|
Obama and Clinton have very different approaches for healthcare (which is talked about all the time) and the housing crisis. I think their approaches for both issues are related.
At the risk of rehashing what has been discussed ad-nausium, I'll be brief on healthcare. Clinton is in favor of an individual mandate with subsidies to reduce costs, and Obama is in favor of subsidies/market reforms to reduce costs. Clinton says that her plan is the only one that will actually produce afforable healthcare, since it requires everyone (the healthy and sick) to join (which she feels is the only way to make healthcare affordable). She argues that it will be affordable because she will limit premiums to a certain percentage of income. Obama claims that Hillary's plan will force those who can't afford healthcare to pay for it (i.e., that Clinton's subsidies won't make it affordable for everyone).
On the housing crisis, Hillary favors a 90-day freeze on forclosures, and a 5-year freeze on mortgage interest rates. Obama opposes any sort of freeze, and favors market reforms (such as a 10 billion dollar fund to help homeowners avoid forclosure).
On both of these issues, Hillary favors the more direct, regulatory approach, while Obama favors a more market-based approach (and disfavors direct regulation).
My problem with Obama's position on both issues is that I don't think it goes far enough. On healthcare, Obama has not explained how costs will be reduced if healthy people can avoid purchasing insurance. If only sick people have to buy insurance, then the costs to the insurance companies of treating everyone is very high (as it is now), which forces insurance premiums to be very high. This is one of the most basic facts of healthcare economics. That is the reason why Social Security is required for everyone. If rich people could opt-out of social security, then the only money going in is the money of lower-income people, making it completely infeasible to run. The Republicans made the same arguments back then about how people shouldn't be forced to do anything (similar to what Obama is arguing here), and they failed. And because of that, we have social security.
On forclosures, a 10 billion dollar fund doesn't come anywhere near solving the problem. I'm not going to write pages and pages of economics, but most economists predict that the housing crisis is going to get very bad (much worse than a normal recession). If that pans out, a voluntary fund will not do anything to solve the problem. Forclosures will continue, and massive rate increases will continue (resulting in more forclosures). Clinton actually puts the break on forclosures and rate increases. This again is similar to what happened in the depression. Democrats favored direct regulation, and Republicans favored letting everything fix itself. The Republican plan failed horribly in the 30s, and it has also failed now (deregulation of the housing market is a major cause of the housing crisis now). Obama doesn't support direct regulation as a means to fix the problem.
So on both of these issues, Obama's plans don't call for direct regulation, and Clinton's plans do.
For those of you who support Obama, does this worry you? Or is the Democratic party moving towards a market-reform based approach? It seems to me that direct regulation and action were always cornerstones of progressives, even though most progressives on this forum are supporting Obama. This is such an important issue, given the trajectory of the economy and the state it will be in come 1/09.
|