5,000 for families.”
This is from McCain’s website: “While still having the option of employer-based coverage, every family will receive a direct refundable tax credit - effectively cash - of $2,500 for individuals and $5,000 for families to offset the cost of insurance. Families will be able to choose the insurance provider that suits them best and the money would be sent directly to the insurance provider. Those obtaining innovative insurance that costs less than the credit can deposit the remainder in expanded Health Savings Accounts.”
That to me sounds like you pay for your own healtcare.
Posted by: Michael D. Johnson | June 17th, 2008 at 3:53 pm | Report this commentMichael,
You pay for it now as well. It comes out of your paycheck. There is not some miraculous benevolent company that funds your well-being; healthcare is part of compensation.
The issue is the tax deduction for healthcare is not available to individuals. McCain would make a similar deduction for business or personal insurance buyers.
JBP
Posted by: John Powers | June 17th, 2008 at 4:11 pm | Report this comment