Sen. Obama's Agenda As Of Today

From the NY Times, Sen. Obama's agenda:

1)" Energy and Economy, Intertwined
“I will invest $15 billion a year in renewable sources of energy to create five million new energy jobs over the next decade.”
OCT. 31, DES MOINES" ( We'll see. Doesn't bother me a whole hell of a lot )
2)" Beyond ‘No Child Left Behind’
“A truly historic commitment to education — a real commitment — will require new resources and new reforms.”
MAY 28, MAPLETON, COLO" ( I'm betting on more reforms than resources )
3)"Reaching the 45 Million Uninsured
“If you don’t have health insurance, you’ll be able to get the same kind of health insurance that members of Congress get.”
OCT. 31, DES MOINES" ( I'm for a single payer national health plan, so I don't like this. I know, I know, how can that be libertarian? It can't, but I have my reasons for biting the bullet on this one. Namely, a free market won't happen, and the current hybrid plan is the worst of both extremes combined. So throw me out of the libertarian caucus if you must. I've talked about this issue before, but many people don't know how to debate issues, probably because they don't actually understand them,and so don't bother to read or debate them. Anyway, here is a post by someone who offers an intelligent libertarian critique of health care in the spirit of the later Hayek. I associate myself with the comments of Captain Sarcastic in the comments section. Fun to read.) ( One other point, which I guess I'll have to mention every time for some people to understand. Hayek himself changed his mind about this. I agree with him in "The Road To Serfdom", which I consider a libertarian book. Here's a post about it. ) ( Finally, philosophically, my argument for positive liberty in a few cases is based upon "Capitalism And Freedom", written by someone named Milton Friedman. Although he disagrees with me about health care, my notion of positive liberty is exactly the same notion that he uses to justify what he called a Negative Income Tax. I won't argue the point here, but I argue that philosophically, no matter that he claimed it was for pragmatic reasons, the Negative Income Tax philosophically rested on a weak claim of positive liberty. Period. Otherwise, the pragmatic argument made no sense at all. Agree or disagree, that's my claim.) ( One more point, for people actually interested in issues. Here's my favorite plan:"The plan would slice one Gordian knot: everyone would be required to buy health insurance, insurers would have to treat the entire population as a single pool and changes in tort and licensing laws would enable low-cost clinics for minor problems." Read about the book that describes my ultimate position here ) I should also say that my claim is empirical. I am claiming that a national plan would cost less and be better overall than what we have now. That's not an ideological position, but an empirical position. The national plan would be no panacea, it would simply be marginally to much better than what we have: Namely, a government/private hybrid loaded with idiotic incentives and redundancies )
4) "Interrogations and Guantánamo
“We’re going to lead by setting the highest of standards for civil liberties and civil rights and human rights.”
FEB. 20, DALLAS" ( Agree completely )
5) "Security and Citizenship
“We cannot deport 12 million people. Instead, we’ll require them to pay a fine, learn English and go to the back of the line.”
SEPT. 10, WASHINGTON" ( Agree completely )
6) "Tax Breaks, Old and New
“As president, here’s what I’ll do: cut taxes for every working family making less than $200,000 a year.”
OCT. 29, PAID TELEVISION ADDRESS" ( Agree completely )
7) "Withdrawing From Iraq
“Nobody’s talking about bringing them home instantly, but one to two brigades a month. It’ll take about 16 months to get our combat troops out.”
MAY 16, WATERTOWN, S.D." ( Agree completely )
8) "Working With Iran
“I would be willing to lead tough and principled diplomacy with the appropriate Iranian leaders at a time and place of my choosing.”
JUNE 4, WASHINGTON" ( Agree Completely )
9) "Negotiating Nafta
“I think we should use the hammer of a potential opt-out as leverage to ensure that we actually get labor and environmental standards that are enforced.”
FEB. 26, DEMOCRATIC DEBATE" ( Agree completely: This is terribly misunderstood. All he's saying is that we can use leverage to promote liberty and decency. I'm fine with that )
10) "But then he hedged, foreseeing the unforeseen. “We don’t know yet what’s going to happen in January,” he said. “And none of this can be accomplished if we continue to see a potential meltdown in the banking system or the financial system.” ( Agree completely )

From his acceptance speech:

"Now, many of these plans will cost money, which is why I've laid out how I'll pay for every dime: by closing corporate loopholes and tax havens that don't help America grow.

But I will also go through the federal budget line by line, eliminating programs that no longer work and making the ones we do need work better and cost less, because we cannot meet 21st-century challenges with a 20th-century bureaucracy."

Enough said. That's fine with me. Try them out, but cut them out if they don't work or are too costly.

"Let's be clear about this: Barack Obama isn't going to raise your taxes in 2009"

Interesting post on the NY Times:

"Barack Obama and his advisers have spent much of the last three years devising policies to deal with the economy’s big, long-term problems, like inequality, health care, the budget deficit. In the process, they came up with an agenda that’s serious, detailed and mostly cogent.

Yet none of it will be their first priority.

Instead, the initial thrust of their economic policy will be on keeping the economy from falling into a recession that’s nastier than most of us have ever experienced.

This year’s election coincided with an important moment in the financial crisis. The credit markets have stabilized in the last few weeks and even improved a bit. But the rest of the economy is deteriorating fairly rapidly. It’s now in danger of falling into a vicious spiral, in which spending cuts by consumers and businesses lead to further layoffs and then more spending cuts.

Mr. Obama and his advisers acknowledge that their focus has to shift, but the change is still likely to be challenging, and a bit disappointing. “Unfortunately, the next president’s No. 1 priority is going to be preventing the biggest financial crisis in possibly the last century from turning into the next Great Depression,” says Austan Goolsbee, an Obama adviser. “That has to be No. 1. Nobody ever wanted that to be the priority. But that’s clearly where we are.”

Justin Fox has a good take on it:

"Let's be clear about this: Barack Obama isn't going to raise your taxes in 2009. He already said back in September, before the severity of the current economic downturn was apparent, that he would probably hold off on rescinding the Bush tax cuts on high-income households because of the fragility of the economy. In October, his campaign said it was backing off plans to impose a windfall profits tax on oil companies--at least until oil prices start heading up again.

The reasoning here is pretty simple. When the economy is shrinking, you don't raise taxes or do anything else (such as cutting spending) aimed at shrinking the federal deficit. Instead, you do whatever it takes to get the economy growing again."

Read the rest. Here's my comment:

1. donthelibertariandemocrat Says:
   Thursday, November 6, 2008 at 2:02 pm

   "Mr. Obama and his advisers acknowledge that their focus has to shift, but the change is still likely to be challenging, and a bit disappointing. “Unfortunately, the next president's No. 1 priority is going to be preventing the biggest financial crisis in possibly the last century from turning into the next Great Depression,” says Austan Goolsbee, an Obama adviser. “That has to be No. 1. Nobody ever wanted that to be the priority. But that's clearly where we are.”

   I agree. I notice that Paul Krugman, Ezra Klein, Jeffrey Sachs, John Judis, etc., have been pushing a big spending line, but I believe that they will be disappointed, if I'm reading them correctly. I believe that I'm likely to be happier with President Obama than they will be.

   As for the rest of your analysis, I agree with it. I hope that doesn't bother you.

"Obama was the true conservative, the Burkean"

Jeffrey Hart on why he voted for President Obama. He's a conservative. In my sense of conservative, I agree:

"Republican President George W. Bush has not been a conservative at all, either in domestic policy or in foreign policy. He invaded Iraq on the basis of abstract theory, the very thing Burke warned against. Bush aimed to turn Iraq into a democracy, "a beacon of liberty in the Middle East," as he explained in a radio address in April 2006.

I do not recall any "conservative" publication mentioning those now memorable words "Sunni," "Shia," or "Kurds." Burke would have been appalled at the blindness to history and to social facts that characterized the writing of those so-called conservatives.

Obama did understand. In his now famous 2002 speech, while he was still a state senator in Illinois, he said: “I know that a successful war against Iraq will require a US occupation of undetermined length, of undetermined cost, with undetermined consequences. I know that an invasion of Iraq without a clear rationale and without international support will fan the flames of the Middle East, and encourage the worst, rather than the best, impulses of the Arab world, and strengthen the recruitment arm of al Qaeda. I'm not opposed to all wars. I'm opposed to dumb wars.”

Burke would have agreed entirely, and admired the cogency of so few words. And one thing I know is that both Nixon and Reagan would have agreed. Both were prudential and successful conservatives. But all the organs of the conservative movement followed Bush over the cliff—as did John McCain."

This is a theme I'd like to develop more. In any case, it's why I'm not worried about President Obama's economic plans, and support him on so many others issues completely.

"will fret over the ballooning budget deficit brought on by slower growth and the enormous expense of bailing out Wall Street. "

New post by Robert Reich:

"Today will determine whether Barack Obama will be President of the United States beginning 12:00 noon, eastern standard time, on January 20, 2009. The next question is what he can accomplish thereafter.

Each of Obama's major initiatives – affordable health care, high-quality schools along with early-childhood education, an end to oil dependence along with a cap-and-trade system that reduces carbon emissions, a more equitable tax system, and a withdrawal from Iraq – would be difficult to achieve on its own. Together they comprise one of the most ambitious presidential agendas in living memory.

Is it achievable? Not even a Democratic majority in both houses of Congress – not even sixty Democratic votes in the Senate – can easily overcome the obstacles."

Read the whole post. Here's my comment:

Don said...

There is never just a president, there is an administration.You know that better than me, a nobody. As to this:

"Fiscal conservatives – including a newly-enlarged group of “blue-dog” Democrats – will fret over the ballooning budget deficit brought on by slower growth and the enormous expense of bailing out Wall Street. They’ll want to put any new spending initiatives on hold."

If you're a Democrat, we're in the same party. It's my job to fret. However, in the end, we'll work it out. That's my plan, at least.

Don the libertarian Democrat

Tuesday, 04 November, 2008

"who represent competing strains of Democratic economic thought": I'm A Sort Of Non-Competative Strand

Yesterday Free Exchange commented on the post by Robert Rubin and Jared Bernstein about interest and debt, and how they are viewed in the Democratic Party. My party. Now, you might well ask where I fit in, but I've about 600 posts now trying to answer that, so let's move on:

"ROBERT RUBIN and Jared Bernstein are two left-leaning economists (both of which have advised Barack Obama) who represent competing strains of Democratic economic thought. Mr Rubin, Treasury secretary under Bill Clinton, was known as an economic centrist—pushing free trade and fiscal responsibility. Mr Bernstein is a more progressive economist, who has emphasised international labour standards and a robust social safety net.

Today, the New York Times published an opinion column co-written by Mr Rubin and Mr Bernstein. It lays out the broad areas of agreement between the two men which, one assumes, hints at what might emerge from an Obama administration. It's not particularly scary stuff—short-term stimulus, infrastructure investment, long-term fiscal discipline, sympathetic labour policies, and a trade policy that seeks to protect workers but not jobs or industries. A change in direction, to be sure, and one that deserves vigilant oversight, but not a new social democratic state."

Now, I didn't respond to this column because I also didn't see it as particularly scary or even interesting. It dealt at the level of nostrums. I'm more on Rubin's side, but I actually am concerned about Bernstein's concerns.

"What's most interesting to me are the areas where the two authors are forced to concede disagreement. One of these issues—the effect of long-run deficits on interest rates and economic growth—is one of the most contentious areas of debate for lefty economists. The authors write:

One of us (Mr. Rubin) views long-term fiscal deficits — in combination with a low national savings rate, large current account deficits and foreign portfolios that are heavily over-weighted in dollar-dominated assets — as a serious threat to long-term interest rates and our currency and, therefore, to our economic future. The other views these economic relationships as much weaker.

This is the view that shaped Clintonian deficit reduction. It also angered many Democrats, who would have preferred that increased revenues be used for a health insurance solution or public investments. Mr Rubin's position strikes me as fairly orthodox. The thing is, I'm not sure that it makes sense in light of recent events. A lot of people expected a dollar run to precipitate crisis. Instead, crisis precipitated a dollar boom."

Again, here I'm on Rubin's side. But I see the problem.

"And now, Calculated Risk is arguing that declining American deficits might result in higher long-term interest rates. Why? A reduction in the current account deficit would trim growth in foreign central bank investment in dollar-denominated assets, pushing up interest rates. In short, so long as Bretton Woods 2 held up, American deficits meant low interest rates. Only when that financial system comes apart can we expect Mr Rubin's conditions to obtain.

Mr Rubin was right about interest rates given that he was in a certain financial equilibrium, but he was wrong about which equilibrium he found himself in. Given Bretton Woods 2, and the resulting ability to borrow cheap, America should have borrowed heavily and ploughed Chinese capital into long-term domestic investments. By instead running a surplus, Mr Rubin simply made easy credit available to the private sector which, understandably, poured that credit into heavy consumption and investment in non-tradable sectors (like housing!) which weren't rendered comparatively unattractive by Chinese currency policies."

I saw the Calculated Risk post as well, and it bothered me. ( but see Setser here )

"So which should America choose moving forward? For the moment, the risk of a dollar collapse seems low, and the need for deficit spending appears high. Beyond that, we must see whether China will continue to finance American borrowing, or if China will allow domestic spending to flourish by letting the RMB appreciate. Increasingly America is learning that neither its monetary policy or its fiscal policy is as independent of international forces as it believed."

So, this really is food for thought. I agree with:

1) Risk of dollar collapse is low ( I also agree with 'seems' )

2) That's why I accept some deficit spending in the short term and a stimulus plan.

Where to go from here. Let me utter some nostrums:

1) A banking system based on Bagehot's Principles

2) Reducing government spending

3) Lower debt

4) A slight budget surplus or debt in normal times

5) Lower taxes, and fairer and more efficient taxes

I fear:

1) Inflation

But I have to admit, all these gyrations are making things hellishly complicated.

However, this post by Bob McTeer seems to echo more or less the same view, although I would disagree with him on some specifics:

"The most important near-term thing you could do to reassure financial markets and quell the turmoil is to announce early that you don't intend to eliminate President Bush's marginal tax-rate cuts. If you can't go that far, keep the adjustments as small as possible and announce your intentions to be moderate early. A little bad news early is better than great uncertainty and expecting the worse. ( I'm fine with small adjustments )

You have an education job to do. You must be able to articulate clearly how high tax rates on capital (capital gains, dividends, corporate taxes, the death tax, etc.) diminishes the demand for labor and keeps wages from rising. ( I agree )

While tax-rate increases are bad anytime, they are particularly bad in a recession. The timing couldn't be worse for a tax increase. ( I tend to agree, but the debt bothers me more )

Energy limitations must be attacked on all fronts: drill, drill, drill, nuclear, clean coal, wind, solar, and so forth. Don't push for energy independence; push for less energy dependence. ( I sort of agree, but have more environmental concerns )

Everyone knows that exports create jobs, but few focus on imports, which represent the gains from trade. Help educate people on the benefits of low prices via imports. ( I agree, basically )

Don't overdo the regulatory reaction to the current financial crisis. Another Sarbanes-Oxley is the last thing we need." ( I agree )

In other words, while things are in flux, let's stick to our general principles, while confronting reality and bending them where necessary. But like Becker and McTeer, I agree that we don't want to kill the goose that laid the golden egg.

As to Rubin and Bernstein, I'm not that bothered by either of them. I see them as sensible people. I've no fear of some massive economic shift. There will be tinkering, but tinkering can often be wise.