Upcoming Election Related Events

[stechen]

I think it's safe to say that an informed voter is the best kind of
voter, and so here I wanna publicize various events that the Roosevelt
Institution is putting on for the election. (For those of you who don't
know, it's a student think tank with various different policy centers -
I'm the co-director of the China Policy Center, and we're always
looking for members~ if that's not your thing there are other issues too)

At any rate, here's some stuff that's going down, and brief explanations:

10/23 Thursday 8:00AM-3:30PM - Diag Day - each center has compiled one-page summaries of the presidential candidates' respective positions on various topics that you can take with you, such as the environment, health care, economics, human rights, international relations, China, etc. If you want to know more but don't have a lot of time doing exhaustive research, this should be a great resource. We'll be out on the diag so please stop by!

10/23 Thursday 7:00PM-8:00PM - Great Hall 1100 Weill Hall (Ford School of Public Policy) - Debate between Tom Duvall (Students for Obama) and Brady Smith (College Republicans). Perhaps not as high profile as you might like, but a great opportunity to ask questions!

10/29 Wednesday 7:30PM-9:00PM - Presidential Policy Dialogue - Betty Ford Classroom 1110 Weill Hall (Ford School of Public Policy) Roosevelt
is hosting a policy dialogue on the candidates - speaking at the event are professors who specialize in economics, health care, and energy/the environment.

Seriously, I can't stress how important it is for people to know what's going on in the world around them. Even if you can't make events, I'd highly encourage you to take time and just do a little bit of solid reading each day... it matters.

[stechen]

Hey everyone, just a reminder about a great event being held tonight at the Ford School by the Roosevelt Institution~ call me if you have trouble finding it!

What do YOU stand for?


Watched a College Dems v. Republicans debate?


Tuned in to see the presidential debates?
Need to clear away all that spin?

TONIGHT: 7:30 PM, 1110 Weill Hall

[fobbymaster]

yo ralph nader is coming. i forget what date. but lolol.

[stechen]

Here I'll be posting some notes that I took at the Wednesday election event - I really encourage everyone to read up on these issues (along with others). These aren't necessarily my views - they're simply what I recorded during the talks and the following Q&As.

Health Care

In the issue of health care policy, there are three major
policy concerns. The first is regarding access and coverage. Currently there
are roughly 45 million uninsured Americans – this issue tends to dominate the
issue of health care. The second issue is that of affordability and cost
control. Generally, this refers to the cost of health insurance. The last one
is a relatively recent one, which is that of quality.

Overall in the United States, there are three categories of
citizens when it comes to health care: the uninsured, those that have private
coverage, and those under public coverage (This includes programs like Medicaid).
Overall in the US, there are 45 million uninsured (17.1%), 180.8 million
private coverage (68.9%), and 48.6 million with public coverage (18.5%). In
Michigan, there are 1.1 million uninsured (13%), 6.3 million with private
coverage (73.6%), and 1.5 million with public coverage (18%). Surprisingly,
above the national average.

At any rate, to understand the candidates’ health care
policies, it is important to understand these three categories, and which ones
are being emphasized. Again: Private, Public, and Uninsured.

John McCain:

His plan focuses more on public coverage. Why? Well,
arguably this affects the most people (see above percentages). This category is
divided into two portions – group coverage, and non-group coverage. He wants to
decouple employment and health insurance, and eliminate tax benefits for
employer-sponsored insurance. This is a drastic change away from the system we’ve
had basically since WWII. He wants to replace this with a refundable tax credit
($2500 for an individual, up to $5000 for a family). This is a flat rate,
meaning it is the same regardless of how much you make. This money is then to
be used to purchase private insurance.

Essentially, the idea is to enlarge the non-group market –
the idea is that there will be increased competition driving down costs. In
this plan, ideally the uninsured will flock to the non-group market. He appears
to be pattering this after state-level plans.

One of the possible downsides to this plan that critics have
pointed out is that employers may drop coverage – so, it may offset gains from
some of the uninsured becoming insured. In addition, the plans may not be as
generous as before. Insurance companies may simply just re-adjust plan pricing.
One of McCain’s more interesting ideas here is that of a new interstate
insurance market – he’s counting on this to drive down costs. Historically,
health care has tended to be a local issue because treatment costs can differ
depending on the area. If there’s a summary of his policy, it’s shifting the
costs of health care to employees, individuals, and families, with the tax
credit to help subsidize costs.

Barack Obama:

In contrast to McCain, Obama’s plan is focused more on the
public category – he plans growth in income eligibility for Medicaid and SCHIP
(State Children’s Health Insurance Program). This includes a mandate for
children’s coverage. His idea is to set up a “National Health Program”, based
off of the highly effective Federal Employee Health Benefits Program, with
subsidies based on income to offset costs. The hope is that the uninsured will
flow to both of these plans, and will be facilitated through a National Health
Insurance Exchange, and it may *not* discriminate based on pre-existing
conditions. This is a very big deal, because currently if you are at risk for
heart attack or HIV or things like that, it is very hard to get insurance.

As far as employers go, his plan involves a “Play or pay”
mandate for employers to fund this National Health Program – Clinton had a
similar idea in 1992 – except on a smaller scale. He also talks about
reinsurance – if the employer incurs severe health costs (over 100,000
dollars), the company will be reimbursed. This is also seen as very important,
because if a company has a worker with say, cancer, this can potentially cost
the company a significant amount of money, which currently discourages
companies from insuring workers. Coverage is expected to increase substantially
over a period of 10 years.

This FEHBP is expected to increase costs (because it’s
actually a good program, in terms of quality); so another option that has been
tossed around is the option for decreased benefits that cost less.

A fear is that non-discrimination may drive up costs, and
that “pay or play” may decrease wages and employment. In addition, the child
mandate *may* fragment family coverage, and reduce employer participation.

Where they agree:

They both see the importance of increased IT – for example,
currently in most hospitals there is actually relatively little digitalization –
paper is still the most common instrument used for records. They both want to
improve disease management and care coordination. McCain wants to do this with
performance initiatives, based on how well a doctor does. Obama wants public
reports of quality and costs. They are also both in favor of clinical
effectiveness research, though Obama has been a bit more concrete about how he
wishes to do so – by forming an institute that measures health care
effectiveness. They agree on bringing in cheaper overseas drugs; those
certified. Obama’s plan is to have medicare negotiate as one unit with drug
companies for a consistent cost.

In summary, McCain’s plan is a shift from non-group to group
coverage, focused on the private insurance market, shifting costs to
individuals. Obama wants to expand the role of the government in providing
coverage, through a mix of mandates, subsidies, and new programs.

Neither talk much about affordability – both candidates intend
to leave the private insurance market intact.

[stechen]

Economy

Recently there has been much emphasis on regulation and
deregulation – how do you look at it from an economist’s point of view? The
common assumption is that markets can be relied on to work for public interest.
However, there are times when you can’t – this is called market failure. When
does it fail? Broadly, in three different ways: When there’s a monopoly,
externality, and when it comes to public goods. This last one deserves special
notice – it refers to things like bridges, in which you using it does not
preclude others from using it as well. It’s different from say, the “donut
market” where me eating one takes away your ability to eat the same one. Thus,
the way you allocate resources is different.

There are times when the government tends to get more highly
involved. For example, between WWII and 1975, telephone and electricity were
tightly regulated. This is because once one seller had a system (wires) set up,
there’d be a natural monopoly. Similarly, most bridges are government-owned. When
there’s asymmetric information, there also tends to be more regulation. This
refers to the situation where people on one side know much more than the other
side – sometimes, this can hurt you. The free market is perfectly fine when you’re
buying cereal, because if you buy a brand and didn’t like it worst comes to
worst you just buy a different one next time. But you can’t do it for medicine –
you can’t experiment with your own body. That’s why they’re regulated.

So, an economist examines whether or not there is a market
failure, and if there is, what is the regulatory solution? Sometimes you have
to regulate, and sometimes you actually have to *deregulate*. For example, as
cell phones became popular, the need to regulate land lines was decreased.

Again, the assumption we’re working off is that markets
generate public good, and thus benefit from competition. Currently there are
two schools of thought regarding competition – both are in favor of it, but
disagree on how it comes about. The first is the belief that left to its own
devices, competition natural occurs. In essence, a laissez-faire argument. The
second is that if the market is left to laissez-faire, it doesn’t work. The
government should thus use the law to promote competition. This influences
policy decisions – for example, if you believe that competition doesn’t occur
naturally, then you want to subject them to anti-trust laws.

Throughout the 1930s, we have deregulated banks, thinking
they could perform just like other parts of the market. Back in the 1980s, banks
were actually quite specialized, and state-based. Now, when you deregulate
banking, you’re saying it should play by normal laws, namely anti-trust laws.
But in the regulatory regime, the treasury actually reinforced anti-trust laws,
NOT just the Department of Justice. Well, it wasn’t in their best interests to
create competition, so banks ended up merging until they were simply too big to
fail, hence the need to bail them out now rather than just let them collapse. A
similar thing happened to airlines.

McCain and Obama are both pro-free trade. McCain’s original
views (close to Obama’s current views) on immigration have generally been seen
by economists as a positive thing – namely, that it’s important to allow
increased immigration. However, he has flawed views regarding taxes; that lower
taxes are *the* solution. This isn’t necessarily what the USA needs. With
taxes, as with other things, you have to pick and choose which ones are
worthwhile and which ones need to be cut.

[stechen]

Energy Policy

Why do we even need government energy policy? Why not just
leave it up to the markets? The answer is that the true cost of energy (ex:
oil) is not fully reflected in price. There are significant macroeconomic
impacts on the economy with oil, that aren’t necessarily directly obvious.
There are geopolitical effects to oil – we import 70% of it from other
countries, and that is money going from the US to other countries. There are
also environmental effects – these are also important, but often not
considered.

Energy is not a place where the market produces the most
efficient outcomes – both candidates agree on this However, the difference is
in what to emphasize. Macroeconomic effects on the economy? Geopolitical
effects? Environmental Effects?

Smart policy requires understanding – oil is a GLOBAL
market, one in which 80 million barrels are produced each day (and for the most
part consumed). Out of that, the US produces roughly 7 million, and consumes
20-25 million. The price of oil is set by GLOBAL supply and demand. Knowing
this affects how you view candidates’ policies and what sort of realistic
effects they will have.

For example, John McCain’s campaign is famous now for its “Drill,
Baby, Drill” chant. His reasoning is that we can break our dependence on
foreign oil if we drill within the United States. It is estimated that
unrestricted offshore drilling will add up to 1 million barrels a day to the
global supply over the next 10-20 years. Obviously, this will not be
significant enough to affect pricing. So here, the true tradeoff is then
between local profits, revenues, and jobs vs a severely detrimental
environmental impact.

Other energy
policies:

CAFÉ Standards: this is something to be seen in a global
context. Currently there are plans for increased emission standards – this will
have a larger effect on price than expanded domestic drilling will, as over the
long term it reduces US oil consumption. In addition, it also helps the carbon
dioxide problem. This is supported by Obama, while McCain is a bi unclear.

Low-cost energy
supply challenge:

Real change requires scalable alternatives to conventional
oil. Currently there are about three that are most popular. The first category
is that of electrical vehicles/plug-in hybrids. The environmental effect really
depends on the location of your electric grid. If the power plant that powers
your garage socket comes from a nearby power plant that runs with coal… well,
then it’s not that useful in reducing CO2 emissions. The second option is biofuels
– the effect really depends on what kind of fuel is being used. For example,
ethanol is very inefficient – much energy is invested into actually turning it
into fuel. The third is oil stands/synthetic fossil fuels.

As renewable get cheaper, energy capture and storage will
likely improve as well. Thus, government intervention is necessary if the goal
is to divert away from fossil fuels. Part of the current problem is that
conventional fuel is simply cheaper than other options. So as a policy option,
one way to change this is to make carbon expensive, either via a carbon tax or
tradable emission permits. Currently, both candidates approve of tradable
permits.

“Economists” don’t necessarily favor one side. These will
both have a similar result – increasing energy prices. The former option can be
used to increase government revenue. Either way, to be actually effective,
these taxes must be high, and that depends on the will of the populace.

Taxing carbon in of itself does not appear to be sufficient
for attracting private research dollars on new energy sources. In general,
firms only invest in research is it provides private benefit. So, solar is not
very popular for private research because any new technology can be utilized by
opponents as well. As a result, basic research with broad benefits is
undersupplied by the market. Here, Obama makes a case for government subsidies
for research – a non-profit driven incentive. McCain has proposed a 300 million
dollar incentive for a better battery.

Additional Policies

McCain supports the construction of new (45) nuclear power
plants in America. Obama wants a Federal renewable portfolio standard –
essentially, renewable energy standards that the country must meet.

As far as nuclear power goes, it’s powerful and efficient,
but like other sources of energy, the true cost is often not covered.
Basically, it’s cheaper than it actually is. There are problems of waste
storage, and liability, currently covered by the government. Nuclear power
would be significantly more expensive if consumers actually had to cover these
costs.

What challenges are
most important?

Both candidates appear to emphasize “independence from
foreign oil” moreso than the environment. That said, Obama appears stronger on
the issue of climate change, while McCain has been more willing to sacrifice
the environment for increased drilling. Both exaggerate the benefits of
short-terms solutions, such as “clean coal”. This is an interesting issue
because it’s hard to determine what exactly candidates are referring to
sometimes. When Obama talks about clean coal, he refers to zero carbon emission
coal, something we don’t yet have the technology to produce yet. McCain has not
yet clarified what he means by clean coal – zero carbon, or low carbon.

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