Is There Really Any Difference Between Clinton and Obama on Health Care?

Watching tonight's debate, I can't see that there's any difference. Clinton seems to concede that there won't be any enforcement for her health care "mandate." As Obama has noted elsewhere, unless there's enforcement, the "mandate" is just a gimmick and political talking point. People who don't want to sign up for a health care program--subsidized or not--won't do so under either Clinton's or Obama's plan. Timothy Noah in Slate has a good discussion of why Obama's on the right side of the mandate issue.


UPDATE: The Washington Post's Fact Checker claims that the estimate that 15 million would not be covered under Obama's health care plan comes from an extrapolation from the Massachusetts plan. As far as I know, that's incorrect. According to the Washington Post itself, and the two other fact check sites, the "dubious" figure comes from a rough guesstimate in a New Republic article. From the Obama website:

"Clinton Uses A Dubious Statistic When She Claims Obama's Plan Would Leave Out 15 Million Of The Uninsured." FactCheck.org reported, "Clinton uses a dubious statistic when she claims Obama's plan would leave out 15 million of the uninsured…Clinton based her claim on a column by The New Republic's Jonathan Cohn, who loosely estimated Obama's plan would leave 15 million uninsured…Cohn makes it clear here that he is offering an estimate based on the best information available, not a hard and fast calculation. And the best available information doesn't always agree." [FactCheck.org, 11/16/07]

Clinton's Claim "Based On Too Many Hypotheticals To Rate More Than A Half True." "It's a tough call, but because of the disagreements here, we find her claim to be based on too many hypotheticals to rate more than a Half True." [Politifact, 11/15/07]

Clinton Cited "Hardly An Authoritative Source" For The 15 Million Claim. "So where did Clinton get her figure of 15 million uninsured under the Obama plan? Her website cites an article in the New Republic, hardly an authoritative source." [Washington Post, 11/15/07]

A Question for Thursday Night's Debate: Clinton vs. Obama on the Colombia Free Trade Agreement

As far as I can tell, no one has asked Obama and Clinton about their stances on the Colombia free trade agreement, since Clinton announced her opposition last November.

Question: Sen. Clinton opposes pending free trade accords with South Korea, Panama, and Colombia. President Uribe of Colombia has said that her opposition to the Colombia free trade accord with his country reflects "an unforgivable lack of understanding" of Colombia. Is he right? (And for Obama: what is your position on the Colombia agreement?)

Suggested answer for Obama: See this briefing. In short, before I can support the agreement, the Colombian government should lay out exactly what it has done and what it will do to address violence against union members.

Obama Economic Policy: Obama vs. Clinton vs. Edwards on Poverty

The inaugural issue of PATHWAYS, a new magazine on poverty, inequality, and social policy, has articles by the three Democratic candidates on the their anti-poverty proposals, along with an evaluation by Rebecca Blank, who's probably the top economist specializing in welfare issues (she was on Clinton's Council of Economic Advisors for a time and is currently a professor at the University of Michigan). Here's the PDF of the whole issue. It also has some great other material, including an update on inequality from Emmanuel Saez.

Overall, Blank says that all three say good things. As with most issues, the policy differences between the three candidates are slim. Here's the heart of her review:

Clinton, Edwards, and Obama each propose multiple policies,
many of which are worth considering, but it is hard to tell how
they would prioritize their current list of proposals. Presidents
face limited resources and hard choices once they actually
enter the White House and have to decide where to place their
political chips ....

Obama, Edwards, and Clinton all have multifaceted and serious
anti-poverty plans. Anyone concerned with poverty issues could
happily vote for any of them. Edwards has made poverty a cen-
terpiece issue for his campaign from the beginning; Clinton has
the best early childhood proposals; Obama is the most thought-
ful on jobs for disadvantaged youth and urban change and (for
my money) the most creative in putting new policy ideas on the
table, such as low-cost Internet service in poor neighborhoods.
But all of them understand that the measure of this country is
not just the size of its GDP or the wealth of its richest citizens.
America must also be measured by how we assist those who are
our poorest citizens, making sure that they have the opportunity
to find a job, to support their families, to educate their children,
and to catch onto the American dream.

Obama Economic Policy: Clinton vs. Obama on Trade

This post begins our promised series reviewing Obama's economic policy program. On trade policy, both Clinton and Obama have taken pains to not paint themselves as protectionists, while at the same time echoing the critiques voiced by those opposed to trade agreements.

After looking closely at their statements and positions, my overall determination is that while their rhetoric is similar, Clinton has changed her stance quite sharply and is now more anti-trade than Obama. Specifically, she has announced her opposition to three pending trade agreements--Colombia, South Korea, and Panama--while Obama has not taken any position on these agreements. (More on these agreements below).

In terms of positions on earlier agreements that have come before the Senate, their records are identical. Both voted against the Dominican Republic-Central America Free Trade Agreement in June 2005, and both have said they would have voted for the Peru free trade accord in December 2007, although they were campaigning at the time and were not present for the vote.

Consider the positions they have on their websites. Here's a piece of Obama's economic policy page:

Obama believes that trade with foreign nations should strengthen the American economy and create more American jobs. He will stand firm against agreements that undermine our economic security.

• Fight for Fair Trade: Obama will fight for a trade policy that opens up foreign markets to support good American jobs. He will use trade agreements to spread good labor and environmental standards around the world and stand firm against agreements like the Central American Free Trade Agreement that fail to live up to those important benchmarks. Obama will also pressure the World Trade Organization to enforce trade agreements and stop countries from continuing unfair government subsidies to foreign exporters and nontariff barriers on U.S. exports.

• Amend the North American Free Trade Agreement: Obama believes that NAFTA and its potential were oversold to the American people. Obama will work with the leaders of Canada and Mexico to fix NAFTA so that it works for American workers.

• 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.

Clinton's October 8, 2007 economic policy press release says that she will do the following:

• Appoint a trade enforcement officer within the office of the United States Trade Representative (USTR) and double the size of USTR’s enforcement unit....
  

• Overhaul the Trade Adjustment Assistance (TAA) program ....

On Trade Adjustment Assistance, their positions are very similar. This is part of the standard center-left policy program to compensate those who lose out under trade agreements. Most economists favor this kind of policy because it is what a standard economic analysis points you towards: free trade increases overall income but has winners and losers, so the right approach is to use some of the income boost from lowering trade barriers to compensate the losers.

Apart from TAA, looking at these "official" economic policy programs--which were probably drafted by the candidates' economic policy advisors--you would think Obama is the greater trade skeptic. Clinton's promise to appoint another official in the trade rep's office is near meaningless, while Obama wants to amend NAFTA and is promising to demand that labor and environmental pacts be included in trade agreements.

Clinton, however, has taken a much more anti-trade position since her economic policy was issued in October.

Consider, for example, the responses to the Iowa Fair Trade Campaign questionnaire, which was issued (and presumably filled out by the candidates) in December. The Clinton and Obama positions are generally similar.

Both promise to renegotiate parts of NAFTA (Clinton: "As President I will review NAFTA and work with our trade partners to correct its shortcomings.") Both promise to include strong labor and environmental protections in trade agreements.

Clinton's position, however, has moved to a more anti-trade position than Obama, in two respects. First, she nows calls for what she refers to elsewhere as a "time out," i.e. a moratorium on ALL new trade agreements. Here's what she says in the Iowa questionnaire:

I will not enter into new trade agreements or seek trade promotion authority, until my administration has ... reviewed all of our existing agreements to determine whether they are benefiting our economy and our workers.

Along these lines, while trying to get the support of labor groups in Iowa in November, she announced she would oppose three pending trade deals: Colombia, Panama, and South Korea. Her opposition to the Colombian trade deal has drawn the criticism of the Colombian president, and Colombian sources tell me her opposition to the pact is well-known in the country.

Thus, the main conclusion is that Clinton has positioned herself as the greater protectionist compared to Obama. I'll consider the merits of these positions in a future post.

UPDATE: See this more recent post with new information.

Obama vs. Clinton vs. Edwards on Fiscal Stimulus

I'm generally against the use of a temporary fiscal stimulus, for reasons that Brad Delong mentions. Studies of this kind of thing estimate that the "lag" for fiscal policy--meaning the time between when the policy is first considered and when it actually has some effect--can be a year or more. Usually, by the time a fiscal stimulus package is enacted and has had time to take effect, the recession which inspired the initial calls for stimulus is already over.

For this reason, it's a better idea to rely on "automatic stabilizers," policy measures which automatically start pumping more money into the economy when the economy starts to go south. The standard example of this is unemployment compensation; when more people lose their jobs, the government automatically starts spending more on the program. The lag on such automatic stabilizers is short enough that they can have a good chance of serving as as a fiscal pump at the right time.

There are, however, some economists, including Larry Summers, who are arguing for a fiscal stimulus now, and all three major Democratic candidates have introduced stimulus packages. Let's say for the sake of argument that a stimulus package is a good idea and consider what sort of package would be best.

Here's a note from the Center on Budget and Policy Priorities and a recent Brookings primer on fiscal stimulus by Doug Elmendorf and Jason Furman.

Both the note and the primer explain that any fiscal stimulus should be timely, targeted, and temporary. The Brookings paper list the following Good Stimulus Ideas:

1. Extend unemployment benefits temporarily.
2. Issue flat, refundable tax credits temporarily.
3. Increase food stamps temporarily.

CBPP has one more: 4. State fiscal relief.

How about Bad Stimulus Ideas? Under "ineffective or worse" they list infrastructure investment, business tax incentives and reductions, and permanent personal tax reductions.

How do Obama, Clinton, and Edwards's proposals stack up?

All three are proposing (1), extending unemployment benefits, and (4) state fiscal relief (linked to the housing crisis). Only Obama is proposing (2) temporary tax credits, though Clinton suggests they should be enacted if things get worse.

The glaring omission from all three candidates' plans is (3) increasing food stamps temporarily. This option has extremely attractive features: it can be done quickly and easily using existing systems, and it goes to people most likely to be in need, who have a high marginal propensity to consume, i.e. they'd almost all the money right away, which is what you want for a stimulus. I suspect they haven't proposed this because "food stamps" sounds like "welfare" to people, and welfare has been slimed by years of conservative propaganda.

All three propose various legal measures to stop people from being evicted during the housing crisis. There are a few other features to Clinton's and Edwards's proposals, but none of them are likely to have much effect as stimulus.

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.

Krugman asserts that Obama's proposal is "less progressive," apparently because it doesn't include renewable energy measures and because the tax rebates are not targeted to only the poor. But as noted, Obama proposes renewable energy measures as part of his long-term policy, where it belongs, rather than as a temporary measure. Although not well-targeted, the tax rebates have the huge advantage of being very easy to enact and distribute quickly as a temporary measure.

All together, I think I'm being objective when I conclude that Obama has the best stimulus program. It looks pretty much like the streamlined program the Brookings and CBPP experts would have written, minus food stamps, and has a halfway decent chance of actually working to its desired effect. I suspect, in fact, that it was written by Obama economic advisor Austan Goolsbee after talking with just those experts.

P.S. I just noticed that Brad Delong beat me to the punch with some similar thoughts.

Obama Economic Policy

Here's the web page with Obama's economic program, and here's a PDF version. Here's a transcript and partial video of his main economic policy speech.

Relative to other candidates, Obama's economic policy proposals are thinner on the details. In my view, this is exactly the right approach. Candidates, particularly Democrats, have a tendency to over-specify their economic programs. This is partially a product of pressure from the media for candidates to demonstrate that they are "serious" thinkers. If a candidate is elected, the fine details of the policy he or she proposes will depend on the particular circumstances and negotiations at that point in time, so there's really no point in providing a microscopic level of detail. The major points of campaign policy are all that matters.

Over the next few weeks, we'll go through and critically examine each piece of the economic policy, and ultimately produce a complete annotated version of the economic program. Check back for regular installments in this series.