Sunday, June 02, 2013

On Douthat on Reform Conservatism

Many people (too many) have commented on Ross Douthat's reform conservatism op-ed.
I have nothing new to say.

There are  two obvious points. As noted by Douthat, the proposal has nothing to do with really existing US Conservatism "Is it an agenda that the party is likely to actually embrace anytime soon? That’s much more doubtful".  This is reform conservatism not reform liberalism and is based on the assumption that Douthat et al have something to teach liberals too.

I admire Douthat's dedication and patience, but I don't think he has useful policy proposals which are new to say Obama.  He has a diagnosis which is roughly that inequality is a problem (not per se but in se or something) and existing social welfare programs are not perfect. I am going to skip to the proposals and fisk.

a. A tax reform that caps deductions and lowers rates,
There is no hint of a justification for the proposal to lower rates in the diagnosis which I didn't cut and paste or later in the op-ed.  The justification is, I guess, that reform conservatism must be conservative and to be a conservative one must propose lower tax rates.  Clearly Douthat was just clearing his throat -- my guess is that he didn't seriously consider the possiblity of not typing "lowers rates" in a sentence which included "tax".but also reduces the burden on working parents and the lower middle class, whether through an expanded child tax credit or some other means of reducing payroll tax liability. (Other measures that might improve the prospects of low-skilled men, ranging from a larger earned income tax credit to criminal justice reforms that reduce the incarceration rate, should also be part of the conversation.)
Been there done that.  This was part of the ARRA (which Douthat denounces below) extended for two years with the payroll tax partial holliday whose further extension was blocked by Republicans.  The tax proposal is to agree that the Democrats are right (and stop talking about the 47%).  then a bit of soft on crime as the icing on the cake.  I agree, but this is moderate leftism not reform conservatism.b. A repeal or revision of Obamacare that aims to ease us toward a system of near-universal catastrophic health insurance, and includes some kind of flat tax credit or voucher explicitly designed for that purpose.
Ah catastrophic health insurance related program activities.  "ease us towards" was too radical, so he added the additional weasel word "aims".  Also been there done that. It is the tax on cadillac health plans.  It clearly was the maximum which was politically possible.  the proposal in general would be rejected by both parties and the vast majority of the public.  c. A Medicare reform along the lines of the Wyden-Ryan premium support proposal, and a Social Security reform focused on means testing and extending work lives rather than a renewed push for private accounts.
Here Douthat assumes that Medicare advantage on steroids will reduce costs even though Medicare advantage increased costs.  This is a triumph of faith over evidence.  It is just not reality based.  Means testing social security will create perverse incentives (it punishes saving) and save little money.  Extending work lives is the most regressive approach to social security reform and makes no sense (we work to live we don't live to work).  
d. An immigration reform that tilts much more toward Canadian-style recruitment of high-skilled workers, and that doesn’t necessarily seek to accelerate the pace of low-skilled immigration. (Any amnesty should follow the implementation of E-Verify rather than the other way around, guest worker programs should not be expanded, etc.)
Douthat agrees with Obama on immigration reform.  Notably he sides with the AFL-CIO against the Chamber of Commerce.  I agree that keeping unskilled workers out is right wing, but I'm the only one.  This is just agreeing with Obama but trying to be rude about it.e. A “market monetarist” monetary policy as an alternative both to further fiscal stimulus and to the tight money/fiscal austerity combination advanced by many Republicans today.
I don't think this will work.  I have written much too much about it.  Note that Douthat advocated further fiscal stimulus as point a. f. An attack not only on explicit subsidies for powerful incumbents (farm subsidies, etc.) but also other protections and implicit guarantees, in arenas ranging from copyright law to the problem of “Too Big To Fail.”
The path to reform is for Conservatives to occupy Wall Street.  Here he is well to the left of Obama and out there with Sherrod Brown (and the diaper guy).
The reform conservatism is moderate progressivism (basically the Obama agenda) plus the Ryan Medicare proposal (try what's failed) and standard conservative tics (lower rates, Any amnesty should follow, no further fiscal stimulus).
I am going to skip back to the diagnosis part.  I think that Douthat's proposals suggest only one objection to 

1) The core economic challenge facing the American experiment is not income inequality per se, but rather stratification and stagnation [skip]
2) The existing welfare-state institutions we’ve inherited from the New Deal and the Great Society, however, often make these tasks harder rather than easier: Their exploding costs crowd out every other form of spending, require middle class tax increases and threaten to drag on economic growth; their tangled web of subsidies and credits and tax breaks often benefit the already-affluent and create perverse incentives for the poor, and the distortions created by the way they pay for health care, in particular, contribute mightily to the rising cost of health insurance and thus the stagnation of middle class incomes.

Note the proposal suggests nothing (more exactly nothing not done already by Democrats and reversed by Republicans) about the alleged "perverse incentives for the poor." I haven't clicked the link, but I note that Douthat's only proposal to this is something along the lines of a making work pay tax credit -- that is from Obama's 2008 proposal (temporarily) enacted in 2009.He wants to reduce tax breaks for the affluent. This was in Obama's 2008 proposal and he is still fighting for it.  Much of this is endorsement of Obama 2008 program disguised by "welfare state" New Deal" and "Great Society."

 Douthat provides no link or argument about how public spending on health care drives up private health insurance premiums.  I think he doesn't because he can't.   I guess he could be referring to the fact that health insurance isn't taxed.  This is not social welfare or inherited from the New Deal or the Great Society.  Replacing the exemption with a tax credit is an egalitarian move.  Obamacare is the first step in that direction.  

But my point (if any) in quoting the diagnosis is to note that none of the proposals have anything to do with anti poverty programs.  The only link between the diagnosis and the proposals is that both have something to do with health care spending. 

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