Monday, September 8, 2008

Scrounging for Change

They always say time changes things, but you actually have to change them yourself. -- Andy Warhol
In this week's Sift:
  • What is Change? Over the next few weeks, I'm going to do my small bit to shift the focus back to issues. This week I compare the Obama and McCain proposals for taxes and health care. Or at least I let the Tax Policy Center do it for me.
  • Palin and the Other Republican Base. All week, journalists have been interviewing Republican voters coming out of Evangelical churches, as if there was some doubt that working-class Evangelicals would rally behind Sarah Palin after her daughter's pregnancy. But what about the old-guard Republican establishment, the suburban professionals? I bet they're not nearly so happy.
  • Short Notes. Fannie and Freddie get a bailout. Jobs increase faster under Democrats. What are these "small town values" Rudy Giuliani was talking about? And how not to respond to political attacks.

What is Change?
It's official: Both candidates -- including the one who has voted with President Bush 90% of the time -- are running on change.

In his acceptance speech Thursday, John McCain said change ten times, including: "Change is coming. ... We need to change the way government does almost everything. ... We have to change the way we do business in Washington." By contrast, the word Bush was hardly ever heard at the Republican Convention. McCain said Bush exactly once ("Laura Bush"). Otherwise it was like listening to orthodox Jews avoid saying the name of God. McCain once obliquely thanked "the president of the United States" (whoever he might be) and "the 41st president" (who shares the unmentionable name). Even the word Republican was hard to find at the Republican Convention. McCain said it three times: twice as part of a nonpartisan list ("Republicans, Democrats, and independents" and "Democrats or Republicans"), and once in a distancing way ("some Republicans gave in to the temptations of corruption").

So everybody is for change now, and is running against (or at least not with) the Republican Party and President He-Who-Must-Not-Be-Named. But what kind of change? Are we talking America 2.0? Or something more like New Coke?

Over the next few weeks I'm going to resist the temptation to lose myself completely in the day-to-day campaign trivia. Instead I plan to take an issue or two each week, look at what McCain and Obama propose to do with it, and try to find some independent analysis about the likely results. This week I look at taxes and health care, which I'm putting together because there's one excellent document that covers both: "An Updated Analysis of the 2008 Presidential Candidates’ Tax Plans" by the Tax Policy Center.

If you want the one-paragraph summary, here it is: McCain cuts taxes mainly for rich people, Obama mainly for non-rich people. (EconomistMom asks the obvious question: "If McCain's tax cuts will create jobs, why haven't Bush's?") McCain's health plan is about 20% less expensive than Obama's, but does almost nothing to reduce the number of people without health insurance. Obama's plan cuts that number in half, but it's still not universal care.

Taxes. Let's start with the conclusion, from page 37:
If enacted, the Obama and McCain tax plans would have radically different effects on the distribution of tax burdens in the United States. The Obama tax plan would make the tax system significantly more progressive by providing large tax breaks to those at the bottom of the income scale and raising taxes significantly on upper-income earners. The McCain tax plan would make the tax system more regressive, even compared with a system in which the 2001–06 tax cuts are made permanent. It would do so by providing relatively little tax relief to those at the bottom of the income scale while providing huge tax cuts to households at the very top of the income distribution.
If you're a visual thinker, see the bar graphs on pages 38 and 39.

The specific changes each candidate supports are in one big indigestible paragraph on page 1, and again in a huge table on page 6. Here's the gist:
  • Expiring tax cuts. Most of the 2001 and 2003 tax cuts are set to expire after 2010. McCain, like He-Who-Must-Not-Be-Named, wants to make them permanent. Obama wants to make permanent almost all the cuts for people making less than $250,000 a year, and repeal the other cuts right away.
  • Estate tax. If your estate is going to be less than $3.5 million, neither candidate will tax you. McCain taxes estates above $5 million at a 15% rate. Obama taxes above $3.5 million at a 45% rate. Prospective heirs of dying billionaires should definitely vote for McCain.
  • Alternate Minimum Tax. The AMT was originally created in 1969 to make sure rich people paid a little tax, no matter how many shelters and deductions they had. But inflation has pushed a bunch of upper-middle-class people into the AMT's range, and millions more have to file a complicated form just to prove they don't owe any AMT. Congress can't agree on a permanent solution, so every year it passes a "patch" to mitigate the problem. Both candidates propose to make the 2007 patch permanent and index it for inflation so that subsequent patches won't be necessary. McCain's plan makes additional cuts in the AMT. (In his stump speech he talks about eliminating it, but that seems to be an overstatement.)
  • Other. Both candidate have a list of targeted cuts. Obama wants to eliminate income tax for seniors making less than $50,000. McCain increases the exemption for children, and lowers the corporate tax rate from 35% to 25%. Both propose to eliminate various corporate tax loopholes. Obama wants to raise tax rates on dividends and capital gains, but not to the Clinton-era levels.
Without spending cuts (which both candidates promise but neither has specified) both plans increase the deficit: Obama by $3.4 trillion and McCain by $5.0 trillion over ten years.

Health care. Obama's plan does a number of things: It mandates that parents find health insurance for their children. It subsidizes health insurance for people of lower incomes, by expanding Medicaid and SCHIP programs for the very poor and by giving direct subsidies to lower-income families who don't qualify for Medicaid but don't have employer-sponsored insurance. It requires more employers to offer health insurance, and it guarantees that everyone will be able to get insurance for no worse than 110% of the average employer-offered premium.

Unlike Hillary Clinton's plan (or Mitt Romney's in Massachusetts) Obama's plan doesn't require adults to have insurance. This is probably a mistake, because no matter how much you subsidize it, a lot of people will assume they're invulnerable and try to save some money. So although the number of uninsured will go down significantly, hospitals still won't be able to assume that everyone is covered. But at least everyone who doesn't think he's Superman will be able to afford coverage.

McCain's plan mostly does two things: It shifts the tax credit for health insurance premiums from employers to individuals, and it allows insurance companies to compete across state lines. The main effect is to increase shopping: Healthy people will shop for the least expensive insurance plan, and insurance companies will shop for a low-regulation state to locate in.
Some workers, especially young and healthy ones who can find inexpensive insurance in the nongroup market, would decide that [employer sponsored insurance] was no longer their best option and would refuse their employer’s offer of insurance (and expect higher wages). Some employers, finding that their average premiums increase as the healthy employees opt out, would decide to stop offering coverage.
This is typical Republican YOYO (you're on your own) philosophy. Group coverage will likely unravel, leaving high-risk people (like my wife, a cancer survivor) dependent on some kind of government-supported "high-risk pool". McCain offers no details about how these pools would work or what they would cost either individuals or the government.

McCain's tax credit is a little more generous (for most people) than the current one, and it applies to everybody (rather than just people who get health insurance through their employers). So it's a net increase in the government subsidy for health care, and the result is a small decrease in the number of uninsured people.

Obama's plan is more expensive, but not a lot more. ($1.6 trillion vs. $1.3 trillion over the first ten years.) And the effect on the number of uninsured is much larger. By 2018, the report estimates that 66.8 million people would be uninsured under the current system. McCain's plan would lower that to 64.8 million and Obama's plan to 32.9 million. Again, a graph can help you picture what's going on.

Palin and the Other Republican Base
Let me start with a digression, and tell you how my magazine-writing career started. By coincidence, I read George Lakoff's Moral Politics and James Ault's Spirit and Flesh one right after the other. And it dawned on me that Ault's long-term study of an upstart working-class Evangelical church provided the nitty-gritty detail that Lakoff's strict-father/nurturant-parent archetypes lacked. So I wrote an article I called Red Family, Blue Family and put it on my web site. A magazine editor noticed it, and convinced me to cut it up into articles here and here. My continuing fascination with the overlap of religion, politics, class, and worldview led to a later article here.

Now let me tell you what that has to do with Sarah Palin. The pundits -- almost none of whom are working-class Evangelicals themselves -- cluelessly expected that such people would turn on Palin when her unmarried 17-year-old daught Bristol turned out to be pregnant. So we've been treated to a week's worth of cameras pointing in the wrong direction, at Evangelicals who (predictably) are more enthusiastic about her than ever. It's a dog-bites-man story -- they always seem like a big deal to people who have never seen a dog before.

The interesting story, which I hope somebody starts covering soon, is what the other side of the Republican base is thinking. I'm talking about the suburban professionals: the corporate middle managers, medium-sized business owners, engineers, doctors, accountants, and Chamber of Commerce types who made up the core of Gerald Ford's Republican Party. I'm willing to bet that they're sitting in front of their TVs being quietly horrified. I doubt they're making any snap decisions, so this effect won't show up in the polls in the next week or two, but they've got to be having some serious doubts.

Here's why: One of the biggest differences between these two chunks of the Republican base -- working-class Evangelicals and non-Evangelical suburban professionals -- has to do with the value of personal planning and control. It's already a big difference between the working class and the professional class, before religion and politics get into the picture. Professionals value control. When you interview with a Fortune 500 company, they're bound to ask: "Where do you expect to be in five years?" But when the car wash hires you, they don't ask that. You can explain this two ways: (1) Working-class people don't have the options professionals do, so they have to react to life more than plan for it. Or (2) professionals are more successful precisely because they don't get knocked off stride. They make a plan -- college and an MBA, say -- and carry it out, while people with a shorter-term view of life are more likely to wind up waiting tables or driving trucks.

When you throw Evangelical religion into the working-class mindset, you get a Christian version of fatalism: Sure, you had plan, but God had a different plan, and you just have to roll with it. Try to see things from God's point of view and look for the blessing-in-disguise.

But to a professional-class Episcopalian or Catholic or Jew, that's a rationalization for losers. Their God is no fairy godmother, so if Cinderella wants to go to the ball she's going to have to make a plan and stick to it -- no matter what random obstacles get thrown in her way.

Now look at how the Palins have spun Bristol's situation: Blessing in disguise. The pregnancy wasn't what they would have chosen for their daughter, but it's OK because everybody's going to do the right thing. Bristol's keeping the baby and her teen-age boyfriend is going to marry her. So Sarah and Todd get to be grandparents even sooner than they had hoped.

It's no wonder working-class Evangelicals are eating this up. Sarah Palin gracefully rolls with the unexpected blow, and quickly gets herself lined up again with God's plan. And the story has a happy ending: a wedding, a baby, and a handsome young couple with a beautiful child -- just like Mary, Joseph, and the baby Jesus.

But to professional-class Republicans this doesn't sound like a happy ending at all. Professional-class parents start picking out their baby's college while the kid is still in the uterus. (I heard this joke: Asked how old her children are, the mother says, "The doctor is five and the lawyer is seven.") Parents coach their kids from childhood about how things will look on their application to Harvard or Stanford. The idea that all that planning might get tossed aside so that their 17-year-old daughter can marry the 18-year-old who knocked her up, and the two of them can raise their accidental child -- it's a nightmare, not a fantasy. If that's what the girl wants to do, her parents will try too talk her out of it. Because in the professional class, a surprise pregnancy isn't a gift of God or even an act of God; it's poor planning. It's a sign -- if you needed another sign -- that the couple is not ready for marriage.

As the professional-class worldview tells the story, it doesn't have an ending at all yet. Professional-class folks believe in statistics, so they know that (the Holy Spirit notwithstanding) teen marriages don't work. Teen shotgun marriages work even less well. So the wedding is just another scene in the ongoing tragedy, not a happily-ever-after moment. Most likely the young couple has another kid or two and then gets divorced. (This is exactly what happened to the pastor's daughter in Spirit and Flesh.) Then the girl is 21 and has kids, but no husband and no education. That's an even bigger disaster than being 17 and pregnant, and it's a disaster not just for your daughter, but for your grandchildren too.

So I'm waiting for reporters to realize that they should interview some Republicans coming out of Nordstroms or visiting their children at Yale. You know who's mind I'd really like to read right now? Barbara Bush. No way she'd have let a teen-age W or Jeb marry some girl just because she got pregnant. That's not how dynasties are built.

Yeah, I know: There are professional-class Evangelicals. I'm guessing most of them don't know which way to turn on this.

It was illuminating to watch the conservative talking heads instantly reverse all their previous rhetoric when Palin was selected. As so often happens, nobody captured the sheer hypocrisy better than The Daily Show. Unless it was that open mic at MSNBC that continued recording Republican flacks Peggy Noonan and Michael Murphy after Chuck Todd cut away for commercial. Both said glowing things about Palin in public, but when they think the mic is off Noonan describes Palin's selection as "political bullshit" and Murphy says it was "cynical".

Matthew Yglesias comments: "In a sane world, one wouldn’t put talking heads on TV to express their opinions unless they were going to express their genuine opinions." Me, back in April: "In theory, it would be possible to assemble a team of pundits of a variety of political philosophies, but still have them work for you. Their statements would be colored by their philosophies (the same way mine are), but they would say only what they truly thought, and not what their side's strategy wanted you to believe. In practice, I don't see this happening anywhere."

Republicans have tried to make an issue of Democrats' anti-Palin "sexism", but actually the harshest comments have come from Republicans. Ben Stein said "She should have Henry Kissinger baby-sitting her." Dr. Laura: "But really, what kind of role model is a woman whose fifth child was recently born with a serious issue, Down Syndrome, and then goes back to the job of Governor within days of the birth?" And then there's this pre-Palin-announcement conversation between Joe Scarborough and Pat Buchanan.

Finally, a lot of questions about Palin really do need answers. Kagro X on Daily Kos explains why Troopergate is so important: Start with someone who abuses her power as governor to advance a personal vendetta, and now drop her into the unaccountable "fourth branch of government" that Cheney has created in the vice presidency. It's a recipe for disaster. Plus, the McCain campaign has started using all the Bush-Cheney tactics to stall or derail the Alaska legislature's investigation. These are the people who are going to clean up Washington?

Short Notes
So now the government is taking over Fannie Mae and Freddy Mac. Here's the best analysis I've seen so far. The upshot: We depend on the Chinese to keep financing our borrowing, and they were getting nervous. Matt Yglesias expresses my own worries about the bailout plan:
Under the circumstances, one is inclined to suspect that obscure-but-consequential provisions of a complicated-and-important arrangement will be slanted toward the interests of the powerful and well-connected (i.e., those in a position to really monitor what’s happening) rather than you or I.

Three lines: job growth under Clinton, job growth under Bush, and population growth. Under Clinton jobs grow faster than the population, under Bush much less so. David Fiderer sums up the lesson of the last 75 years: "Rapid job growth only occurs when there's a Democrat in the White House." A former vice chair of the Fed agrees.

The Daily Show asks the just-plain-folks at the Republican Convention to define "small town values".

The voter registration numbers look good.

You know what the dumbest thing Nixon ever said was? "I am not a crook." Because of way human brains work, that statement fused the words Nixon and crook for anybody who lived through that era. Here's advice on how not to repeat that mistake by saying things like "Obama is not a Muslim."

You know all that talk about crumbling infrastructure? Never mind. Couldn't be that serious.

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