Why Obama's windfall oil profits tax is a bad idea...

Though it's not enough to turn me off to the prospect of a President Obama, I have to say that the Senator does keep doing things that justify the 'another Carter term' argument. The windfall profits tax on oil companies is the latest example. Whether or not a lower gas price would be good for America (it would in the short term, but not long term) we need to at least protect ourselves from skyrocketing prices in response to, say, Iran deciding to punish the West for some sin against them by restricting oil exports. Moreover, we're not going to quit our oil habit cold turkey - it's not possible. So we need secure supplies of oil regardless of the price of gas. And we need to get ourselves off a dangerous reliance on Middle Easterners who largely hate us.

My point is: we need more oil no matter what - and it would be much better for America if that oil was American. But Obama's proposed excess profits tax would discourage the search for additional oil; thus it would have the opposite effect on the search for oil that a relaxation of the moratorium on offshore drilling would. If such a tax persisted for many year, which it most likely would, it would continuously discourage further exploration for oil for an obvious reason: much of the profits on any new oil production would be taxed away.

It costs oil companies a lot to search for oil and, when found, to build the infrastructure to extract and move it. The incentive to do so is not always going to be there simply because oil executives are greedy bastards. And this brings me to the most important point in all this: is Mr Obama failing to take into account the effect on incentive that his various proposed taxes would have? I trust Austin Goolsbee is aware of them; so I have faith in Obama. But he could really damage the economy if, while he is president, he suggests things like windfall profits taxes in response to crises he (and America) is forced to meet.

Jimmy Carter didn't take de-incentivisation into account a number of times during his presidency. Granted, it wasn't talked about as much then or as widely accepted as a result of certain kinds of taxation, but that doesn't mean the lessons of his presidency should be disregarded. As Gary Becker explained on his blog with Richard Posner:

In 1980, President Jimmy Carter introduced a windfall tax on oil companies to prevent them from profiting a lot from the high price of oil due to the Iran-Iraq war. An evaluation by the Congressional Research Service, a think tank that provides reports to Congress, concluded that the tax significantly reduced domestic oil production and raised oil imports. Disillusionment with the tax led to its abandonment in 1987.

Issue for debate: health care...

Obviously, something needs to be done about health care. Too many Americans are uninsured; and the employer based health care 'program' that currently exists has - to be frank - turned to shit. Surprisingly (or unsurprisingly, to some of us), most Americans think this program is 'normal' in some sense - that it is the job of one's job to provide health care coverage. In fact, the only reason employers provide health care in America is because , as a consequence of WWII wage controls, companies began offering non wage extras to entice workers, the most significant of which was a health care plan. But this system - which is no system at all, but rather a short term creative solution for a very particular situation - has stuck with us. And it has failed us - is failing 40 some million Americans (and killing American industry) of every day.

What to do...

Basically, there are three options (four if, as Washington habits have taught us, we include innaction). Option 1 - A state run single payer plan on the European social democrat model; Option 2 - Something akin to the Clinton 1994 plan, which essentially amounts to universal coverage based on a continuation of the current employer provided model; Option 3 - A plan which removes the onus from employers and provides tax credits and subsidies to ensure universal coverage.

In my opinion, only the last option amounts to a true solution. My support regarding the particulars of that option is firmly behind the plan offered by Oregon's Democratic Senator, Ron Wyden, which is both radical and simple (and perfectly fitting for a republic, to boot): 'Every American citizen should have the same health benefits available to members of Congress.' Moreover, 'according to an independent assessment by the Lewin Group, a nonpartisan health-care consulting firm, it would save $1.48 trillion over the next ten years.'

Joe Klein (in the afterward to his terrific book, Politics Lost) summed up the plan and its implications best, i think:

Wyden's plan would eliminate the current employer-based system [and] employers would 'cash-out' the money they currently pay for health benefits and distribute it as wages; individuals would then pay an annual health care premium to the federal government, as part of their annual taxes, and choose their own private plans from a system very much like the one currently offered federal employees. There would be two mandates - one for individuals and one for insurance companies. The individual mandate would require everyone to participate, especially those who can aford health insurance and currently choose not to buy it... The destitute - those who currently receive Medicaid - would join the same system as the rest of the public, and their health-care premiums would be subsidized on a sliding scale up to 400 percent of the federal poverty level. The second mandate would require insurance companies to cover everyone who applies at the same rate, regardless of preexisting conditions (this is called 'community rating' in the trade). So where's the pain [in such a plan]? Up the income scale. Health care would no longer be tax deductible. Those with incomes of more than 400 percent of poverty would have to pay for their health-insurance premiums themselves.

Why is this plan best? Five reasons: 1 - it simplifies the system; 2 - it disentangles coverage from work, a move for which portability is only the best upshot; 3 - it gets rid of Medicaid; 4 - it provides real choice instead of imposing a one-size-fits-all coverage plan, which imposition would be thoroughly unAmerican in its utter disregard for freedom of association (and to associate freely), that most basic of American traits - and the basis, as Tocqueville understood, of American society, economy, and polity; and 5 - it is eminently fair, democratic, and republican (in the particular sense understood by Plato and Cicero, Hamilton and Madison, and Montesquieu and Mill - and which is the most basic of my political sensibilities)!

Quote of the day

The Economist sums up the situation well:

Mr Obama enjoys huge support among blacks and rich white liberals. That was enough to win him the Democratic nomination. But to win the general election, he needs Reagan Democrats - working-class whites who worry about national security, are somewhat culturally conservative and whom the Gipper was able to persuade to change political sides. These folks might well prefer a plain-spoken war hero like Mr McCain to the articulate and arugula-munching Mr Obama. But they would vote for Mr Obama if he ran with another plan-spoken warrior...

Obama's (Singular) Potential to End Terrorism

It's ironic that the new Washington Post poll numbers show McCain significantly besting Obama (only) on the question of terrorism - because Obama provides, in the end, a counter terror tool that McCain can never match, and which ultimately may be the most vital in our toolbox.

It's likely either president will prosecute the war on terror as well as (and surely more thoughtfully and subtlety than) President Bush has (i.e., I don't see Obama going soft on Terror in his first term, since it's such a questionable leadership issue for him). And, arguably, continued prosecution would lead ultimately to the end of Al Qaeda as a/the major terror network throughout the world. But that still leaves the independent, radicalized, would-be terrorists that have become - for around half the counterterror policy establishment, no less - the most central aspect of terrorism today (and, more importantly, tomorrow).

Obama can fight this aspect of terrorism by showing Muslims throughout the world who are disaffected because of social alienation in a sometimes-suffocating but still often-distant western society; and who channel that disaffection into deadly anger toward America, that ther e's hope (and much more than hope) for them, exactly as they exist. That people of their background (sons and daughters of men and women once dismissively referred to by Anglos as colonials or natives) may count on having a true place (indeed, the very top place) in the Western wold, and in a Pax Americana. A President Obama means that both western society and hegemonic America have embraced an African American with a Muslim name - and by doing so, they have truly embraced the whole world - fulfilling a long held goal, in America's case.

For Debate | Pro-Life Heath Care Workers Desires to Abstain

Today's Washington Post featured an article on pro-life pharmacies. The proliferation (admittedly slow) of such pharmacies are part of a (slowly) growing trend for health care workers in various fields to refuse to participate in care contributing to abortions and/or sometimes contraceptive measures. As always in America, an issue has been raised as to whether or not such health care workers should be allowed to abstain from or even flat out refuse to administer (let's call it) 'birth control' procedures, including issuing and/or filling birth control prescriptions.

This question, in my opinion, can be answered by referring to a fundamental principle: people should be free to engage in whatever career they desire, so long as it doesn't contribute directly to the harm of anyone else. And they should be able to do so in accord with whatever personal principles they subscribe to. If, for example, someone who wants to sell books and magazines for a living wants to do so without contributing to the dissemination of (what he considers) pornography, he should be allowed to do exactly that. Thus, it seems, if someone wants to be a nurse or a pharmacist, they should be allowed to do so according to whatever principles they hold dear. The only time their doing so should be questioned is if and when it contributes directly to the harm of someone else, meaning essentially, in our present case, if our nurse or pharmacist is the only person providing that skill in a given locality. To argue against this (and specifically in the following way) is basically unfair and moreover makes 'pro-life' citizens less likely to concede that in some thinly-served areas people shouldn't be allowed to be pro-life if they go into a certain profession:

But critics say the stores could create dangerous obstacles for women seeking legal, safe and widely used birth control methods. "I'm very, very troubled by this," said Marcia Greenberger of the National Women's Law Center, a Washington Advocacy Group. "Contraception is essential for women's health. A pharmacy like this is walling off an essential part of health care. That could endanger women's health."

There are so many CVS, Duane-Reade and/or Walgreens pharmacies all over America that a pharmacy based on the idea of being pro-life (and thus expressly refusing to cater to contraceptive needs) is not going to limit access to contraceptives, which are readily available at any mainstream drug store. Moreover, nurses and doctors (the issue has apparently been more pronounced re Anesthesiologists refusing to anesthetize for certain types of procedures) who are of this persuasion should simply say so at the outset and not be put into situations where they will be the only individual available to provide such care. If they are the sole provider, their situation can default to an agreement they made when they become a professional in the health care field to waive their refusals.

The point is: to tell an American that he or she cannot participate in a certain profession because of their personal beliefs is wrong. There is plenty of room in the American economy, which is more than ably served in most sectors, for people to have the luxury of working within their framework of personal belief. That (maybe particularly American) freedom should be valued to a high degree, if not to the same degree as the freedom to purchase contraceptives.

A Problem with the 'Obamantra'...

I want to take issue quickly with Obama's repeated charge against McCain, namely that a President McCain would amount to 'four more years' of George W. Bush.

There is a significant difference between what President Bush suggested, what he attempted, and what he accomplished. Admittedly, almost everything that he accomplished has become a failure - on the whole, because it was the wrong policy. But that leaves what Mr Bush suggested and what he attempted - neither of which can be considered Bush accomplishments, and thus shouldn't be seen as 'what Bush did' during his 2 terms. For example, Bush attempted to fix Social Security, in part using Health Savings Accounts (in my opinion the right policy, and nowhere proven as a failed policy). Certainly HSAs alone are not going to provide the solution to the pension problem; but they are part of that solution. But when Obama criticizes McCain, who also wants to use HSAs to help fix Social Security, he says something along the following line:

My opponent in this general election, John McCain, his idea of Social Security amounts to four more years of what was attempted and failed under George W. Bush. Yesterday he tried to deny that he ever took that position, which leads us to wonder if he had a change of heart or a change of politics.

But this is - or should be - largely beside the point. If Mr Obama wants to criticize McCain as amounting to another four years of Bush failures - for which criticism there is plenty of legitimate fodder - he should limit that criticism to Bush's failed (and thus accomplished) policies. If he wants to include in his criticism proposed Bush policies that never had the opportunity to fail, like HSAs, he should not use the same refrain: that McCain's policies here amount to another 4 years of Bush failures.

The point is - and the same point will apply for immigration as well, if it ever becomes central to Obama's speeches - that HSAs and other Bush policies only failed in Congress, they did not fail outright. Bush's legacy might have been much better if such proposed policies had truly been tried; or, they might not. But when he criticizes the Bush legacy as it stands, Obama can't honestly include in that criticism issues like Social Security reform or immigration reform. By lumping such issues together with genuinely failed Bush policies, Mr Obama is participating in the kind of dishonest politics he finds deplorable and aims to transcend.

Should we tax the rich?

From today's Hotline at National Journal:

Obama's tax plan "would provide $1,042 in tax cuts for Americans in the middle 20 percent of income," while McCain's plan "would provide about $1,009 -- $33 less." Families "in the lowest" 20% of income "would get an estimated tax cut of $567 under the Obama plan but only $19 under the McCain plan." Families "in the top 1 percent of income" would "pay $115,974 more in taxes under the Obama plan while getting a $45,361 tax cut from the McCain plan" (Tumulty, Gannett, 6/12).

Having spent most of my life as a Republican, I have an aversion to tax increases. But what I'm opposed to, in the end, is not tax increases, especially for the wealthy; rather I'm opposed to high taxes. Wealthy people in America can certainly afford to pay an extra hundred thousand dollars a year. But it was unfair when we taxed the rich at a marginal rate of 90%. That's just ridiculous. Even 70% bothers me a great deal. 50% or even 60% is okay with me - it's fair and it won't negatively effect the economy by stifling productivity or creativity or the entrepreneurial spirit, which higher rates would. That's not to say the tax increase that moves us back to 50% of 60% wont hurt the economy. It will - but only temporarily. The help it provides will be permanent - our inexcusable level of debt will be reduced.

We have a lot of things we need to pay for (or pay the interest for) in this country. The wealthy shouldn't be increasing their share of our nation's wealth if it means ignoring that fact.

Quote of the day...

Alvaro Vargas Llosa in The New Republic:

Actually [oil executives and governments that refuse to intervene to protect consumers] are not the culprits. For years, countries endowed with oil, such as Russia, Venezuela and Mexico, have been messing up their own capacity to produce it by using it as a political weapon. That doesn't mean that they are not producing millions of barrels each day, but it does mean that they are unable to increase production in order to keep up with demand--and traders do not expect them to raise the supply of oil in the future.

Why Obama and the Democrats Will Have More Trouble Than They Think

Sunday’s Washington Post says the Obama team is aiming at all 50 states, trying to give lots of help to down-ballot elections. But an Obama presence tied up with a Democrat running for congress in – let’s say – northern Mississippi is bad news. In fact, it’s doing the Republicans’ job for them. The Republican strategy in those kinds of districts is to paint the Dem candidate as part of the Obama Dem party – which his just too liberal to be appealing. And the only reason the Dems won in – let’s say – northern Mississippi, taking a GOP seat, is that the Republican claim was unconvincing. If Travis Childers had been seen with the Obama campaign, the fact that he thinks like a conservative Republican wouldn’t have much mattered.

The Obama plan begins with victories in Kerry-voting states, and then adds 18 electoral votes somewhere. But what happens to the plan if it doesn’t begin correctly?

McCain really does appeal to a significant chunk of Democrats (HRC backers) while Obama doesn’t pull much from the Republican side. Disaffected Republicans are flooding the country; Defecting Republicans are few and far between – in fact, they are the true elites in this race (not concerned about the populist and cultural aspects of their party to stick with it when things go bad on the high end).

Thanks to McCain’s status as a Republican peculiarity, it’s looking like the GOP will be able to count once again on Ohio and Florida. On the Dems side, however, it’s looking (more each week, it seem) like either Michigan or Pennsylvania will jump the blue-state ship. Ironically, it seems Obama’s role as a party-peculiarity will prove a serious disadvantage – totally reversing the dynamics that McCain found in a very similar role.

I still say the best move for Obama is to put the South into play. Pick Sam Nunn as a running mate, win Georgia and North Carolina, keep pushing hard out west, and reduce the catastrophic fallout from a rude move by Michigan or Pennsylvania.