Friday, February 29, 2008

The Unbearable Bungling of Factcheckers

From today forward I'm not going to read any "fact check" sites other than Politifact, which as I noted in a post a few months ago is by far the best of such sites. Too often the other sites lead me astray.

But before removing the site from my bookmarks, I need to set the record straight on this post from on corporate tax breaks, which implies, falsely, that Clinton and Obama are both lying.

This matters because these sites are very influential. In 2003, while working for Dean, I had a back-and-forth with a "factchecker" who argued--incorrectly--that Dean's figures on tax incidence were wrong. Ultimately, they ignored me and shortly afterwards the AP's Nedra Pickler published an article taking the site's findings as "fact." In the post on corporate taxes, the site suggests that Obama and Clinton are twisting the truth, when in fact they are 100% correct. This post could easily lead to an article and even an extended meme that the Democrats are fudging the facts. Here's why they are right and the "factchecker" is wrong:

In the first part of the post, the site quotes Obama and Clinton using similar language; here's the part from Obama:

Obama, Nov. 3, 2007: When I am president, I will end the tax giveaways to companies that ship our jobs overseas, and I will put the money in the pockets of working Americans, and seniors, and homeowners who deserve a break.
The site than says,
Both candidates are referring to a feature of the U.S. tax code that allows domestic companies to defer taxes on “unrepatriated income.” In other words, revenue that companies earn through their overseas subsidiaries goes untaxed by the IRS as long as it stays off the company’s U.S. books.

But economists, including left-leaning ones, do not agree that eliminating this provision will bring an end to off-shoring.
The post goes on to present evidence that changing this provision will not "end the movement of jobs overseas." But neither Obama nor Clinton ever made such a preposterous claim. They actually made no claim at all about the effects of changing this tax provision. Although it's not what they say, at most one could argue that they're raising hopes that their proposal will reduce (but not end) the flow of jobs overseas. (While the effects are hard to predict, there is a plausible case that the effects would go in this direction.)

This sort of bogus gotcha-ism is typical of the aforementioned Nedra Pickler's writing. I remember Atrios once declared "Write Like Nedra Pickler Day" and called on everyone to offer their own Picklerisms.

An example parallel to the form here would be "Obama said he's going to stop eating at restaurants that serve greasy french fries. However, economists do not agree that this will bring an end to restaurants serving greasy fries!"

There are also problems with the second part of the post, which looks at complaints by Clinton and Obama that the 2005 energy bill increased tax breaks for oil and gas companies, but I'll leave identifying those problems as an exercise for the reader.

Thursday, February 28, 2008

Is McCain Eligible to Be President?

The NY Times has a good article today which suggests that although born in Panama, he probably would be considered a "natural born citizen" and thus eligible. But the McCain campaign is worried enough about it to have asked Ted Olson to research a legal brief on the issue.

The most important conclusion I take out of the article is that I should never trust for the definitive word on anything. I had previously taken's word that McCain is definitely a "natural born citizen," based on a 1790 law, a 1795 law, and a State Department interpretation of a later immigration law.

However, if you actually read the text linked to at, you see that neither the 1795 law nor the State Department statement mention the definition of "natural born citizen" at all. According to the Times, the 1795 law superseded the 1790 law (which did define "natural born citizen"), leaving the whole question in legal limbo.

Bob Samuelson and Obamanomics

I appreciate Rosser writing up this short critique of Samuelson's column but I resent that it forced me to read the column. Here's Rosser:

In today's WaPo, Robert J. Samuelson attacks "the Obama delusion," complaining that he is a new kid on the block whom RJS is uncomfortable with in contrast with Hillary and McCain. He starts with the usual whine about Obama's speeches being too good but lacking substance. Then he admits that Obama presented a 12-point economic plan at the Janesville, WI GM plant, only now the problem is that it is just "the usual political goodies," and looks too much like Hillary's plan. Oh. But I thought Hillary's plan was OK. I think RJS is steamed that he has not been schmoozed enough by Obama and his circle.

Of course RJS makes a serious fool of himself by ranting about entitlements, he being one of these people who thinks social security and medicare are one and the same. So, Obama is castigated for not resolving entitlement spending. His call to lift the income cap on FICA taxes is simply dismissed, although it is something specific. That Hillary is calling for a vague commission with no specifics, and McCain has said nothing at all that I know of about any of this, and has confessed that he does not know much about economics, does not seem to bother RJS in his lather at all.
To fill this in a little bit for the uninitated: Medicare and Social Security are entirely separate issues. Medicare's long-term finance problems are driven almost entirely by projected increases in health care costs, not rising life expectancy. Social Security's long-term financial issues are much less significant and could dealt with some fairly minor tweaks. One option for Social Security, that Obama has suggested, is lifting the income cap on FICA taxes.

There are plenty of points of his economic policy where one could reasonably question whether Obama has got it right. But these are not the points that Samuelson raises. This is a good moment to remind anyone who might be wondering that RJS is no relation to Nobel-prize winner Paul Samuelson.

Tuesday, February 26, 2008

Obama Befuddles Conservative Intellectuals

"We are the change that we seek"

"We are the ones we've been waiting for"

Is this message really so difficult to understand? Apparently so...if you are a conservative intellectual. First Charles Krauthammer referred to this as "rhetorical nonsense". Now "Mister" William Kristol (click the link for a funny anecdote by Dani Rodrik) is equally befuddled and thinks its really the message of someone trying to pretend he is our savior:

Obama likes to say, “we are the change that we seek” and “we are the ones we’ve been waiting for.” Obama’s rhetorical skill makes his candidacy appear almost collective rather than individual. That’s a democratic courtesy on his part, and one flattering to his followers. But the effectual truth of what Obama is saying is that he is the one we’ve been waiting for.


Have these people never heard of Mahatma Gandhi and his famous quote that "We need to be the change we wish to see in the world". I suppose its fitting that Kristol and Krauthammer are confused --they strike me as the kind who would have defended the British Empire and perceived Gandhi as an egomaniac.

Getting back to the quote, one simple interpretation is that its basically about "bottom-up" politics. People take responsibility by taking an active role in politics to effectuate change. It makes total sense for Obama, a former community organizer, to push this idea. At an even simpler level its reminiscent of Howard Dean's call: "you have the power". As a political tactic its also refreshing to hear about our role in effectuating change in contrast to Hillary telling us how great she is.

Its hilarious however, watching these right wing blowhards stumbling around in the dark as they try to deal with concepts that are just fundamentally alien to them.

Obama Policy Speeches (or Doesn't Susan Estrich Know How to Use Google?)

Estrich writes that while Obama "is an inspirational and impressive guy, he has yet to make the five policy speeches that would give substance to his agenda."

Haven't we killed the "Obama has no substance" meme yet? And why five? Since she asked, here's the full set of Obama speeches, policy and otherwise. Policy-wise, here are speeches on 1) economic policy, 2) another on economic policy 3) foreign policy , 4) education, 5) Iraq, 6) energy, 7) the military, 8) urban poverty, and 9) health care.

Reading speeches is actually a pretty inefficient way to figure out a candidate's positions. If you're hungry for policy nitty-gritty, check out the 64-page Blueprint for Change at Obama's website.

Poverty Anecdotes and Cuba Memories

If I may veer off election topics for a moment while I'm try to figure out my own opinion about the housing crisis ...

There's a discussion ongoing involving Tyler Cowen, Brad Delong, and Megan McArdle about how poor Cuba is based on travelers' impressions and comparisons to the Dominican Republic and Mexico. I've been to all three places, and I think the whole exercise is a fool's errand. You just can't make statements about the welfare distribution in any of the three countries based on a highly non-random sample of observations.

I saw some pretty poor places in rural Cuba, but I've seen spots in northern Mexico and the DR that were about the same, and places elsewhere in Mexico that were much poorer; undoubtedly there are sections of the distributions of welfare in all three countries that overlap. But I couldn't have accurately guessed the poverty rate or median income based on those observations. The whole reason we do household surveys and collect other hard data is so that we don't have to rely on anecdotes.

An exception to the "anecdotal evidence is worthless for poverty measurement" rule applies to place where almost the entire distribution is dirt poor. In Haiti, for example, where 80% of the population survives on less than $2-a-day, your subjective impressions are not likely to lead you astray.

What stood out for me when I visited Cuba was the level of repression (and you don't need a household survey to know that). You see security forces on every corner, and the media is just like how I always imagined the Soviet press--loaded up with comically transparent propaganda. Also evident was the sheer volume of sexual tourism. In all the tourist zones, you see fat old foreign guys walking around clutching teenage Cuban girls. On the other hand, in Cuba I didn't see barefoot little kids begging on the streets, which is something you see in Mexico City and many Third World cities.

Monday, February 25, 2008

Obama was Once a Nader Man

Not yet noticed in the press is that Obama wrote the following in Dreams from My Father: "I spent three months working for a Ralph Nader offshot up in Harlem, trying to convince the minority students at City College about the importance of recycling." This was during the year before he started his community organizing work in Chicago. Presumably this was one of Nader's Public Interest Research Groups.

I wonder if Mark Penn will twist this into a new attack line: Obama worked for the guy who lost Al Gore the presidency!

I don't have any problem with an independent candidate joining the race to push the political conversation to the left--I just wish it was someone who's speaking style didn't resemble that of the crazy dude on the street corner near my apartment. If the entire point of your campaign is to get your message out, you should be someone who can communicate the message. How about someone like Katrina vanden Heuvel, Amy Goodman, or Noam Chomsky (if he weren't 80)? I'm watching Nader on CNN, and I can barely understand what's he trying to say.

Housing Crisis: What is the Problem?

I've been putting off writing about proposed responses to the housing crisis, and new proposals keep popping up. So far, I see distinct proposals from Obama, Clinton, Bush, Alan Blinder, Larry Summers, and Dean Baker, and I'm sure there are lots of others out there. I'll write a brief description and evaluation of the proposals soon.

But first, in not too many words, what's the problem? Starting around 2000, residential housing prices skyrocketed. According to the Case-Shiller housing price index (which controls for quality and covers only major metropolitan areas), prices nationally in mid-2006 were more than double those in 2000, with even more spectacular growth taking place in LA, Miami, DC, and San Diego. (The index is normalized to be equal to 100 in January 2000.)
Now that the housing bubble has burst, prices are dropping precipitously. Over the long run, our best guess is that housing values will grow at a constant rate. Taking as a very, very rough guide to long run price growth the average annual growth rate of the Case-Shiller index between 1987 and 2000 (3.6%), and extrapolating forward from January 2000 (making the heroic but not crazy assumption that prices at that point were at their long-run level) we would expect that the recent value of the Case-Shiller index would be about 130 rather than 200. In other words, nationally, residential housing is about 50% overvalued. Assuming prices drop back to their long-term trend values, we expect a decline of 20-30% from current values over the next five years.

As prices have started to decline, many people who bought properties with the expectation that they could quickly sell them again for a profit are faced with mortgages that they are unable or unwilling to pay. A not mutually exclusive category consists of those who got mortgages with a variety of gimmicky payment plans--teaser rates, exploding adjustable rates, etc.--and now can't afford their payments.

At the risk of sounding like a cold-blooded economist, it's important to specify exactly why this is a bad thing. Those who were more prudent may find it hard to find much sympathy for those who gambled in the housing market and are now suffering for it. That said, there are reasons to think government should do something about the housing crisis.

First, some people truly didn't understand the risks they were taking, in part because mortgage companies skirted the laws requiring transparency and didn't inform them. It is the job of the government to regulate mortgages and enforce disclosure laws, and the government failed to protect those people.

Second, the empty houses that result from repeated foreclosures can have a large negative effect on nearby homes, leading to neighborhood decay, and accelerating the decline in housing prices.

Third, a quick drop in prices can bring a drop in consumer spending (through so-called wealth effects), which is not what we need at a time when recession clouds are brewing.

The second and third reasons are in economic parlance "externalities," which is every economist's favorite rationale for government intervention.

The options for dealing with the problem, as I see them, are 1) mandate a moratorium on foreclosures and/or a freeze on adjustable rates , 2) buy up some mortgages and refinance them, 3) provide limited government financial assistance to those having trouble paying their mortgages, 4) or make some tweaks to foreclosure and/or bankruptcy law. In my next post, I'll evaluate the main solutions and look at the Obama and Clinton plans in particular.

Friday, February 22, 2008

Obama, Clinton (and McCain, sort of) on Trade, Part III

Just today, I came across candidate questionnaires from the Wisconsin Fair Trade Coalition. The most bizarre point is that the Coalition reports that "Senator McCain indicated he does not return questionnaires."

A brief note about candidate questionnaires is in order here. Speaking from my experience with the Dean campaign, I can tell you that presidential campaigns are deluged with questionnaires sent by various groups trying to nail down the candidates' positions on their areas of concern. Typically, responses to the questionnaire are drafted by a junior staffer, reviewed by a senior advisor (like the policy director), and then sent to the candidate for approval.

The questionnaires sometimes deal with microscopic policy questions, but they serve a useful purpose in forcing the candidate to go on the record on specifics rather than speak in sweeping, vague generalities. They're free to skip questions that they don't want to answer. And they may sometimes deem filling out particular questionnaires sent in by the most obscure organizations to be not worth the time of their campaigns. But outright refusing to answer any questionnaire, as McCain has apparently done, is a statement of astounding contempt for the voters, reminiscent of Bogart in the Treasure of the Sierra Madre:

Us: "If you're the candidate, what are your positions on the issues?"
Straight Talk McCain: "Positions? We ain't got no positions. We don't need no positions! I don't have to show you any stinkin' positions!"
The responses to the Coalition reveal some new information about Obama, namely, that he opposes not only the South Korea trade agreement, but also the Colombia and Panama accords, as he says in this letter to the Coalition, which is the most complete statement of his position on trade that I've seen. In their responses to the questionnaires (Hillary's is here and Obama's is here) they give identical responses to the yes/no questions. Given these responses, their positions on trade are essentially indistinguishable, although Obama does appear to have given greater prominence to expanding assistance for displaced workers.

I've also been looking at the foreign investor rights provisions of recent trade agreements and will write about these in a future post.

hmm....Dowd on Sunday?

[Update --the column is out and no mention of "Iseman", just more Hillary, I'm surprised, but many readers at Digby's blog were right --maybe next week]

Now let's see, what oh what will Maureen Dowd find to write about this Sunday? I'd think its a sure bet that the name "Iseman" will feature in there. Maybe some reference to the golden dress she's wearing in the photo that's all over the news. Some references to Cindy's hair?

As much as I can't stand Dowd and her absurd focus on superficiality, I have to admit I think this column should be a fun read.

And let's see what Kristof has to say about St. John now after fawning over what an admirable hypocrite he is.

Speaking of Dowd, here's a Flashback: More than 4 years ago, after Drudge spread some rumors that Kerry used botox, I wrote a post at Economists for Dean (links are gone):

I'd really like to be proven wrong...but what are the odds that Maureen Dowd will write about botox and Kerry tomorrow?

(Atrios even picked it up)

Well to my shock it took her about 6 weeks before she finally wrote about it:

With all the fuss about the 60-year-old John Kerry going from Shar-Pei to whippet, I figured a physiognomic quiz might be in order. The candidate's more serene visage has spurred rampant speculation that his attractive 65-year-old wife, Teresa, a Botox aficionado, turned him on to the wrinkle diffuser, which paralyzes the muscles that deepen wrinkles.

How could we elect a president who couldn't show his emotions? After all, the leader of the free world has even more reason to frown, wince and be startled than a sitcom star.

Trade and Public Opinion in Colombia

The response to my earlier post inspired me to look for some evidence to back up my claim that the Colombian trade deal is viewed by most Colombians as a vital step forward. Here are results from a recent Gallup poll in the country:
Also, Colombia's President Uribe, who wants to make the trade deal the signature foreign policy accomplishment of his presidency, enjoys an approval rating of 81 percent in this recent Gallup poll. It's also notable that Hugo Chavez's approval rating in Colombia is 10 percent, and that of the FARC guerrilla group is below 1 percent.

Thursday, February 21, 2008

Obama on Trade, Reloaded

In an earlier post, I took a close look at Obama and Clinton's positions on trade and concluded that they are nearly identical, except that I couldn't find any position from Obama on the pending trade agreements with Colombia, Panama, and South Korea that Clinton opposes.

Now that Obama looks likely to be the nominee, his views on trade are getting new scrutiny, so it seems like a good time to revisit the issue and offer my own thoughts on what a progressive trade policy should look like.

First, I missed earlier this AP article from last October which says that Obama opposes the South Korea trade accord. But there's also this more recent statement in which he says that he has concerns but doesn't say he'll definitely vote against the accord:

The U.S.-Korea economic relationship has also benefited both nations and deepened our ties. I look forward as well to supporting ways to increase our bilateral trade and investment ties through agreements paying proper attention to our key industries and agricultural sectors, such as autos, rice, and beef, and to protection of labor and environmental standards. Regrettably,the U.S.-Korea Free Trade Agreement does not meet this standard.
(Thanks to the Custom House blog for pointing these out.)

Greg Mankiw says that it is an open question "whether Barack Obama is going to align himself with the economic centrists in the Democratic party or with the populists on the far left of the party. A key litmus test is trade, and so far it does not look good." Similarly, a couple Foreign Policy magazine bloggers seem to think that Obama is taking a sudden left turn on trade. (One of the FP bloggers claims incoherently that Obama wants to shove "protectionist agreements" - huh? - "down our trading partners throats.")

In my read, however, Obama's been quite consistent on trade. Indeed, if you look at my earlier post, you that his public statements on trade look very similar to what he's saying now. Here's what he said in his recent economic policy speech:
It’s also time to look to the future and figure out how to make trade work for American workers. I won’t stand here and tell you that we can – or should – stop free trade. We can’t stop every job from going overseas. But I also won’t stand here and accept an America where we do nothing to help American workers who have lost jobs and opportunities because of these trade agreements. And that’s a position of mine that doesn’t change based on who I’m talking to or the election I’m running in.

... when I am President, I will not sign another trade agreement unless it has protections for our environment and protections for American workers.
I read this as just a statement that trade agreements should include strong environmental and labor protections and compensation for those who lose out, which is basically the standard center-left position. He's tossed out some criticism of NAFTA, but that doesn't signal to me that he's going to be an anti-trader. (Unlike Clinton, he's never called for a freeze on new trade agreements.)

What is missing in Obama's position on trade--and indeed in the entire American dialogue on the issue--is any discussion of what trade means for developing countries. For many countries, trade is the way to achieving the economic growth needed to life their citizens out of poverty. Leaders and citizens of those countries see access to the U.S. market as crucial to progress.

The Colombia case is particularly acute because the country has suffered immensely fighting on the front lines of the Americans' drug war, with cocaine money fueling not only the drug cartels themselves, but also two armed groups--the guerrillas and paramilitaries--who have long since abandoned any political or legitimate goals and become simply organized criminal organizations dedicated to the drug trade and kidnapping. The current Colombian government, having made great strides in demobilizing the paramilitaries and isolating the guerrillas, is desperate to show some payoff for the people of Colombia, and the trade agreement with the U.S. is seen by many Colombians as the way forward. This is why Clinton's opposition to the Colombia trade deal is widely known in Colombia and has even criticized by the country's president.

Back when I was advising Howard Dean--who had positions similar to Obama's--I argued that Dean should be more pro-active in his trade position. At the time, Bush was pushing for a Free Trade Agreement of the Americas. Why not, I said, a Fair Trade Agreement of the Americas that would embrace trade agreements with serious labor and environmental provisions? The agreement could be a blueprint for shared prosperity for the continent, and would be embraced by the center-left governments of Lula in Brazil and Kirchner in Argentina. Obviously, I lost that argument, but I still think it's ultimately the right approach.

The signature Democratic sentiment is, in my view, "We're all in this together." Obama's great promise is that like Kennedy and LBJ, he can speak to many Americans who might not otherwise see themselves as part of that "we" and sweep them in the feeling that they, too, have a responsibility and a desire to share in making their country a better place. I hope that Obama as President--if not on the campaign trail--aims to take this message a step higher, to see the "we" embracing all of mankind, and that expanding trade with developing countries becomes part of this vision.

UPDATE: See this new post here.

Mexican Growth and Illegal Immigration

Mark Thoma at Economists View suggests that compared to McCain and Hillary, Obama is the only one on the right page with respect to the importance of promoting the Mexican standard of living:

Fences don't stop economic forces from working. I think the only viable long-run solution to the immigration problem is to reduce the economic distance between Mexico and the U.S. Obviously, we don't want to do that by reducing our income, so we need to do what we can to help Mexico develop and raise its standard of living. In that regard, I would like to hear more from the presidential candidates on how the U.S. might help to promote business and job development in Mexico. Proposing a tax credit to companies willing to invest in Mexico would be political suicide - tax breaks to U.S. companies willing to move jobs to Mexico probably wouldn't go over well - but if we are going to solve this problem we will have to realize that such investment must take place. If nobody from the outside ever locates in Mexico, if we wait for development to spontaneously erupt on its own from within, it could be a long wait with a high fence repair bill. But tax breaks are but one small part of the government's arsenal, and I would like to know what the candidates plan to do to promote economic development in Mexico. So I checked their websites to see if they say anything about this (in each case I clicked on issues, then immigration):

Obama: "Work with Mexico: Obama believes we need to do more to promote economic development in Mexico to decrease illegal immigration."

Clinton: Doesn't explicitly say anything about development, closest statement is "greater cross-cooperation with our neighbors."

McCain: "Recognize the importance of building strong allies in Mexico and Latin America who reject the siren call of authoritarians like Hugo Chavez, support freedom and democracy, and seek strong domestic economies with abundant economic opportunities for their citizens."

I have to give this one to Obama. I have no problem with promoting free market policies, but McCain is essentially adopting the Washington Consensus as a development strategy and that's not what I had in mind, and it's not a strategy that has been successful. Clinton doesn't mention development in Mexico as a means of stemming illegal immigration - I'm sure she'd give the right answer if asked but it's not on her website - and only Obama makes the clear link between the U.S. helping Mexico to develop and decreases in illegal immigration.

Wednesday, February 20, 2008

NYT actually reports on policy!

Matthew Yglesias recently pointed to a New York Times column by Jeff Zeleny about Obama's shift towards spelling out more policy details in speeches. Like much of the "horse race" media coverage of politics the article didn't actually mention any of the details.

I was pleasantly surprised that in today's New York Times article by John Broder and Jeff Zeleny they actually mention Obama's substantive positions on home foreclosures:

"...Senator Barack Obama of Illinois, was in San Antonio, where he also talked about the crisis affecting subprime borrowers. Mr. Obama pledged to penalize predatory lenders, offer a tax credit to cover 10 percent of interest on mortgages of struggling homeowners and make an additional $10 billion in bonds available to help buy first homes or avoid foreclosure.

There, now that wasn't so difficult to do!

St. John and Lobbyists: Money Quote

This is just too funny a quote from the New York Times piece that totally exposes the sanctimonious McCain for his incestuous relationship with lobbyists:

“Unless he gives you special treatment or takes legislative action against his own views, I don’t think his personal and social relationships matter,” said Charles Black, a friend and campaign adviser who has previously lobbied the senator for aviation, broadcasting and tobacco concerns.

(emphasis mine...but the NYT writers must have been chuckling in writing that line)

This after the article points out that both McCain's campaign and his Senate staff are run by lobbyists:

Like other presidential candidates, he has relied on lobbyists to run his campaigns. Since a cash crunch last summer, several of them — including his campaign manager, Rick Davis, who represented companies before Mr. McCain’s Senate panel — have been working without pay, a gift that could be worth tens of thousands of dollars.

In recent weeks, Mr. McCain has hired another lobbyist, Mark Buse, to run his Senate office. In his case, it was a round trip through the revolving door: Mr. Buse had directed Mr. McCain’s committee staff for seven years before leaving in 2001 to lobby for telecommunications companies.

Sunday, February 17, 2008

The November 2000 Natural Experiment

Tyler Cowen has column in the New York Times suggesting that the scope for Presidential elections making a whole lot of difference with respect to economic policy is relatively modest:

To put it simply, the public this year will probably not vote itself into a much better or even much different economic policy. To be sure, the next president — whoever he or she may be — may well extend health care coverage to more Americans. But most of the country’s economic problems won’t be solved at the voting booth. It is already too late to stop an economic downturn.

Of course, it is impossible to know the true effect of an election on economic policy because it impossible to observe the counterfactual state of the world --what would have happened if the other person was elected. I think in this respect, the November 2000 election, however, is something close to a natural experiment because it was so close. The difference between Bush and Gore was basically a coin toss. More accurately it was the difference of a butterfly ballot, a thousand Nader votes or one Supreme Court Justice.

The fact that it was close suggests that we are essentially holding constant the pre-election preferences of the electorate, i.e. the popular vote was actually higher for the candidate who was not in favor of the large tax cuts that actually took place. In that sense the closeness of the election addresses the problem that the preferences of the electorate are "endogenous" (in econ speak) with the outcome of economic policy post-election.

So imagine that all else was the same but the butterfly ballot was properly designed, Gore won Florida and became President instead of Bush.

Here's the question, do you seriously believe that we would have pursued the same economic policies, that the value of the our national debt would be the same today as it would have been under Gore? Too me it strains credulity to think so. Gore likely would not have slashed tax rates at the top, entered the war in Iraq and signed a joke of a Prescription drug bill. Would Gore have reacted the same way to the prolonged jobless recovery? Certainly not. One might argue that the housing bubble and the credit crunch likely would have ensued under a Gore administration, maybe so, but Gore would not have had the same people in charge of the key banking and regulatory agencies that took pride in being completely hands off.

In fact, once you start to think about it more broadly the US and the world likely may very well have been on a completely different trajectory. Now this is admittedly much more speculative but 9/11 might not have even happened if there was a continuation of the predator program in Afghanistan or if the Gore Administration reacted the same way to the August 6th memo as Clinton did to the threat of a millenium attack.

So does it really matter if McCain or Obama (or Hillary) are President? ...I think so, just think of McCain singing "bomb, bomb Iran".

(Note post was updated to try to more clearly explain the argument)

The Ignorance of Krauthammer

In addition to the false notion that Obama lacks substance (the guy is a former Constitutional Law Professor) another emerging theme is that Obama's support is like a cult following.

Charles Krauthammer in a column devoted to perpetuating this new narrative highlights his own ignorance when he writes:

ABC's Jake Tapper notes the "Helter-Skelter cult-ish qualities" of "Obama worshipers," what Joel Stein of the Los Angeles Times calls "the Cult of Obama." Obama's Super Tuesday victory speech was a classic of the genre. Its effect was electric, eliciting a rhythmic fervor in the audience -- to such rhetorical nonsense as "We are the ones we've been waiting for. (Cheers, applause.) We are the change that we seek."

(Emphasis Mine)

I guess Krauthammer never heard of Mahatma Gandhi who is known for saying that "We need to be the change we wish to see in the world", a philosophy that helped liberate the world's most populous democracy.

I suppose we will now be told by Kruathammer that the "fierce urgency of now" is "rhetorical nonsense"

Details, Details

Its amazing to me how in a New York Times article about Obama and his recent decision to emphasize more policy discussion into his speech, they somehow can't actually discuss the details.

At a minimum the article ought to at least refer to the fact that Obama has a very detailed set of policies "Blueprint for Change" that is a 64 page document.

You might think "well what's the big deal?" The big deal is that these false characterizations that pigeonhole a candidate have destructive power. (Think "Al Gore is a an exaggerator" --even though it was the media that misquoted him to say that he invented the internet.)

Given that both Hillary and McCain (laughably so ) have both tried to push the idea that Obama is not substantive, you would think that the media could at least present some basic factual information. For example, they could say:

While both Clinton and Obama have presented detailed plans for the economy and healthcare reform, Obama has emphasized broader themes such as hope and unity while Mrs. Clinton has emphasized the importance of working hard to implement change.

At least that would make it clear that they both have detailed plans even if the media is too lazy to actually describe them.

Matthew Yglesias picks up on this and has emphasized in several posts this bizarre reluctance of the media to actually discuss the policy details.

Friday, February 15, 2008

Trade and the Safety Net

As the campaign starts to focus on Ohio, a traditionally blue collar manufacturing state, the issue of international trade and who will push back harder against trade agreements will undoubtedly receive a lot of attention.

Both Clinton and Obama are appealing to populist sentiment. There is much to dislike in the way corporate interests are carefully negotiated during "free" trade negotiations. Labor and environmental considerations are secondary concerns that tend to serve more as window dressing.

As unpopular and as distasteful as these agreements might be, and while it makes a lot of political sense to rail against them, they should not detract from the broader idea that there are large economic gains from trade to be had. Exports are one important factor that has helped keep the economy afloat during the housing downturn and credit crunch.

These gains from trade however, are broadly dispersed among all consumers (e.g. cheap toys from China) while the costs are highly concentrated in specific industries and specific regions (e.g. textile workers in the South). I think there is a reasonably strong consensus among many economists in Democratic policy circles that we finally have to stop paying lip service to the idea that we need a stronger safety net for displaced workers. Much of our current safety net is antiquated.

In 2004 during the Democratic primaries, there was growing talk about broader wage insurance policies that would help address the dramatic losses to permanent income that accompany job losses, irrespective of whether they are due trade or other structural changes in the economy. I guess I'm a little bit disappointed that the candidates are largely avoiding talking about such policies.

I checked Hillary Clinton's website and could find nothing related to trade and trade-related safety net policies under "issues" [in an earlier post, Don Pedro noted that Hillary would expand the TAA based on a information in a Clinton press release]. Obama, to his credit, does have a section on his website discussing several specific policies that deal with expanding the safety net:

Improve Transition Assistance: To help all workers adapt to a rapidly changing economy, Obama would update the existing system of Trade Adjustment Assistance by extending it to service industries, creating flexible education accounts to help workers retrain, and providing retraining assistance for workers in sectors of the economy vulnerable to dislocation before they lose their jobs.

Ideally I think its important to go farther than this. Robert Lalonde, an economics professor at the University of Chicago recently wrote a detailed report (pdf) entitled "The Case for Wage Insurance". He makes the case that its time to move beyond just linking support for dislocated workers with international trade. That approach has not successfully bought political support for trade but only undermined it.

...the linking of displacement assistance to trade has helped foster the false impression that displacement largely results from liberalized trade, whereas the truth is that technological progress and changing patterns of consumer demand contribute more to job churning. A program that might have made trade deals more politically salable has therefore risked having the opposite effect of cementing the connection in popular debates between trade and economic hardship. The misleading connection between assistance and trade has also created an undesirable double standard: workers displaced by trade are offered help while those displaced for other reasons often are not, even though there is little policy justification for this distinction and it can be hard to tell what caused a particular worker to lose his or her job.

Congress needs to address this problem by going beyond the traditional conception of trade adjustment assistance and modestly funded low-intensity retraining programs for displaced workers. Policies toward displaced workers need to be better funded than in the past. They need to include all displaced workers rather than just those affected by trade, and they need to offer meaningful wage insurance. In principle, these prescriptions could have bipartisan appeal. Wage insurance extends help to middle-aged, middle-class workers, which should attract support from labor unions and their allies. But wage insurance proposals envision paying benefits only when eligible displaced workers find and keep jobs, which should make the program palatable to conservatives.

Unfortunately, until recently, both labor groups and conservatives have been skeptical of wage insurance, characterizing it alternatively as “burial insurance” or as
excessively expensive. But there have been hopeful signs recently in Congress. Senator Max Baucus (D-MT), the chairman of the Senate Finance Committee, which has jurisdiction over trade, and Senator Norm Coleman (R-MN) are pushing a TAA proposal that includes wage insurance. Jim McDermott, a Democratic representative from Washington State and chairman of the Joint Economic Committee, and Senator Charles Schumer (D-NY) have coauthored a freestanding wage insurance bill. House Republicans have offered an alternative wage insurance plan that would be funded at the expense of unemployment insurance. None of these proposals is sufficiently ambitious, as this paper will argue. But they are evidence of the hopeful gathering of support for the concept of wage insurance.

The politics of trade have grown so toxic that wage insurance cannot guarantee a resumption of liberalization. But polling evidence suggests it would help. Kenneth F. Scheve and Matthew J. Slaughter, the leading experts on globalization and public opinion, report that Americans understand that trade brings lower prices and greater variety, but that a growing majority nonetheless opposes trade liberalization because of fears of stagnant or falling wages. Similarly, a Program on International Policy Attitudes (PIPA)–Knowledge Networks Poll conducted in January 2004, “Americans on Globalization, Trade, and Farm Subsidies,” concludes that, “If the government would make substantial, visible efforts to mitigate the side effects of expanded trade, support for the growth of trade would be substantially higher than it is. When the possibility of helping workers adapt to changes associated with increased trade is considered, support for free trade becomes very strong.”

Moreover, irrespective of the potential benefits from trade liberalization or from technological changes that lead to permanent job losses, wage insurance is desirable in its own right. As this report explains, wage loss following displacement can be as financially catastrophic as the loss of a house. But whereas private markets offer insurance for storms and fire, no such insurance is available when a middle-aged worker loses a job and suffers a permanent drop in wages. There is a market failure here, and government should correct it.

Hillary Uses Discredited McCain Advisor to Attack Obama

Hillary's campaign is so desperate that they quoted a McCain advisor, Kevin Hassett to attack Obama's economic plan as just a copy of Hillary's.

First of all shame on Hillary for using Republican talking points.

Second of all...KEVIN HASSETT...all you need to know is two words "Dow 36000", a book co-authored by Hassett in 1999 predicting that the Dow would be three times higher than its current 12000 level.

Here's Brad Delong describing Hassett and his co-author's pathetic attempt to wipe the egg off their faces by backtracking off their central claim:

...those of us unlucky enough to own Dow 36000: The New Strategy for Profiting from the Coming Rise in the Stock Market can go to our bookshelves, pull it down, and read that "the Dow should rise to 36000 immediately"--i.e., in October, 1999. But Hassett and Glassman say, they are going to be cautious and conservative. They are not going to forecast that the Dow will rise to 36000 tomorrow, but instead they "believe the rise will take some time, perhaps three to five years..." (p. 18).

However, they acknowledge that they might be wrong: the rise might come much quicker. As they go on to say later on the book, the fact that Glassman and Hassett "conservatively" don't expect the rise of the Dow to 36000 to occur for three to five years--i.e., until 2002 or 2004--does not mean that investors should delay. Investors should "seize the opportunity now [i.e., in 1999] to profit from the rise in the Dow to 36000 (p. 125)."

Thursday, February 14, 2008

McCain's "Platitudes" on health care

The other night McCain said:

To encourage a country with only rhetoric rather than sound and proven ideas that trust in the strength and courage of free people is not a promise of hope. It is a platitude.
So I thought I'd mosey over to the McCain website to see his "sound and proven ideas" on healthcare reform. What I found instead is what you might call a series of trite and banal other words "platitudes".

Take a load of some of these bullet points taken from the website:

  • While we reform the system and maintain quality, we can and must provide access to health care for all our citizens - whether temporarily or chronically uninsured, whether living in rural areas with limited services, or whether residing in inner cities where access to physicians is often limited.
  • Promote competition throughout the health care system - between providers and among alternative treatments.
  • Promote rapid deployment of 21st century information systems.
  • Insurance should be innovative, moving from job to home, job to job, and providing multi-year coverage.
  • We must do more to take care of ourselves to prevent chronic diseases when possible, and do more to adhere to treatment after we are diagnosed with an illness.

So is McCain planning on actually proposing a way to actually cover "all of our citizens" with "innovative" insurance using "21st century technology"?

About the only actual detail provided was the following:

Reform the tax code to eliminate the bias toward employer-sponsored health insurance, and provide all individuals with a $2,500 tax credit ($5,000 for families) to increase incentives for insurance coverage. Individuals owning innovative multi-year policies that cost less than the full credit can deposit remainder in expanded health savings accounts.
Compare this to Obama's plan on health care which is a lengthy and detailed policy proposal .

Just as an example, let's look at how each candidate addresses the issue of chronic disease. Rather than McCain's platitude about how "we must do more to take care of ourselves to prevent chronic disease", Obama says the following:

  • Support disease management programs. Seventy five percent of total health care dollars are spent on patients with one or more chronic conditions, such as diabetes, heart disease and high blood pressure. Obama will require that providers that participate in the new public plan, Medicare or the Federal Employee Health Benefits Program (FEHBP) utilize proven disease management programs. This will improve quality of care, give doctors better information and lower costs.
  • Coordinate and integrate care. Over 133 million Americans have at least one chronic disease and these chronic conditions cost a staggering $1.7 trillion yearly. Obama will support implementation of programs and encourage team care that will improve coordination and integration of care of those with chronic conditions.
  • Require full transparency about quality and costs. Obama will require hospitals and providers to collect and publicly report measures of health care costs and quality, including data on preventable medical errors, nurse staffing ratios, hospital-acquired infections, and disparities in care. Health plans will also be required to disclose the percentage of premiums that go to patient care as opposed to administrative costs.
So which candidate really provides straight talk and which is a candidate of platitudes? I wonder if the media will correct the record the next time McCain tries out this line of attack. I won't hold my breath.

Wednesday, February 13, 2008

Obama Economic Policy Speech

Obama gave a "major economic policy address" today in Janesville, Wisconsin. The speech doesn't lay out any major new material that I can see, but it's a good reference for the basic Obama economic policy program.

In separate remarks in Waukesha, Wisconsin, Obama took some shots at McCain on economic policy:

It turns out that yesterday, or maybe today, John McCain started attacking me on economic policy, which I thought was flattering. It makes clear that he knows who his opponent is going to be, and I am looking forward to a great debate on the issues with John McCain.

I have to say, though, that I was surprised that he took me on on economics because he has admitted—and by the way John McCain is a great American hero, a war hero we honor his service. But economics is not his strong suit. I mean he said, "I don’t understand economics very well," and after what he said, it shows, because his main economic philosophy is to continue the same tax breaks that George Bush has been perpetuating over the last seven years and that...John McCain criticized as irresponsible back when he wasn’t running for President

...Somewhere along the line he traded those principles for his party’s nomination and now he is for those tax cuts. So I just want to make everybody clear I am not....

So George Bush may not be on the ballot this fall, but his tax cuts and his economic policies are. And if John McCain wants to debate the specifics of how well the economy has worked for ordinary families over the last seven years, that is a debate that I am happy to have, because the American people know that Bush’s policies have not worked for ordinary Americans.
It's good to see him hammering away at McCain's confession that he doesn't understand economics. I expect this will become a staple for the campaign.

Tuesday, February 12, 2008

It's Not About Race and Sex

I want to express my continued annoyance with high-profile commentators why make assertions without applying even a minimum of evidence-based scrutiny. Today, Anne-Marie Slaughter, Dean of the Woodrow Wilson School at Princeton, approvingly quotes syndicated columnist Ellen Goodman, who says "Southern white men still won't vote for a white woman."

This leads Slaughter to conclude

In other words, many white men in the South may be voting against Hillary more than they are voting for Obama.... Just because these voters prefer Obama to Hillary does not mean that they will vote for Obama over McCain, no matter what the polls say. It's very hard to believe that when the chips are down they're not going to vote for the guy who looks like them.
Right, better to trust your own idle speculation about racism rather than what the data has to say. If it's all about race and sex, what happened to Edwards?

Anyway, the entire basis for her argument--Goodman's claim that white men don't vote for white women--is quickly refuted by a glance at Wikipedia. Nine Southern states have elected women senators, and there are currently five Southern women in the Senate--including Democrats and Republicans--all of whom had to have been elected with significant numbers of votes from white men. Kay Bailey Hutchinson received 70% of the white guy vote in 2006.

So if all those white men voting for Obama aren't just voting against the white woman, that leaves what would have seemed the more obvious possibility all along: they like the sound of "President Obama."

By the way, as a white man and once and forever Texan, I did my best to pump up the evidence for Goodman's bogus theory, by voting against Hutchinson in her first term election. But I also had the pleasure of voting for Governor Ann Richards.

Sunday, February 10, 2008

The Iraq War Will Not Be "Off the Table"

I am constantly amazed to hear otherwise intelligent friends tell me that the Iraq war is “off the table” for the November election. As Lerxst pointed out, McCain is already saying that the Democrats want to surrender to Al Qaeda, and the election is still seven months away. McCain’s entire campaign rests on the claim that he is the warrior who will fight the terrorists and that Democrats are guilty of treason. There’s no way the Democrats are going to be able to sidestep these accusations and just talk about the economy.

Nonetheless, as Glenn Greenwald notes, Hillary and her advisers believe that they need to concede that McCain is strong on national security, so that the winning strategy is to try to match his position of belligerence and thus take the issue "off the table." Never mind that this was the same losing strategy the Democrats pursued in 2002 and 2004. In my view this is the key difference between Clinton and Obama. Clinton’s refrain has been, “I can go toe to toe with John McCain on national security” In contrast, here’s what Obama said on Saturday night (this is now part of his stump speech):

It is time to turn the page on eight years of a foreign policy that has made us less safe and less respected in the world. I am looking forward to having a debate with John McCain about foreign policy, because if I am the nominee, the American people will have a clear choice.
I will end this war in Iraq. I will bring our troops too home. But I will also end the mindset that got us into war. That will change when I am President.

Saturday, February 9, 2008

McCain on Surrender

John McCain said the followng:

“I guarantee you this: If we had announced a date for withdrawal from Iraq and withdrawn troops the way that Senator Obama and Senator Clinton want to do, Al Qaeda would be celebrating that they had defeated the United States of America and that we surrendered,”
My rejoinder would be:

“I guarantee you this: If we had not invaded Iraq the way that Senator McCain and President Bush wanted to do, 4000 more American soldiers and several hundred thousand more Iraqi civilians would be alive today”
In truth, Al Qaeda is already celebrating the defeat of America because invading Iraq and getting us bogged down while they could train their next generation of jihadists is exactly what they wanted.

Back when I was an Economist for Dean one of the things I really wanted to see was the Democrats consistently savage Bush on national security from the right, it pained me that the outsourcing of troops at Tora Bora that allowed Bin Laden to escape was never seized upon. Kerry eventually brought it up --but it needed to be pounded on day in and day out the way the Repubs talk about taxes.

Obama has to cut through the militaristic rhetoric of Bush-McCain-Romney and has to emphatically and forcefully insist upon the facts of what actually makes us safe.

Obama Election Regression Results

Update: has a discussion of Poblano's model as well as other regression results.

Poblano at Daily Kos has a nice empirical analysis of the two way vote share between Hillary and Obama using multivariate regression.

Not surprisingly, some key variables include: caucus vs primary, African American share, youth share, fraction with college degrees, fundraising, southern baptists (proxy for Southerness).

Interestingly, the Latino share does not matter once one conditions on the other variables (e.g. college). What I like about this analysis is that it 1. goes deeper than set of cross tabs on exit polls can by conditioning on multiple variables 2. aggregates info across states (Latinos in CA vs NM) and 3 can be used as a forecasting tool.

It suggests that had Obama campaigned in Florida he would have narrowed Hillary's lead by about 7 percentage points. It also forecasted a much closer race in WA than it appears to have been. Interestingly it suggests that Obama has a good chance at winning Ohio (by 10 pts) but losing Texas by 10.

Interesting stuff!

(btw, its nice to be on board!)

Why Am I Spending Part of My Weekend Writing a Blog Post About Obama?

Cornell prof Robert Frank has a nice column in today's NY Times in which he comes out as another prominent economist for Obama. The column is principally about the issue of why people devote money and time (and blog posts) to campaigns at all, when they have zero chance of influencing the outcome. It ends with the following:

Many people have likened the response to Mr. Obama’s appeal for civic engagement to the response to similar appeals by President John F. Kennedy during the 1960s. Then, as now, many economists were skeptical. The Nobel laureate Milton Friedman, for example, began the opening chapter of his 1962 book, “Capitalism and Freedom,” by quoting the already-famous passage from Kennedy’s inaugural address in which he said, “Ask not what your country can do for you, ask what you can do for your country.” Mr. Friedman seemed to find the statement unintelligible, or at any rate not “worthy of the ideals of free men in a free society.”

“The free man,” he wrote, “will ask neither what his country can do for him, nor what he can do for his country.”

Some economists seem similarly baffled by the exuberance inspired by the Obama candidacy. But while homo economicus may be unresponsive to calls for sacrifice for the common good, the plain fact is that many people find such calls compelling.

Self-interest is surely an important human motive, perhaps even the most important motive much of the time. But it is never the only important motive. And during at least some moments in history, narrow self-interest models miss the essential story line completely. This may be one of those moments.

Help us further confuse those skeptical economists by clicking the donate button to the left!

Obama Knows Some Economics

This is old news, but back at a debate in January, Obama demonstrated a sophisticated understanding of a complex economic policy issue, noting that both a carbon tax and a cap-and-trade system of emissions control would have a cost to consumers. (Here's a pretty good article which explains the two proposals.)

In contrast, consider John McCain: "The issue of economics is not something I've understood as well as I should."

Interview with Obama Economic Advisor

I haven't had a chance to listen to it yet, but here's an hour-long interview with Austan Goolsbee.

UPDATE: I listened to the full intervew. (The complete mp3 doesn't work, but the chopped up 7 minute mp3 files do.) The most interesting parts are segments 4 and 5 when he's talking about inequality, and segment 8 in which he talks about the politics of health care and also their retirement program proposals. His discussion of the retirement proposals mirrors my own analysis, which is here. Overall, he sounds like a nice guy with views which are typical of a center-left academic economist.

A Difference Between Clinton and Obama

One hesitates to make too much of one vote, but Obama's vote to ban use of cluster bombs in civilian areas vs. Clinton's vote against the ban does, I think, tell us something about them. It's hard to imagine that Clinton actually favors the use of cluster bombs. But on this vote, she must have calculated that she needed to vote against the ban in order to look tough. Obama, on the other hand, voted for what was right.

Thursday, February 7, 2008

Some Prominent Economists for Obama

We haven't kept track of this systematically, but for those looking for a few names:

David Cutler
Brad DeLong
Austan Goolsbee
Jeffrey Liebman
Paul Volcker
Most Democratic economists Greg Mankiw knows

As far as I can tell, there aren't any prominent economists who have endorsed Clinton. (I'm using "economist" to mean someone who as a Ph.D. in economics.) Her lead economic advisor is Gene Sperling, a lawyer who worked in her husband's White House. MIT economist Jonathan Gruber is one of her health care advisors.

Things We're Thinking About

Check back soon for these upcoming posts:

  • Obama vs. Clinton on addressing the housing mess
  • A look at the Republican's attack file on Obama
  • John "Don't Know Much About Economics" McCain's economic proposals and advisors
  • A review and excerpts from Obama's superb first book, Dreams From My Father
Plus, the likely debut of Lerxst!

Wednesday, February 6, 2008

Will the Florida and Michigan Delegates Count at the Convention?

In my last post, I suggested that Clinton's prospects are dim in part because it's unlikely that she will succeed in getting the Florida and Michigan delegates to count at the convention in August. I still think that's true, but she might be able to pull it off.

Correction: An earlier version of this post said that the seating of the Florida and Michigan delegates would be up to the convention's Credentials Committee. (The composition of the committee is described in this document. The leadership of the committee was announced in this release.) After further research, and in particular after reading this post, I've concluded that whether or not they are seated will be decided by the full set of delegates at the convention.

Specifically, if the seating of the delegates is favored in the Credentials Committee by a minority of delegates (as is likely), a minority report from the committee will be filed. As the first major order of business, the convention will vote on whether to accept the minority report and seat the Florida and Michigan delegates.

The complication here is that superdelegates will participate in this vote, raising the possibility that
1) Obama has a majority of pledged delegates without Florida and Michigan,
2) Hillary has a majority of delegates (including superdelegates) without Floria and Michigan,
3) Hillary's majority votes to seat the Florida and Michigan delegates, and then
4) with Florida and Michigan, Hillary has a majority of pledged delegates.

Yglesias raises the same scenario. Although this is a worrisome possibility, my guess is that Obama will dominate the remaining caucuses and primaries sufficiently that Clinton won't be able to get a majority of pledged delegates even with the Florida and Michigan delegates.

Is It Over For Hillary?

I think so, although on the bus home today I ran into a friend from my Dean campaign days who pointed out we shouldn't count Hillary out yet. At one point in the primaries in 2003 (early December, I think), Kerry was broke and had been mostly written off.

Still, playing out all the scenarios, her chances are slim. The Intrade prediction markets are currently showing her with just a 41% chance at the nomination, and I think this is too high. Here's why I think she's toast:

1) Her campaign's broke. Obama's campaign killed her on the fundraising in January--almost all through small-dollar money over the Internet. What's more, many of her donors have already given the maximum $2300 and can't give it any more, while all those people who chipped in $50 for the Obama campaign can be hit up for another $50. It came out today that she has already chipped in $5 million of her and Bill's money to the campaign, and the rumor is that she's going to dump in another $20 million. She and Bill aren't megarich--according to her financial reports they have between $10 and $50 million--so their money can only go so far. Plus, paying for her own campaign with their money makes her look desperate and plays into the line that she and Bill are running for a co-presidency. I think she realized this but decided she had no choice. They need the money for the expensive campaign they'll have to keep going through the last primary in June. Ads, staff, and travel in a whole slew of states costs money, and with a huge dollar advantage, Obama will crush her in every form of campaigning.

2) Obama will probably win all three states this Saturday. There are two caucus states--Washington and Nebraska--where Obama has a big advantage (he has won 7 out of 8 caucuses thus far). The only primary is in Louisiana, where voter demographics favor him. Ditto for the DC, Virginia, and Maryland primaries on Tuesday.

3) Superdelegates won't save her. Her hope now is that even if Obama wins a majority of pledged delegates (the ones picked in primaries and caucuses), she may still be able to win if she can pick up a large share of the superdelegates, who make up 20% of the total. However, it's extremely unlikely the superdelegates are going to go against the pledged delegates and pick Hillary. There would be a huge outcry among Obama supporters if they did so, which could split the party and spell disaster for November. Many of the superdelegates are elected officials themselves, and they wouldn't want to garner the wrath of Obama supporters for their own upcoming re-election bids.

4) Florida and Michigan won't save her either. On this point, I need to do some further analysis to confirm my initial conclusions. But I think based on how the mechanics of how this would have to happen, she will probably not be able to get the Florida and Michigan delegates seated at the convention. I'll explain more tomorrow.

If it's close on the total delegates, Clinton might be able to bargain for the VP spot, or maybe for a Cabinet position, but I don't think she'd want one of those jobs. Again, a lot could still happen, but right now the forecast is definitely an Obama victory!

Tuesday, February 5, 2008

Brad DeLong is an Economist for Obama

Brad DeLong--Berkeley professor, former Clinton Treasury official, econ blogger, and all-around intellectual Sasquatch--explains why he voted for Obama today in the California primary.

Sunday, February 3, 2008

Why We Have a Long Democratic Primary Season Ahead of Us

It looks like the split of votes (and delegates) on Feb. 5 is likely to give no more than 60% of the delegates cast that day to one candidate or the other. That means both Obama and Clinton will be a long way from reaching the 50% majority of TOTAL delegates they need to claim the nomination. Below I've graphed the cumulative number of delegates committed by date. The percentages are based only on pledged delegates (the ones selected by voting) but are calculated as a percentage of the overall total (pledged + unpledged).

A candidate needs 50% of the total to get the nomination. Fifty percent of the total votes won't even be cast until Feb. 9, and it's not until April 22 that the 70% line is crossed. There's a long lag between the March 11 primary in Mississippi--after which 66% of the delegates will be committed--and the April 22 contest in Pennsylvania. My guess is the race won't be decided until that April 22 contest at the earliest, and it could well go all the way to the convention in August, when the superdelegates (who make up the remaining 20%) make their choice.
UPDATE: Paul Krugman seems surprised by this conclusion, which makes me wonder what he's been thinking. At least since South Carolina it's been clear that this thing's going to go a while.

Would a Health Care Mandate Mean Universal Coverage?

Jonathan Gruber of MIT has a new NBER working paper on health insurance coverage, based largely on a simulation model. Krugman cites the paper as evidence that making coverage mandatory makes a big difference for the number actually covered.

However, if you read the whole paper (unfortunately only available to subscribers), you find that Gruber sidesteps the crucial question of how a mandate will be enforced and just assumes a mandate will work. He writes:

The second option is ... by adding an individual mandate, a requirement that all individuals obtain insurance coverage, to the universal access option. This is similar to what is required for auto insurance in many states, and was a centerpiece of the recent Massachusetts reform plan. We have no experience to date with such a mandate, so it is hard to predict the success of enforcement. But, if penalties are strong (as they are in Massachusetts, where individuals are liable for half of insurance premiums even if uninsured), the mandate is likely to be close to universal. For simplicity here I assume that the mandate provides close to universal coverage, although in practice some individuals are likely to "slip through the cracks".
This reminds of the old joke about the economist, the engineer, and the chemist trapped on a desert island, trying to figure out how to open a can of beans. After his colleagues offer elaborate technical solutions, the economist says "You're all thinking too hard. Let's just assume a can opener."

There's some similar logic at work in Gruber's analysis. Would a mandate ensure near universal coverage? Let's assume that it does! Question answered.

Since Gruber specifically mentions auto insurance, let's look at statistics on mandatory auto insurance as a very rough guide to how successful health insurance mandates would be. The Insurance Research Council produces estimates on auto insurance coverage rates; here is the press release from their most recent study, in 2006. Nationally 14 percent of drivers are uninsured, with 26 percent insured in Mississippi, and 25 percent uninsured in California and Alabama. (I couldn't find a listing of mandatory insurance laws by state, but insurance is definitely mandatory in the five states that have the highest rates of noncoverage.)

Thus, noncoverage rates for auto insurance are still very high, despite a wide variety of carrot and stick policies, e.g. requirements that proof of insurance be presented for registration, cross-checking between registration and insurers' databases, penalties for being caught driving without insurance, subsidized insurance for low-income drivers, etc.

This experience would suggest that a health care mandate, however enforced, would not be able to achieve "close to universal" coverage.

Of course you can achieve near universal coverage if the penalty for not having coverage is sufficiently draconian--say, imprisonment of those who don't sign up. But serious punishments will never be enacted in the first place because they would be perceived as too harsh. Clinton has tried to have it both ways with this question, by assuming 100% coverage with her mandate, but refusing to say how the mandate would be enforced.

All in all, this makes me think that my original conclusion--that the mandate question is largely a non-issue--is correct. See my earlier post on the topic for further discussion.

Saturday, February 2, 2008

Difference Between Obama and Clinton on Economic Policy

This article in the NY Times summarizes some of what Obama has said about economic policy and struggles to find substantial differences between Obama and Clinton. As we've discussed in more detailed posts (see the list off to the left on this page), there is barely any daylight between them when it comes to the economy.

The only difference I see that's even a tiny bit significant is that Clinton has come out for a moratorium on all free trade deals, including pending accords with Colombia, Panama, and South Korea. While Obama has also cast himself as a free trade skeptic, he hasn't taken such a sweeping stance.

Yes We Can Video

This is great! Some might prefer the Obama reggaeton at Amigos de Obama.

Why Vote for Obama vs. Clinton

I think this article from the Nation sums up my own view about why I favor Obama over Clinton.