Sunday, November 09, 2008

Mankiw Keeps Chipping Away

Harvard Economist Gregory Mankiw-a former advisor to Gov. Mitt Romney's Presidential bid-continues to push the oh-so-popular Republican economic policies.

In today's New York Times, the professor has some advice to President-elect Obama. Had he simply copied one of the memos he sent to Romney and-from the looks of the policy proposals-the McCain campaign, he could have saved some ink.

His list is quick: embrace McCain's health care tax rebate, look at shrinking Social Security and Medicare in order to increase available funds, and support the Dominican Republic-Central America Free Trade Agreement (which he includes in his "Recognize Past Mistakes" category).

Yet his laundry list excludes any explanation why these golden ideas have failed to gain real traction.

The first of several straw men is Obama's supposed opposition to "Senator John McCain’s proposal to reform the tax code to include a refundable health insurance tax credit". As anyone who remembers the Presidential campaign we just went through might mention is that Obama opposed McCain's decision to tax health benefits provided to employees by their employers. The tax credit-which would only have covered a portion of what the employee would have to pay for an equivalent policy in the individual market-was merely the sugar coating a poison pill. The real point of the plan, of course, is not to provide better coverage, but to eliminate employer-provided health care. 

The second piece of advice is to tackle Social Security and Medicare before the Baby Boomers strain it to breaking. He apparently has forgotten President Bush's bruising run-in with that train. Much of that "crisis" is as phony as the proposed Republican solution-privatization. Certainly some tweaking-either increasing the tax, increasing the retirement age, or reducing payouts-will help ensure the solvency, but given that the predicting tipping-point seems to recede into the distance every year, there are far more useful expenditures of political capital.

The third is actually a purposeful misrepresentation of Obama's, and other Democrats, opposition to the Dominical-Republic Central American Free Trade Agreement. Democrats have tried for years to ensure stronger labor and environmental rules are included in the agreements. Rules the Republican party has refused to support.

Certainly different economists will disagree on how to best tackle the economic issue facing the country, but like anything else it doesn't benefit anyone to simply drop a few tid-bits while keeping the real detains cloaked. 

- Murphy

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