The most moderate Dem on economics?

[Beet]

Choosing among the serious Dem primary contenders, Edwards, Clinton and Obama, it seems clear that on the front-and-center issue of economic policy, the Democrats nominated their substantively most centrist candidate. Take for example the candidates' positions on subprime mortgages, summarized by The Nation in January:

"As the subprime mortgage debacle drives a recession that threatens financial markets around the world, the Democratic presidential candidates are pushing plans to address the crisis. John Edwards and Hillary Clinton are pledging substantial federal resources to stabilize the mortgage market and intervene on behalf of borrowers. Barack Obama's proposal is tepid by comparison, short on aggressive government involvement and infused with conservative rhetoric about fiscal responsibility. As he has done on domestic issues like healthcare, job creation and energy policy, Obama is staking out a position to the right of not only populist Edwards but Clinton as well.

...

Only Obama has not called for a moratorium and interest-rate freeze. Though he has been a proponent of mortgage fraud legislation in the Senate, he has remained silent on further financial regulations. And much like his broader economic stimulus package, Obama's foreclosure plan mostly avoids direct government spending in favor of a tax credit for homeowners, which amounts to about $500 on average, beyond which only certain borrowers would be eligible for help from an additional fund."

On health care, while there were many similarities, both the Edwards and Clinton plans had individual mandates, and Obama's does not, making his plan significantly cheaper:

"Government costs. Clinton's plan, with an estimated $110 billion annual price tag for the government, would require everyone to have coverage. Obama would make coverage mandatory only for children. His plan would cost roughly $50 billion to $65 billion a year. "If it's accessible and affordable, they'll buy it, independent of whether they have to buy it or not," says David Cutler, an economics professor at Harvard who's advising the Obama campaign. Not true, argues the Clinton camp. Without a mandate, some people, especially young, healthy ones, are going to skip signing up, and their participation is key to balancing out the higher healthcare costs of those who are sick. Who's right? It's not clear, though economists have generally sided with Clinton on this issue."
- US News, 11/07

Or take their economic stimulus plans, summarized by Economists for Obama

"Clinton proposes a massive increase in spending $25 billion on emergency energy assistance for households facing high heating bills. Obama and Edwards have both supported spending more on this elsewhere. The entire budget of the LIHEAP program has never been much more than $3 billion, so she's proposing a massive expansion, presumably with the intent of making it permanent. This might be a good idea as general policy, but it's not effective stimulus.

Likewise, both Clinton and Edwards are proposing spending more on renewable energy, something that Obama also proposes elsewhere. Again, this may be a good idea, but it's not good as stimulus. It's basically in the category of one of the Bad Stimulus Ideas, "infrastructure investment," which will have too long a lag to prime the economy anytime soon.

The big contrast between the candidates' stimulus proposals are 1) Edwards and Clinton have thrown in some non-stimulating measures, and 2) Obama is proposing a tax rebate as a primary measure, which Clinton leaves as a backup measure, and Edwards doesn't mention at all."

Obama was the only one to propose a tax rebate as the primary stimulus measure.

Or their position on tax cuts in general
"Obama, however, proposes more extensive tax cuts than the other two leading candidates. " - Bloomberg, 11/07

So while Republicans may be right in arguing that Obama in his short career has not yet broken with his party in dramatic, headline-grabbing ways that McCain has, the notion that he is nothing but a doctrinaire liberal who never breaks with his party's orthodoxy is highly exaggerated. He is to the right not only of the populist Edwards who was the darling of the liberal activists, but also Hillary Clinton of DLC repute.

Its clear that he has huge differences with John McCain. But this doesn't look like a tax-hiking ideologue. No wonder he was endorsed by Robert Rubin and Larry Summers, two well known Clinton administration centrists.

[○∙◄☻¥tπ[╪AV┼cVê└]

Liberals don't get Presidential nominations; the system is rigged against them.

[Beet]

Liberals don't get Presidential nominations; the system is rigged against them.

And judging from his religious outreach efforts, he seems to be (marginally, admittedly) the most moderate on social issues as well. O/c, he doesn't try to claim his support of faith based initiatives makes him a "maverick." Pretty much the only area he was more liberal was compared to Clinton on foreign policy- particularly the talking to Iran stuff.

[○∙◄☻¥tπ[╪AV┼cVê└]

Liberals don't get Presidential nominations; the system is rigged against them.

And judging from his religious outreach efforts, he seems to be (marginally, admittedly) the most moderate on social issues as well. O/c, he doesn't try to claim his support of faith based initiatives makes him a "maverick." Pretty much the only area he was more liberal was compared to Clinton on foreign policy- particularly the talking to Iran stuff.

I'm not convinced that there is that much difference ideologically between them. Obama is more against war with Iran Clinton is more against wiretapping.

[Beet]

Liberals don't get Presidential nominations; the system is rigged against them.

And judging from his religious outreach efforts, he seems to be (marginally, admittedly) the most moderate on social issues as well. O/c, he doesn't try to claim his support of faith based initiatives makes him a "maverick." Pretty much the only area he was more liberal was compared to Clinton on foreign policy- particularly the talking to Iran stuff.

I'm not convinced that there is that much difference ideologically between them. Obama is more against war with Iran Clinton is more against wiretapping.

Well that's a difference, just not clearly directional.

[Torie]

Obama is certainly somewhat moderate now. He has been tacking and trimming towards the center as fast as Hurricane Gustav. Of course, he still wants to spend another trillion or so (maybe it is just several hundred billion, but who's counting?), and give middle class tax cuts, by raising taxes a relatively modest amount now on incomes over 250K, and cutting "waste, fraud, and abuse."  That is less leftist however, than just fraudulent advertising.

[Beet]

Obama is certainly somewhat moderate now. He has been tacking and trimming towards the center as fast as Hurricane Gustav.

Most of these sources are from last year before the primaries.

[Torie]

Obama is certainly somewhat moderate now. He has been tacking and trimming towards the center as fast as Hurricane Gustav.

Most of these sources are from last year before the primaries.

Ya, that just emphasizes my point. He's moved "right" from there! I could give you a list of the trims, but I don't want to bore folks with endless repetition.

[Beet]

Obama is certainly somewhat moderate now. He has been tacking and trimming towards the center as fast as Hurricane Gustav.

Most of these sources are from last year before the primaries.

Ya, that just emphasizes my point. He's moved "right" from there! I could give you a list of the trims, but I don't want to bore folks with endless repetition.

So he was already to the right before the primaries when it could have hurt him, and this is evidence of what exactly?

And yes, it is in the hundreds of billions, but the Iraq war which he opposed has cost $573 billion.

[Torie]

Well "right" here is a relative term. The old Obama wanted to raise my marginal tax rate by about 17%. The new Obama wants to raise them about 6%. The old Obama wanted to raise capitals gains taxes to 28%. The new Obama wants to raise them to 20%, and that only for income over 250K.  Obama had a U of C economics professor who steered him away from F'ing the mortgage markets long term, and kudos to him for that. Hillary said she didn't give a damn what the experts said, and the Obama professor wrote a WSJ piece trashing Hillary for  it. It was quite gratifying.

[Beet]

Well "right" here is a relative term. The old Obama wanted to raise my marginal tax rate by about 17%. The new Obama wants to raise them about 6%. The old Obama wanted to raise capitals gains taxes to 28%. The new Obama wants to raise them to 20%, and that only for income over 250K.  Obama had a U of C economics professor who steered him away from F'ing the mortgage markets long term, and kudos to him for that. Hillary said she didn't give a damn what the experts said, and the Obama professor wrote a WSJ piece trashing Hillary for  it. It was quite gratifying.

In the 1990s when the capital gains tax rate was 20% your Vanguard index would have been doing a lot better than in the 2000s when the capital gains tax rate was 0%.

And really, Republicans can't talk much about changes in position. The old McCain was opposed to drilling. The new McCain wants to drill. The old McCain was opposed to the Bush tax cuts in a time of massive surplus. The new McCain wants to extend all of them when they would put us in a $5 trillion budget hole. Which is fair enough. If you change your mind, you change your mind. This flip-flopping nonsense from 2004 has got to stop. As John Kerry said... you reevaluate when new facts come to light.

[Torie]

The new "facts" for Obama were political ones. The new "facts" for McCain were in fact, facts, such as the price of oil zipping up, and his theory that cutting taxes was bad, but once cut, it is bad to undo the cut, because it creates uncertainty vis a vis financial planning. Granted, I am not persuaded by McCain's grand unified theory about the evils of the delta function in this case, but whatever.


By the way, where did you get the figure that keeping the Bush tax cuts will "cause" a loss of 5 trillion of revenue, and over what period of time is that anyway?  How much of a hole does Obama's hundreds of billions and billions and billions of new spending create?  Granted, that spending will never happen, but that gets back to the fraud meme, doesn't it?

I missed the zero capital gains tax bit. What's up with that? Is that something about equity appreciation or lack thereof?  And if so, how does that connect all your little dots? Dot.com was a bubble you know. It had to go. At one point there near the end of the Clinton term, per my calculations, the expected returns from equities were negative!

[Beet]

The new "facts" for Obama were political ones. The new "facts" for McCain were in fact, facts, such as the price of oil zipping up, and his theory that cutting taxes was bad, but once cut, it is bad to undo the cut, because it creates uncertainty vis a vis financial planning. Granted, I am not persuaded by McCain's grand unified theory about the evils of the delta function in this case, but whatever.

That is funny then, that McCain did not begin his drilling push until the start of the GE this year, when oil prices have been shooting up since 2004. The new "facts" for McCain were polls showing the overwhelming popularity of drilling. The new "facts" for Obama were the economy weakening which made the case for smaller capital gains taxes. He's also said he would adjust his other tax plans if the economy made them unrealistic. I see nothing wrong there.

[Beet]

By the way, where did you get the figure that keeping the Bush tax cuts will "cause" a loss of 5 trillion of revenue, and over what period of time is that anyway?  How much of a hole does Obama's hundreds of billions and billions and billions of new spending create?  Granted, that spending will never happen, but that gets back to the fraud meme, doesn't it?

The nonpartisan Tax Policy Center says that both candidates' tax cut plans would increase the national debt by trillions, but McCain's radical tax plan would incresae the national debt by a further $5 trillion:

"Both John McCain and Barack Obama have proposed tax plans that would substantially increase the national debt over the next ten years, according to an updated analysis by the non-partisan Tax Policy Center.

Neither candidate’s plan would significantly increase economic growth unless offset by spending cuts or tax increases that the campaigns have not specified.

Compared to current law, TPC estimates the Obama plan would cut taxes by $2.8 trillion from 2009-2018. McCain would reduce taxes by nearly $4.2 trillion. Under current law, the 2001 and 2003 tax cuts would expire in 2010 and the Alternative Minimum Tax would remain in full force.

Both candidates prefer to compare their plans to the “current policy” baseline, which would extend the 2001 and 2003 tax cuts and indefinitely extend an indexed AMT “patch.” Against that baseline, Obama would raise revenues by about $800 billion over the decade, while McCain would lose $600 billion. But choice of baseline doesn’t change how the proposals would affect the budget picture; without substantial cuts in government spending, both plans would sharply increase the national debt. Including interest costs, Obama would boost the debt by $3.4 trillion by 2018. McCain would increase the debt by $5 trillion."

This is including all spending. Ouch.

http://www.taxpolicycenter.org/publications/urlprint.cfm?ID=411742

[Torie]

You should have been a minister, Beet. Your spin is just so kind, generous, and forgiving.   

The economy has deteriorated a lot in the past 4 months eh?  That is interesting, since economic growth bounced up to 3% in the second quarter. And when did oil prices really start to ramp up? Wasn't it mostly in the last year?  But yes, McCain was clearly wrong on drilling based on what we knew a year ago. And yes, I think it was mostly a matter of political calculation. He wanted to seem green friendly. That is why he is pushing this incredibly stupid cap and trade thing. McCain has come up with several incredibly stupid ideas actually, like giving manufacturing workers laid off their old wage for two years. Fortunately, that idea has not researched. Hopefully, it has been deep sixed into the Mindanao Trench!

[Torie]

Thanks for the post and links Beet. These numbers I don't think do dynamic scoring (and while one need not go nutter Club for Growth/WSJ on steroids, and assume supply side is the universal solvent for all of our ills, that does not mean it does not exist at all either), but yes, both candidates' little plans are DOA and ludicrous.

Repealing the estate tax is particularly ludicrous, but that of course is not going to happen. In Torie's world, the Foundation scam would also be cut way back, along with the life insurance tax loophole, which is why of course insurance companies love the estate tax. Obama's plan is about right on the estate tax - a 3 million exclusion with a 45% rate over that, if I recall correctly.

[Beet]

You should have been a minister. Your spin is just so kind, generous, and forgiving.   

Speak for yourself, my friend. Speak for yourself.

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That was not announced until the past week! Talk about spin. And the possible 28% was always tentative and floated back last November, when the economy did not seem nearly as weak as now, yes.

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Oil prices were shooting up a year ago already. McCain didn't come out for drilling until the month the General Election started.

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http://www.huffingtonpost.com/2008/06/18/mccains-offshore-drilling_n_107872.html

The prices didn't change that fast. A poll, however, can be conducted this quickly.

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Oh I'm not against all his ideas. I just don't think he's above switching his positions for political calculation. But if he says that they're genuine switches, I'll give him the benefit of the doubt. I wouldn't have brought this matter up even. Generally, politicians should have the right to change their minds.

[Torie]

Fair enough, Beet. You are not that easy to dispatch! Kudos.

But then your economic score is "only" minus 2.5, so one should not assume that you are just another economically clueless liberal in any event.

[Beet]

Well if supply-siders have some alternate way of calculating budget numbers, that may explain the discrepancy, as Arthur Laffer is one of McCain's economic advisers, after all. But then again revenues did drop in the 1980's until taxes were raised again.

Fair enough, Beet. You are not that easy to dispatch! Kudos.

Discussing these things with you always brings up some new facts, Torie.

[Torie]

Laffer was a professor of mine. He was not very bright, and very weak technically, and quanitatively. He was not a "maths" type.   He failed to secure a full professorship at the U of C.

By the way, did you know he was a big fan of fixed exchange rates?  The free market is great, except when it isn't I guess. I told him at the time, it didn't make any sense to me, and he was not very good at debating with me. You are better.

[Beet]

Laffer was a professor of mine. He was not very bright, and very weak technically, and quanitatively. He was not a "maths" type.   He failed to secure a full professorship at the U of C.

By the way, did you know he was a big fan of fixed exchange rates?  The free market is great, except when it isn't I guess. I told him at the time, it didn't make any sense to me, and he was not very good at debating with me. You are better.

Shocking. My best econ professor was probably John Rust. He is not bad at math. Not to say I learned much math from him. I think many people who took econ at my school were people who couldn't get into the business school.

[Torie]

The guy I thought was a mega mind was Eugene Fama. Milton was great to debate with. Pity at the time I did not understand the theory of externalities as well then as I do now. Myron Scholes was excellent in his field (options). By the way, at least back then, students in business school were not that bright in general at the U of C. Only about 15% were really on top of things. Students were much smarter in law school. At Michigan, about 15% were clearly smarter than I was, which was sobering. Some of them could connect the dots like a computer. But I was very good at writing briefs! I should have been an appellate court  lawyer.

[JSojourner]

Obama is certainly somewhat moderate now. He has been tacking and trimming towards the center as fast as Hurricane Gustav. Of course, he still wants to spend another trillion or so (maybe it is just several hundred billion, but who's counting?), and give middle class tax cuts, by raising taxes a relatively modest amount now on incomes over 250K, and cutting "waste, fraud, and abuse."  That is less leftist however, than just fraudulent advertising.

You'd rather have ME running?  Tax increases for everyone!!! BWAHAHAHA...

[Beet]

Myron Scholes was excellent in his field (options).

Ah, I remember that guy rings a bell. Myron Scholes of the famous Black-Scholes theorem. Something about pricing an option based on predicted volatility? Can't say I'm familiar with it anymore. My financial economics lecturer was a grad student, former wall street investment banker. There was some nice meaty stuff in her class but it was boring.

You studied with the greats, that is for sure. This guy was also involved in the LTCM debacle though, IIRC.