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Obamanomics (Mostly) Explained


 

In today’s NYT magazine, David Leonhardt has the first decent overview I’ve seen of what BHO’s economic policies might be if he becomes president. Essentially, Obama is trying to reconcile two Democratic Party camps — the old-school Keynsianism of Robert Reich, and the fiscal conservatism of Robert Rubin.

Ideologically, Obama comes across as a liberal who has learned to love the market, a legacy, perhaps, of his immersion at the University of Chicago.

Policy-wise, it seems to boil down to a more progressive tax system, with respect to payroll taxes as well as an income-tax reform that would cut taxes on the bottom four-fifths of the population, and raise taxes back to Clinton-era levels on the 20 percent of the households making more than $118k per year. [number corrected; see comments — ap]

Additionally, Obama seems open to increasing government investments in education, working re-training, and infrastructure. These investments would be less about redistribution, more about completing the public insurance safety net and contributing to economic efficiency.

The problem Obama is going to have is when it comes to selling this, since even he admits that his message is not as simple as the ‘low taxes, smaller government’ mantra of the Republicans. It struck me that what Obama is offering, and the theme he is searching for, is a view of the relationship between government and the market that is proposed by Joe Heath in his excellent book The Efficient Society.

“American must become an Efficient Society!” — how’s that for a campaign slogan.


 
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Obamanomics (Mostly) Explained

  1. That was quite a remarkable piece, and one that appears to attempt to soft pedal Obama’s solid track record of far left liberal voting, and one that belies Obama’s stated intentions on taxes, carbon targets and spending promises.

    For a more realistic look, you may want to check out George Will’s piece (can get it at Real Clear Politics) on Obama’s economic platform.

    Obama’s promise to enforce hard caps on emissions alone stake him out of the realm of a free market thinker. Of course there’s much, much more to worry about from the man who’s promising to remake America as we know it, but the hard caps is a good starting point.

  2. Good point — that’s the weirdest part about the Leonhardt article, the way BHO’s position on climate change gets introduced in the last two paragraphs.

  3. “Obama’s promise to enforce hard caps on emissions alone stake him out of the realm of a free market thinker.”

    And why is that? Do you even understand what a “hard cap” is?

  4. I love the idea of the efficient society. But after spending a year in university, there is absolutely no way that I can trust it. Listening to most of the profs at my college makes me scared of communism, not because they make obama look like a communist, but because they tell me that communism is bad, but because they want to use the government not to solve the coolective action problem, but to enforce a sort of far left orthodoxy. This really does make me afraid because I know full well that Canada is better of then the United States. But Canada has human right commisions taking away basic liberty. I dont want to have to pick between the two, but as long as there are universities who believe that Marxism is wonderful I shall have to. Its heart breaking really.

  5. He appears to have very little in the way of new thinking about the issues at all. There is no sense that he has any ideas on reducing the humongous deficit that is threatening the US economy, has proposed yet more regulation (Sarbannes-Oxley has already sucked several percentage points out of most companies’ productivity), has nothing to say about significant trade issues and labor mobility and wants to up the taxes on the rich.

    McCain is even more clueless on the economy so he is unlikely to win or lose on this issue, but the level of economic illiteracy on the part of the political leaders in the states is very disheartening.

  6. Andrew,
    I don’t have time right now to read the article, but I am curious at where you get the figure of 20% of Americans making more than $250K. 2006 US Census data indicates that of approx. 235 Million Americans over 15, only 1.4 million are making over $250K. (or .6%)
    Here is a link:
    http://pubdb3.census.gov/macro/032007/perinc/new11_000.htm

    And in fact, on page 5 of the article, he claims that HOUSEHOLDS making more than $118,000 make up the top 20% of the population (citing the Brookings Institute)

    Again this claim is contradicted by the Census, where they have a total of 116 million households and 22 million of those making over $100K (which is 19% making over $100K).

  7. Chris,
    Good points to make. The whole tone of the NYT article seems to be about income inequalities and how these should be addressed by government, and this looks to be a consistent theme of Obama’s. The actual numbers may not be that important except in how it chops up the electorate into the haves and have-nots. Obama will want to accurately gauge which class people think they belong to, and the middle-class looks like it is the key segment. Interestingly, they only seem to care about the upper limit, not the lower limit.

  8. Chris B — my mistake about the numbers, should have double checked –as you point out, the 20% refers to households over $118. But Bill is right, the exact figures are less important than how it feeds into a redistributive agenda.

  9. “He appears to have very little in the way of new thinking about the issues at all. There is no sense that he has any ideas on reducing the humongous deficit that is threatening the US economy, has proposed yet more regulation (Sarbannes-Oxley has already sucked several percentage points out of most companies’ productivity), has nothing to say about significant trade issues and labor mobility and wants to up the taxes on the rich.”

    I’m not sure that the problem is Obama’s lack of ideas when it comes to addressing this mind-boggling deficit ($9 trillion, isn’t it?). I think the problem lies with the fact that Obama and any other policy-maker understands that the only way out of this quagmire would be to raise taxes, curtail spending and put an end to both the Afghan and the Iraqi missions.

    That is a problem because neither Obama nor McCain are prepare to risk their chances at becoming President by telling the american people the truth. Though I think that Americans might be prepared to curtail spending and end their wars, talk of raising taxes in that country is the ultimate kiss of death.

  10. Change you cannot believe in!

  11. What was Kim Campbell’s famous, disastrous, accurate line: “Elections are no time to talk about issues”

  12. Chris, not just during elections. Americans have zero tolerance for any talk of raising taxes. As a politician hoping for a shot in hell to become President, proposing an increase is damn near suicidal. In fact, running for President without promising some sort of tax cut is is also damn near suicidal.

    With that kind of debt load ($9 trillion – I just had to type that number again), even if the next president did a Reagan-like everything-gets-cut-except-for-national-defence move, it still wouldn’t be enough to climb back out of the hole. Add to that the cost of their “war on terror,” Americans are going to need to stop being in denial and get out of their mindset which has them thinking that the sky is limit as long as you put it on credit.

    They have to raise their taxes. But they don’t want to hear that so what choice do Obama and McCain have but to continue with their collective economic delusion?

  13. Obamanomics! try saying that out loud a few times.

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