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Category: Obama

Published on Leave a comment on The Fiscal Grand Canyon

With the benefit of hindsight, I think the adoption of the "massive fiscal cliff" metaphor for our fiscal policy challenge was a bad idea.  I think Ben Bernanke introduced it to motivate action -- 10 months in advance -- to improve fiscal policy.  But what was meant to suggest urgency actually led to unnecessary panic.  A clear statement by a newly re-elected Obama in November that unless the Congress sent him a thoughtful bill to sign, the tax code would simply revert would have been a much better course of action.  The Republicans would then have to specifically introduce legislation to achieve their objectives.  The sad story of the last two years is that they have been able to get Obama to acquiesce to their demands without having to actively promote their agenda through legislation.  In this case, Obama really did hold all the cards, and yet almost all of the Bush tax cuts have been made permanent. 

Not to be outdone by Chairman Bernanke, I introduce the phrase "fiscal grand canyon" in an op-ed in the New York Daily News today.  We certainly jumped out of the frying pan and into the fire.  The key excerpt:

Unfortunately for Obama, he signed away the opportunity to pursue an ambitious second-term agenda when he signed this legislation.

In this era of partisan disagreement, we can expect congressional Republicans to oppose any new idea the White House may propose on the grounds that it costs more money and the budget is already projected to be in large deficit.

Enjoy!

Published on Leave a comment on So Who Won the Fiscal Cliff Fight?

Obviously, former President George W. Bush.  Despite how much he has been vilified in the years since his departure from office, the Congress and the President yesterday decided to ratify almost all of his tax policy agenda.  As Joe Wiesenthal of Business Insider noted, "The difference between the Obama Tax Cuts and the Bush Tax Cuts?  Obama's are permanent*."  Joe also pointed out, quite astutely, that even if top marginal tax rates are not lower than in the Clinton years, taxpayers with the highest incomes are still paying lower taxes because all the tax rates below the top are lower.  Who's laughing now?

Not me.  In over eight years of blogging, you won't find a single word of praise for the Bush-Obama tax cuts.  As a matter of revenue, we now permanently have a tax system that will not raise enough revenue to cover our expenditures.  As a matter of policy, we continued to constrain our choices based on whether some portion of legislation that wasn't popular enough to pass initially without explicit sunsets should be continued or not.  The proper course of action for President Obama was to allow all the sunsets to occur and then to force the Republicans to propose legislation to achieve their political objectives.  Instead, he surrendered his political advantages and handed it to them without a fight.  What an abject failure of leadership. I am reminded this year, as I was last, of a statement by Paul Tsongas in his Call to Economic Arms, "It takes toughness to lead a people toward their preservation no matter how disquieting the journey may be."

Maybe the next step is as Brad DeLong suggests -- they are now Obama's tax cuts, so he has to find a way to fund them.  A large carbon tax to recover much of the revenue would complete the "Green Tax Swap" that I have long wanted to see.  An economist can hope, can't he?

Published on Leave a comment on Handicapping Obamacare at the Supreme Court

This Opinionator blog post by Linda Greenhouse takes issue with the claim by the opponents of the Affordable Care Act that it is "unprecedented."  She describes the opponents' case as weak and wonders what all the attention -- six schedule hours of the Court's time -- is all about.

If I had to guess, I would say that the law will be upheld with 6 or more justices concurring and that the majority opinion written by Chief Justice Roberts will work very hard to narrow the legal scope of the ruling -- this law is okay but no others like it.  The extended hearings are to gather enough testimony to do that as well as possible.  Just my conjecture.

I am not a constitutional lawyer or any kind of lawyer.  I find myself in the position of thinking that there should be universal coverage but not through this law.  Even opponents of the law who have prosecuted these cases acknowledge that the government could have used its budgetary powers to obtain universal coverage.  My own suggestions were expressed in this post from December 2009 after the Senate passed its bill:

Specifically, I'd like to see everyone enrolled in Medicaid via the tax return as the default, unless they can prove that they had alternative coverage. They could then be charged an income-related premium for Medicaid on the tax return. I think this gets us to universal coverage more directly -- there is no need to separately impose penalties for those who violate the individual mandate and no need to provide a complicated system of incentives for those of modest means to be able to afford coverage through traditional markets.

That arrangement is no less constitutional than giving a tax deduction for a contribution to a 401(k) plan.  With a sufficiently steep income-sensitivity for the premium, it wouldn't cost much either.  The trouble is that the Congress didn't pass and the President didn't sign this bill.  They passed and signed one that relies on the government's regulatory powers to achieve universal coverage.  And that seems to me to be the reason why this case has gotten to the Supreme Court.

Published on Leave a comment on The Case for Obama

With Jon Huntsman now out of the presidential campaign, chances are very high that I vote for President Obama in November.  Even though I don't think a President Romney would implement policies too far from the political center (see this post for my reasons), the Republicans have done little to merit more influence in national government.  I thought Huntsman was the only interesting Republican candidate.  I was disappointed in his campaign but hope to see him in the 2016 race if the opportunity arises.

Via Ezra Klein this morning, I see that Andrew Sullivan has a thoughtful column laying out the case for President Obama's re-election.  It discusses policies but it also discusses tactics:

And what have we seen? A recurring pattern. To use the terms Obama first employed in his inaugural address: the president begins by extending a hand to his opponents; when they respond by raising a fist, he demonstrates that they are the source of the problem; then, finally, he moves to his preferred position of moderate liberalism and fights for it without being effectively tarred as an ideologue or a divider. This kind of strategy takes time. And it means there are long stretches when Obama seems incapable of defending himself, or willing to let others to define him, or simply weak. I remember those stretches during the campaign against Hillary Clinton. I also remember whose strategy won out in the end.

This is where the left is truly deluded. By misunderstanding Obama’s strategy and temperament and persistence, by grandstanding on one issue after another, by projecting unrealistic fantasies onto a candidate who never pledged a liberal revolution, they have failed to notice that from the very beginning, Obama was playing a long game. He did this with his own party over health-care reform. He has done it with the Republicans over the debt. He has done it with the Israeli government over stopping the settlements on the West Bank—and with the Iranian regime, by not playing into their hands during the Green Revolution, even as they gunned innocents down in the streets. Nothing in his first term—including the complicated multiyear rollout of universal health care—can be understood if you do not realize that Obama was always planning for eight years, not four. And if he is reelected, he will have won a battle more important than 2008: for it will be a mandate for an eight-year shift away from the excesses of inequality, overreach abroad, and reckless deficit spending of the last three decades. It will recapitalize him to entrench what he has done already and make it irreversible.

I recommend the whole thing.  For my own views on President Obama's re-election chances, see this post from August 2011.  I am less sympathetic to the "long view" that Sullivan is using to tie together Obama's actions in his first term, but that's the thing about long views -- it takes time to prove them right or wrong.