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Tuesday, December 25, 2007

One of These Things is Not Like the Others

Dean Baker on the similarities and differences among Democratic presidential candidates:

Challenging the powers that be, by Dean Baker, Comment is Free: It would be difficult to identify much difference between the three leading Democratic presidential candidates' positions on major economic issues. They have come forward with comparable positions on taxes, healthcare and trade. ...

On taxes, all three candidates have said they want the wealthy to pay a larger portion of the bill, which starts with taking back the Bush tax cuts on families earning more than $200,000 a year. All three have proposed eliminating various loopholes that primarily benefit the wealthy. Edwards has gone the furthest in this respect, calling for raising the capital gains tax rate back to the pre-Clinton level of 28%. This tax increase almost exclusively affects the wealthy. ...

All three contenders have proposed a national healthcare system... Both Clinton and Edwards would impose a mandate that everyone buy into this system. Obama has claimed that he would not require a mandate. As a practical matter, the healthcare system that any of them are able to put in place will depend on the arms they twist and the pressure they can bring to bear against the insurance companies, the pharmaceutical industry and other powerful actors who will be hurt by real reform.

Any serious plan will require a mandate - this directly follows from its requirement that insurers take all comers. Without a mandate, no one would buy insurance until they had serious bills. This would be like letting people buy car insurance after an accident, and then sending the company the bill. That doesn't work.

All three contenders have said that they want to break with the Bush-Clinton-Bush trade agenda. ... What their position means in practice remains to be seen. ... As a practical matter, the country has already gone about as far as it can in placing its manufacturing workers in competition with low-wage workers in the developing world. The impact of any future trade deals on the US economy will be almost imperceptible.

A decline of the dollar by an additional 10% against the currencies of our trading partners would swamp the impact of all currently pending trade deals. On this issue there are likely to be substantial differences among the candidates. Former Treasury secretary Robert Rubin is likely to be the guiding light for economic policy in a Clinton or Obama administration. Rubin was the architect of the high dollar policy of the 1990s... He remains an enthusiastic supporter of a high dollar. Therefore Clinton or Obama would be more likely than Edwards to sacrifice the jobs and wages of manufacturing workers in order to prop up the dollar.

Rubin's Wall Street agenda would also apply to other areas of economic policy, most importantly the budget. Rubin places balanced budgets and even budget surpluses at the centre of his economic vision. A push to a balanced budget will seriously curtail the ability to extend healthcare coverage, promote access to childcare, promote clean technologies and address other neglected priorities. By contrast, Edwards has clearly stated that he does not view a balanced budget as a priority... The willingness to accept deficits may prove especially important in the context of an economy that could be in recession when the next president takes office.

In short, Edwards has set himself apart from the other two top candidates by indicating a clear willingness to challenge an agenda set on Wall Street. If a President Edwards actually carried through with this course, he would pursue a very different economic agenda than his two leading rivals.

    Posted by on Tuesday, December 25, 2007 at 12:15 AM in Economics, Politics | Permalink  TrackBack (0)  Comments (8)

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