Friday, October 31, 2008

McCain vs Obama on policy, part 2

Trade

McCain seems reasonably in the "free trade" camp. He wants a program that would alter the unemployment insurance system to steer it towards retraining, in order to help cushion those who lose jobs due to globalization. Obama is in the "fair trade" camp, and I've said before that I'm sympathetic to that as long as it's done consistently and without playing favorites. He wants to amend NAFTA, which is funny because polls in all three countries show that the populace think the deal is skewed against them. Meaning, it's unlikely anyone would gain in a renegotiation.

There are three trade specifics I'm heavily against Obama on. One, he opposes the South Korea trade deal due to there being no guarantee that we would sell them as many cars as the other way around. However, it would lower tariffs on both sides, and right now the ratio is so skewed in South Korea's favor that the ratio could only improve. Perfect shouldn't be the enemy of good, especially when perfect is unattainable. Two, he opposes the Columbia trade deal based on the issue of violence against labor leaders and organizers. This was a reasonable position five or ten years ago, but the Colombian government has done a good job of cracking down, to the point where labor is no more a target of violence than the general population. Union leaders in the US oppose the deal, and Democrats are trying to appease them. Finally, Obama favors maintaining the tariff on Brazilian ethanol, a stance that is utterly baffling to me. It's done to shield the already heavily subsidized (and highly inefficient) domestic corn ethanol industry, and Democrats say that it needs to be done so the US doesn't rely on foreign ethanol like we rely on foreign oil. Then why the hell don't we put a tariff on foreign oil too? Brazil is a reasonably friendly nation, especially compared to Venezuela and Russia, who we don't tariff. It's bad policy, but it's good politics. "Change" my eye.


Social Security

McCain is incredibly vague on social security, probably too scared to do anything after Bush got shellacked in 2005. He talks about "supplementing" the program with personal accounts, whatever that means. But I'll take vague over harmful. Obama, for starters, wants no age hike. Sorry, but as life expectancy increases, the time spent working must go up. Especially because US labor is service-oriented, and manufacturing is heavily mechanized, meaning we aren't expecting grandma and grandpa to do back-breaking work. On top of this, Obama says that those earning over $250,000 aren't paying their "fair share", and should have 2-4% of earnings over the current tax cap shaved off to cover the future deficit. That's false on its face. Anyone in the social security system gets out of it what they put in, and those in higher income brackets certainly don't get MORE than they put in. What's fairer than that? Apparently, turning social security into another wealth redistribution program.


Healthcare

The centerpiece of Obama's plan is a nationwide government-run insurance program. What's odd about it is that there's no real way to determine what the cost or effect is. Will it heavily subsidize coverage for lower-income families? Moderately subsidize? Barely subsidize? Will it be run with a goal of breaking even? Etcetera.

Among Obama's other healthcare policies:

-Insurance companies will be unable to deny people coverage for pre-existing conditions, AND must offer these people insurance at an "affordable" price. That sounds to me like forcing insurance companies to take on new clients who will cost them a lot of money. Worrisome.
-Federal benefit mandates. Benefit mandates are one of the reasons why so many people can't afford health insurance in the first place. An inability to choose NOT to get coverage for things that won't be needed means people can't buy policies tailored to their actual needs. This especially effects younger people, who don't need as many things covered on average. It so happens that younger people are far more likely to be uninsured.
-More money for R&D
-Expansions of Medicaid and SCHIP
-Direct negotiation of drug costs by the federal government, which would be de facto price-setting due to the increasing amount of healthcare dollars controlled by the federal government. I believe this would be a huge blow to the creation of new drugs unless it was offset by a hell of a lot more R&D money than is proposed.
-Businesses must give 7 paid sick days per year
-All children must have health coverage. This is also confusing, because it doesn't say if parents are responsible for paying or the government. This is separate from the issue of children being covered by a parent's plan.
-Hospitals required to keep records and analyze data on how "disparity populations" are treated. I have no idea what the heck that means but it sounds like tedious micromanaging to me.
-He says that he'll go after insurance companies that are too profitable and spend too much on administration (ie. paperwork, employees). It's a very strangely worded section, because high administration costs lower profit, and profit is the goal, so why would a company deliberately lose money?
-Tax credit for small businesses to pay for health coverage, up to 50%
-Large employers must pay an unspecified percentage of total payroll towards the government insurance plan if they don't offer coverage. This could be really important, but no specifics are given. There's a big difference between 1% and 5%, for instance.

McCain's plan is very different. The centerpiece is a tax credit for health coverage that would be mostly offset by making employee health benefits taxable income. He claims this wouldn't negatively effect businesses offering health coverage, and that's baffling to me, because the entire point is to move people away from coverage that's dependent on employment. Businesses who pay for healthcare distort the market, because people who don't pay for their own coverage have less incentive to worry about costs. I love the plan but hate the dishonesty. I also worry about the cost, because it would lower taxes for pretty much everyone, and the fact that it's refundable means that millions of households would get thousands of dollars. McCain's tax cuts mean that new spending would need to be offset by cuts elsewhere. He has some generic cost cutting jargon, and the one I like most (tort reform) wouldn't even have much impact on *government* costs.

McCain has two other main proposals. One is that he would "develop a plan with governors" in regards to insurance companies covering people with existing conditions, and that the government would help subsidize the cost. That could get really, really expensive, and the lack of a budgetary number there troubles me. Less troublesome is the proposal to allow people to buy insurance across state lines, which would allow people to buy affordable coverage from states with fewer benefit mandates. It would have the odd effect of making state mandate laws moot, and as a states-are-better-than-federal type that rubs me the wrong way a little bit. Do the ends justify the means? Probably, but it would be nice if he acknowledged the other side of the debate.

Both plans are flawed and costly, but I much prefer McCain's for the effect of de-centralizing things, as opposed to Obama's which moves towards centralization. Removing consumers from the cost of healthcare prevents the market from properly working to keep costs in check. The primary way for government-run programs to control cost is through rationing, which goes against the entire idea of a "right" to healthcare.


Energy & The Environment

Both McCain and Obama want higher CAFE standards. Both agree on a cap-and-trade program, though Obama's is more ambitious and done differently at the outset. Both would spend some of the cap-and-trade money on R&D. Both want to limit "speculation" in oil markets. Both want to see the electrical grid upgraded, though Obama focuses on linking renewable energy to cities while McCain focuses on cutting red tape. McCain favors more nuclear power, while Obama seems to be opposed for reasons of national security. The way he says it is strange, as though the problems are unsolvable, when that ought to be dealt with in homeland security. Heck he even talks about securing nuclear resources in the homeland security section! Both favor some oil drilling (Obama shifted during the summer), though of course McCain wants more. McCain wants an end to ethanol subsidies; Obama wants more ethanol mandates and by all accounts wants the subsidies to continue.

Obama, unsurprisingly, goes into more detail than McCain:

-Fight wildfires, including clearing out wildfire fuel. Environmentalists often fight such measures, but it's necessary to prevent the worst wildfire activity. Kudos.
-Lots of regulations on pollution
-Give money to poorer countries for the prevention of deforestation. It would need to be a LOT of money.
-A "Green Job Corps". Whatever that means.
-All new buildings must be carbon neutral or emission-free by 2030. That seems like a heck of a high standard, especially compared to cars.
-Incentives to utilities to reduce energy usage. That does make some sense, since more energy usage equals more profit for utilities.
-Energy conservation measures required on a state level for a state to get federal transportation money
-"Smart growth" promotion
-"Use it or lose it" on federal oil leases. This is a talking point I've seen in a lot of places, and it makes no sense, because it implies that oil companies are knowingly sitting on available oil supplies. Numbers are often used about the amount of oil available on leased-but-inactive land; said numbers are wild guesstimates based on the assumption that land not being drilled on has as much oil as land being drilled on. The effect of all of the rhetoric is to give an excuse for not allowing offshore drilling (ie. "why don't they drill on land they already have?). If you're opposed to offshore drilling, be opposed, but the "Use it or lose it" talking point is a dishonest way of doing it.
-Spending $150 billion over 10 years (from the cap-and-trade taxes) for "5 million green jobs". This is brought up as a way to boost the economy. That doesn't make sense the way Obama promotes it. "Green" jobs would, in theory, improve the environment, reduce energy usage, and reduce global warming. As such spending on those jobs could be justified by reducing harm. However, Obama acts as if the money comes out of thin air and creates jobs, and jobs are good, right? Sorry, no. The money comes from taxes, and the tax money would otherwise be creating jobs in the private sector. Once again it's about honesty: be honest about what the costs are and where the benefits come from.

Obama's plan would mean higher costs but less pollution and less energy usage. Another clear choice depending on your personal stance on the overall issue.

Taxes

McCain wants to lower capital gains and corporate taxes, reduce the impact of the estate tax, and double the personal exemption. The corporate tax rate is very important, because the US is suffering in terms of tax competition with other nations. Why a capital gains cut and not an income tax cut, that I'm not sure, because cap gains are already much lower than income for the vast majority of taxpayers.

Obama's plan is about rebates:

-$1000 per family and $25 billion to states from a "windfall profits tax" on oil companies. Very bad policy. First, it discourages domestic production, which goes against energy independence. Second, oil is cyclical (as we've re-learned in the last few weeks), meaning that the companies alternate between lots of profit and not much profit; it's not nice to remove their ability to make money at the top when they face potential losses at the bottom. Third, they're only being targeted because it's a nice populist talking point, yet other big companies with similar profit levels get left alone.
-Up to $3000 for child care
-$500 per worker
-Expanded Earned Income Tax Credit
-No income tax for seniors earning less than $50,000. This really ought to be adjusted to take into account net worth, because seniors with a lot of assets shouldn't get a break like this.
-Reduced estate tax levels (though not as much as McCain)
-No capital gains tax on small businesses and start-ups (no specifics given)

This would be funded by restoring '90s tax rates on upper income brackets, and moving capital gains from 15% to 20%. Obama says that the overall tax burden would be about the same. Sadly, he's wrong.

That's because the vast majority of his "tax cuts" are refundable tax credits. That means people with no tax burden to begin with get a check. When that was done earlier in the year it was called stimulus spending, not a tax cut. If he called it stimulus spending, and justified it to boost the domestic economy, that would be honest. Saying that the rebates lower the level of taxation is dishonest. Raising taxes on one person to give another person a check is redistribution, and if you think that's a good thing then say it, but be open about it. Especially when tens of billions of dollars are involved. What's more, because the tax credits are phased out as income increases, middle-class households will face a very high marginal tax rate when you combine the loss of benefits with the progressive tax rate. High marginal rates on the non-wealthy are a serious damper on productivity and entrepreneurial activity, the engines of growth. Obama's tax plan is nice in the short term for the poorest 40%, but is bad in the long term for everyone.


Misc. Economy

Obama favors the Employee Free Choice Act, which would implement "card check" unionization. McCain opposes it. There's rhetoric on both sides about "intimidation" in how employees vote on unionizing, but it's mostly a smoke screen. The bottom line is, the bill would make it easier for unions to be formed. Do you see that as good for the economy or not? Me, I think the UAW and its effect on Detroit is evidence enough that in the long run unions can be very harmful. Plus, unions are less needed now that the economy is more diverse and more specialized, rather than dominated by huge factories full of unskilled (and thus powerless) line workers. Even industrial laborers today are exponentially more skilled than those of a couple generations ago. There should be an ability to unionize, and secret ballots provide that well enough.

Obama favors raising the minimum wage to $9.50 an hour and indexing it for inflation. McCain, as best I can tell, is against that. Obama uses "living wage" rhetoric, wherein every job should pay enough to support a household. I strongly disagree, because inflated wages eliminate a lot of starting-level jobs that provide needed experience to those breaking into the workforce, and provide jobs to those who would otherwise be unemployed. I'm okay with some level of minimum wage, but not one that means every job has to be able to pay all the bills. Not every job is worth that much, not every worker is the head of the household, and additionally, different costs of living mean that states should decide, not the federal government. $9.50 an hour doesn't have a big impact in New York City, but it can have a serious effect on jobs and businesses in Topeka.


Fiscal policy

McCain is anti-pork, in case you hadn't heard. Obama claims to be, but hasn't been good on the issue during his legislative career. To Obama's credit he wants to do a lot in the way of public databases on contracts, lobbying, earmarks and corporate/military pork to help add transparency. Both want to cut medicare waste, though McCain goes into more detail there (for a change). McCain wants to balance the budget with a 1 year domestic spending freeze followed by smaller increases thereafter. Obama wants to balance the budget with a faster (than McCain) drawdown in Iraq, PAYGO (which congressmen from both parties have ignored whenever they felt like it), more competitive bidding, eliminating unspecified programs, and raising taxes on high earners. I don't trust either of them to balance the budget, but McCain seems a lot more honest about controlling spending. When you see all the ways Obama wants to increase spending, he has a higher burden on him to point out what he'll cut and how much will be saved. He doesn't come close to meeting that burden.


Obama grab bag

I am in general a small-government conservative, so it was a hard slog for me to get through the entirety of Obama's proposals. He wants to create programs or double spending on dozens of things.

-Increase support to organic farmers
-Increase prosecutions of civil rights and labor law violations
-Increase funding to the National Endowment of the Arts
-Create an "Artist Corps" to work in poor schools
-Double funds to after school programs
-"Fully fund COPS program" to add 50,000 police officers
-$60 billion over 10 years for infrastructure
-More money for public transportation
-More funding for Amtrak, which he bizarrely called "the only form of reliable transportation in some places". Where exactly are there train stations but not roads?
-Retraining program for inmates
-An "Advanced manufacturing fund"
-An Affordable Housing Trust Fund... wait... wait there's no way. He wants to fund it using profits from Fannie Mae and Freddie Mac? WHAT PROFITS? WE JUST HAD TO BAIL THEM OUT!

Other Obama positions:

-Reduce number of absent fathers by... combating domestic violence and child support avoiders? I mean I'm all about punishing those bastards but that isn't going to make them less absent. He also wants to "fund support services" and "remove some gov't penalties on married families", both of which are vague.
-Opposes "discriminatory photo ID laws", though what photo ID law proposals would be "discriminatory" is left up to the reader. I take this to mean he opposes photo ID laws in general, because the civil rights community accuses all ID laws of being discriminatory.
-Obama wants to change the fact that "women earn 77 cents for every dollar a man does". Good boilerplate for the ladies, bad bad policy starting point. That number has far more to do with career choice, full time versus part time, and taking time off for families. The "77 cents" line implies that a woman doing the same job as a man gets paid dramatically less, but that simply isn't the case on a meaningful level.
-Cap payday loan interest. This would have the effect of closing down payday loan operations more than it would make them more humane.
-Federal action to end local racial profiling. He mentions a law passed in Illinois that made police record race, age and gender of everyone stopped. If that sort of thing was done on a federal level it would be a gigantic pain in the ass for every police officer in the country.
-Expanded hate crimes laws. I oppose hate crime legislation in general, but the people they effect aren't anyone I want on the street so I'm not going to shed any tears.
-Drug courts for federal drug cases. I've read some good things about drug courts so that's fine by me.
-Fight mandatory minimum drug sentencing, and crack/cocaine sentence differences. Both are fair enough. We should have mandatory minimums on a lot of things before we do on drug charges, and there's no good reason for the crack/cocaine disparity.
-Modernize air traffic control, which is good in theory but would largely depend on if he opens up the skies to new routes.

The reason for this special Obama section is because his site goes into more detail than McCain. Simple as that.


Conclusion

There's a handful of instances where I favor Obama or it's a draw. On the biggest issues, and a majority of the time, I favor McCain. I see people who want to decide based on the little stuff, or the details, or personality, and to me, anyone who pays enough attention to be a good voter shouldn't have a hard choice. However lots of people have opinion sets that don't fit into a "conservative" or "progressive" label as neatly as, say, mine do. For those of you in that category, I suggest taking a close look at the fundamental beliefs of the left and the right.

As much as the parties fall short of their idealogical goals, that's still a good starting point. "Living constitution" versus originalism, small government versus active government, progressive taxation versus flatter taxation, carrot-based foreign policy versus stick-based foreign policy. Develop a personal philosophy that's consistent from one issue to the next. Hopefully you'll find that one party better exemplifies your philosophy better than the other, even if for the most part both parties suck. And then, more importantly, get involved with primaries and support people with principles more advanced than just winning elections. It's a sad fact that a lot of people with a lot of potential get defeated by those who are better connected to the political machines. The only solution is to get involved early. Sometimes the good ones actually win.

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