Before You Vote, Consider This

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hillary clinton bernie sanders

Before You Vote, Consider This

Primary voting starts in just 6 days with the Iowa Caucuses.  A little more than a week later brings the New Hampshire primaries; after that, it’s off to the races with Nevada, South Carolina, and Super Tuesday.  We know you’re seeing many campaign ads, are inundated with opinion posts on Facebook and Twitter, and likely are already predisposed to a certain candidate.  Please, though, consider this before you caucus or cast your primary vote.

Democrats face an election of head versus heart

Bernie Sanders’ upstart, insurgent campaign identifies a singular problem – income inequality – and seeks to address it.  Nothing more.  His candidacy is premised on the one issue; the plans he offers cannot – and will not – pass Congress.  Lofty rhetoric of fundamental change plays well and offers ideas whose merit needs to be debated, considered, and discussed, but words with no hope of action do not a president make.

Hillary Clinton represents the head of the Democratic Party.  Of course, the House of Clinton has been a mainline force for decades.  More importantly, though, Hillary has long been considered a policy wonk, willing to work across the aisle to see legislation pass and to make change happen.  Bernie’s strong liberal positions earn him a weak congressional record with very few significant legislative achievements and no known ability to compromise on his values.  Love it or hate it, compromise and deal making gets things done in Washington.  Vote for the head of the Democratic Party and let the heart continue to fight in the Senate and to shape discourse without further polarizing and gridlocking our legislative system.

Political Revolution

I take many problems with this phrase.  It’s blatant reference and conjuring of Karl Marx’s writings make it immediately distasteful, reminiscent of failed ideas, and undemocratic.  Even ignoring that, the phrase is still wrong.

We don’t need, nor does anyone want, a full-on political revolution.  The country needs people to vote.  Turnout rates are incredibly low when compared to other Western democracies.  Voters skew older and wealthier than the average American.  Increasing the turnout rate will lead to more young and poor citizens voting, therein boosting Democratic vote share and the appetite for redistributive policies.  Progressive platforms win when turnout is high.  No political revolution is needed.

People voting is not a revolution, it’s simply a democracy at work.

Minimum Wage

Though it’s clear the minimum wage needs to rise, an increase to $15/hr is simply irresponsible.  That would double the current minimum wage.  Such actions would greatly increase unemployment through much of America.

What works in New York does not work in Tulsa, Oklahoma.  Expensive cities need higher minimum wages than do cheap places.  The cost of living simply differs over much of the country.  San Francisco, New York, Washington, and Los Angeles are all much, much, much more expensive than Cheyenne, Wyoming, Sioux City, Iowa, and Gary, Indiana.  The national minimum wage cannot be premised on the cost of living in the most expensive cities; it must establish a baseline above which states and localities should increase their minimum wages.  $15/hour would increase unemployment and inflation (if the base wage starts at $15, all other rates must then be raised to maintain hierarchy) in states like Nebraska, Ohio, Vermont, etc.  Costs, too, would rise.  The benefits are slim with a national wage hike to such an absurd level.

Hillary wants to raise the minimum wage to $12 an hour.  This still represents a large and substantial increase, but precludes many of the unemployment worries caused by Bernie’s plan.  The difference between the two plans – Bernie’s desired wage is 33 percent higher than Hillary’s – has a real impact: It raises business costs by at least that amount.  To offset the costs, firm will either layoff workers and/or raise prices.  A $12 minimum wage lifts millions out of poverty without creating the unemployment and inflation caused by a $15 wage.  It respects the cost of living differences between states and encourages municipalities, like New York and San Francisco, to update policy on their own terms.  The national minimum wage, as Hillary understands, should be set at the lowest common denominator; wages should be raised to higher levels by the government closest to the people whom the wage will impact.  They are in a better place to make that decision.  Hillary, and not Bernie, understands that.

A lot of policies can be made on the national level; this is not one of them.

Free College

College is an investment.  Students decide whether to go to college to boost potential earnings.  Like any investment, they must have skin in the game.

College should not be free for everyone.  It should be affordable and students should have the opportunity to attend debt-free, but the government should not subsidize a public college education for all its inhabitants (also irresponsible to raise taxes only to redistribute them to the children of wealthy parents).  His plan relies on Wall Street taxes, but that would not raise enough money to pay for the plan.  How would he fill the gap?  Similarly, ideas capping interest rates on student loans are nonsense.  Many are upset that one can get a mortgage with a cheaper interest rate than a student loan.  This makes economic sense.  Loans are based on risk.  Students are risky.  Even after earning a degree, earning potential might be low.  Unlike a mortgage, which is backed by a house (a real, physical asset), student loans have no backing.  A bank cannot seize a degree in the case the student does not repay debts.  The risk associated with student loans leads to higher interests rates.  That’s not a corrupt economy; that’s basic market principles.

Hillary’s proposes debt free public education.  This makes sense.  It stops cost from being an educational barrier while ensuring that students still have skin in the game (as it is an investment, after all).  She also goes about this in the right way: public universities are operated by the states; Hillary’s plan incentivizes states with block grants to urge them to provide no-loan tuition.  Moreover, in the case of loans, Hillary will cap repayments at 10 percent of income.  This ensures that students will not sacrifice subsistence to pay down debt.  It also does not interfere with the forces of the free market – it doesn’t distort supply, demand, and risk elements.  Unlike Bernie’s plan where the proposed funding does not add to the price tag, Hillary’s plan to cap deductions for top tax-earners would cover her proposals.  Hillary solves college debt and makes college affordable without introducing moral hazard or burdening the free market.

Free college is not a good idea.  Debt-free college is.

Infrastructure Spending

Bernie has the right idea here.  $1 trillion of infrastructure spending is necessary for the health of our economy.  However, the timing is wrong.  Such an endeavor should be undertaken during a recession so it can serve as an economic stimulant.  When the unemployment rate is 5 percent, as it is now, the government needs to tighten its belt and close deficits, paying down the national debt.  That theory stems from basic Keynesian principles.  When the economy inevitably sags again, stimulus spending will be needed to create jobs and spur economic growth; that’s when Bernie’s plan should be introduced.  To do so now is fiscally irresponsible.

Hillary, on the other hand, proposed a reasonable $250 billion infrastructure plan that would create jobs and provide needed service to the country’s crumbling roads and bridges without severely straining the federal budget.  In addition, Hillary calls for a $25 billion seed fund for an infrastructure bank, a crucial step to ensuring the long-run vitality of America’s modes of commerce.  The bank would help finance another $250 billion in infrastructure improvements.  Her plans will create jobs without straining the federal budget, critical during a boom period in which we should be seeking to close the deficit and pay down debt, not add another $1 trillion to it.

Rigged Economy

Former chairman of the Federal Reserve Ben Bernanke wrote in his memoir that Bernie has a “conspiracy view of the world.”  This is absolutely correct.  Bernie envisions a world in which “the billionaire class” – in perfect sympathy with ideas of class warfare – tries to keep everyone else suppressed below them.  It’s an outlandish sentiment that bears little reality to data.

Economic mobility has not changed in 50 years, since the Johnson administration.  Only if you think that the economy was rigged during the liberal heyday of social programs, tax and spend policies, and Democratic legislative domination can you now believe that the economy is rigged.

Yes, inequality has grown, but that’s not a bad thing.  Income inequality is the natural result of a market economy.  Not everyone can earn the same income.  Higher incomes generate incentives and are rewards for society’s most talented and hard-working.  That inequality exists proves our economy is working.

The problem is stagnant middle class wages.  For the middle class, incomes have not grown in 25 years.  Yes, the top 1 percent’s income has grown manifold, especially following the Great Recession, but much of that can be attributed to stock market increases and changing payment schemes for CEOs.  That’s simply not the problem.  Taxing the rich to give to the poor would not solve inequality.

This is another instance in which Bernie’s policies break down.  He relies on soaking the rich to combat inequality.  Such ideas don’t raise middle class incomes.  A $15/hr minimum wage raises incomes only so far as it doesn’t create unemployment – and it will.  Bernie doesn’t focus on job creation and wage growth; he focuses on taking and giving – a concept that simply will not work to fix the only issue to which he is committed and pretends to be versed.

His policies and rhetoric of a rigged economy pitting the little guy against corporate fat cats is only correct if you ignore economics.

Wall Street

Once more, there’s a disconnect between Bernie’s fiery, populist rhetoric and reality.  His platform centers around breaking up the big banks.  But guess what?  Doing so would not have prevented the 2008 financial crisis, which started with pure investment firms (Bear Stearns and Lehman Brothers).  Breaking up big banks does not solve problems potentially endemic to the financial sector.  In fact, “a breakup of the largest financial institutions would reduce the value that they provide for the economy, businesses, and consumers. Recent research points to significant economies of scale and scope at large financial institutions, leading to efficiencies for businesses and consumers.”

Bernie’s spectacular fundraising pitch – reinstalling Glass-Steagall – fails to live up to his goals.  Like politicians on the far right, Bernie has an incredible immunity to social science.

The best means of preventing another financial calamity seems to be taxing the behavior that made the 2008 crisis awful: reliance on short-term, often overnight, funding.  Prior to 2008, many banks needed overnight lending from other institutions in order to pay daily operating expenses and meet capital requirements.  As assets lost value, banks began to worry about solvency and ceased the web of lending.  This prevented banks from meeting daily operations and made them illiquid, prompting a fire-sell of assets that were quickly losing value.  In came a crisis of solvency and banks suddenly faced bankruptcy.  To prevent another catastrophe of the sort, banks need to be discouraged from short-term funding.  Hillary’s plan does this by levying fees on the institutions that rely heavily on volatile, short-term loans.

Her proposals are many times better than Bernie’s because she addresses the root problem instead of issuing rally cries.  There’s a reason Hillary is respected on both sides of the aisle when it comes to policy credentials and know-how.

Money and Special Interests

Here, too, lies another instance in which Bernie’s call to action stands against political science research and would actually increase political polarization.

No corporation expects to buy a politician.  All the money in the world cannot elect a candidate if the candidate’s positions are anathema to the majority of voters.  Decision making is still – and is always – left in the hands of the voters and it becomes their responsibility to turnout and have their voices heard.  It seems misplaced and normatively wrong to forbid companies from exercising speech and preferences while not placing any blame on apathetic voters.

Moreover, when corporations donate to political campaigns, they tend to do so in a bipartisan manner because they want things to get done.  It’s bad for business when Congress fails to pass laws.  Take, for instance, the 2011 debt ceiling debacle.  Corporations and their lobbyists urged Congress to raise the debt ceiling as failing to do so would have resulted in an economic catastrophe.  However, many House members and some Senators wanted to default on obligations because the grassroots voters thought that was the best position.  Businesses actually tried to bring the sides together.  That’s not corporate-induced polarization – that’s corporate induced bipartisanship.

Preventing the moderating force of many of these corporations from influencing elected officials actually worsens polarization by increasing the impact of grassroots donors.  Proposals in which small donor sums are matched by the government can empower radical candidates who attract a broad grassroots movement.  In the presidential election, that would pit Bernie, the most liberal senator, against Ted Cruz, one of the most conservative.  It’s easy to see how that might lead to more extremists in both congressional chambers, worsening polarization and ensuring that no legislation whatsoever is enacted.

That said, it’s important to point out the most corporate political money goes to lobbyists.  Again, that’s not necessarily a bad thing as it can bring sides together to pass budgets and raise the debt ceiling.  The main impact of Citizens United and Speechnow is the ability for individuals – whose motivations are quite different than those corporations – to donate vast sums to super PACs.  But there’s still no definitive literature on how super PACs and individuals impact elections.  In fact, if 2012 is any precedent, super PACs and outside money have a muted impact on elections.

Super PACs and unlimited contributions are inherent parts of free speech.  Since Buckley v. Valeo, money has been equated with political speech, and for good reason.  By and large, there are three ways to engage in the political process: 1) donate, 2) volunteer, and 3) vote.  Each contains elements of speech and each should be unlimited.  Let’s use a though experiment.  If you supported a candidate, how would you act to ensure the candidate’s election?  You would donate, volunteer, and vote and you would want to complete freedom to do all three.  Perhaps the easiest way of engaging with politics is to donate money to campaign committees and PACs.  They have a competitive advantage in producing political communications as they specialize in it (I could make lawn signs on my own, but a campaign will do it much more efficiently).  In this sense, I’m using money to further my speech by giving it to an organization that can best amplify it.  My donation adds to the marketplace of ideas and allows many points of view to be presented to the electorate.

Liberals tend to dislike Citizens United because conservatives make the most of the decision.  That’s no reason to curtail rights.  We cannot limit speech because we don’t like what’s being said.  We must instead counter donations or utilize the other elements of political engagement to ensure victory for our candidates and ideals.  We can’t limit freedom because we don’t like what’s being done with it.  A liberal society is bettered and strengthened when speech is wholly encouraged.

Lastly, accepting this chart from political science research, we see that more money in elections betters the chances of challengers to unseat incumbents.  Challengers need fewer dollars to sway voters and given the natural incumbency advantage – around 5 to 9 percentage points, for a variety of reasons – more money can lead to more competitive races.  And, if the challenger raises a lot of money but his or her views are deplorable, it’s easy to still vote for the incumbent.

screenshot-www.washingtonpost.com 2016-01-26 11-58-24

 

What’s more, there is nothing Bernie, as president, can do.  To overturn Citizens United, either a new Supreme Court case is needed or a constitutional amendment (which no president can pass or propose).  Any case needs to have standing and injury, hard to prove considering the equal availability of all to make use of the campaign finance system.  It would set a dangerous precedent to sue based on speech unfavorable to one’s interests.  Bernie doesn’t seem to understand this – he tweeted that he would appoint Supreme Court justices whose first case would be to overturn Citizens United.  That’s not how the judicial system works.  Furthermore, establishing any sort of litmus test for a judicial nominee makes a mockery out of judicial independence – a value enshrined in the Constitution and the Federalist Papers.  It amounts to subversion of the Constitution.

In the end we have a choice: elect rhetoric or elect results.  Bernie’s policies fix no problems, especially not those about which he cares.  What’s more, his proposals are too far left to have any chance of passing a Republican or split Congress.  With no ability to set an agenda and no laws to his name, a Bernie presidency would amount to nothing but a cheerleader-in-chief, fervently calling for an end to the problem he doesn’t know how to solve.

Hillary has a record of working across the aisle.  Her policy ideas draw from social science and actually address root issues.  She’s a leader and has breadth of knowledge about which the single-issue Bernie can only dream.  It’s fine to have a single-issue politician in the House or the Senate, but in a president, we need someone ready to fight on all fronts, someone able to make deals, and someone truly able to lead the country forward.

We need Hillary.


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