2008 Presidential Debate 3/3

[hermionesviolin]

I saw a lot of clips (and heard some of the pundits) on CNN AM this morning, but I still wanted to read a full transcript (completionist, what?). I did a GoogleNews search for "presidential debate transcript" and this is the first one that came up.

SCHIEFFER: By now, we've heard all the talking points, so let's try to tell the people tonight some things that they -- they haven't heard. Let's get to it.

Haha. Yeah, good luck. Though it did actually feel substantive -- though not much particularly new.

OBAMA: If I can answer the question. Number one, I want to cut taxes for 95 percent of Americans. Now, it is true that my friend and supporter, Warren Buffett, for example, could afford to pay a little more in taxes in order...

MCCAIN: We're talking about Joe the plumber.

OBAMA: ... in order to give -- in order to give additional tax cuts to Joe the plumber before he was at the point where he could make $250,000.

Then Exxon Mobil, which made $12 billion, record profits, over the last several quarters, they can afford to pay a little more so that ordinary families who are hurting out there -- they're trying to figure out how they're going to afford food, how they're going to save for their kids' college education, they need a break.

So, look, nobody likes taxes. I would prefer that none of us had to pay taxes, including myself. But ultimately, we've got to pay for the core investments that make this economy strong and somebody's got to do it.

MCCAIN: Nobody likes taxes. Let's not raise anybody's taxes. OK?

OBAMA: Well, I don't mind paying a little more.

Hai, I like this a lot -- the "Yes, I am well-aware of the fact that I make a lot of money, and in fact I am okay with paying higher taxes on that lots of money."

Assorted commentary:
I was thrown by the almost conflation of autism and Down Syndrome -- I mean, fine, talk about autism, and yes Sarah Palin has a child with special needs, but it still felt weird.
I kinda sighed at the Drug War and Obesity mentions.
I laughed at McCain's "his object is a single payer system. If you like that, you'll love Canada and England," because of course the liberals watching LOVE Canada (though I don't really know where the "undecideds" fall on that; I mean, they're fiscal conservatives/social liberals).

OBAMA: Now, what we haven't talked about is Senator McCain's plan. He says he's going to give you all a $5,000 tax credit. That sounds pretty good. And you can go out and buy your own insurance.

Here's the problem -- that for about 20 million people, you may find yourselves no longer having employer-based health insurance. This is because younger people might be able to get health insurance for $5,000, young and healthy folks.

Older folks, let's healthy folks, what's going to end up happening is that you're going to be the only ones left in your employer-based system, your employers won't be able to afford it.

And once you're out on your own with this $5,000 credit, Senator McCain, for the first time, is going to be taxing the health care benefits that you have from your employer.

And this is your plan, John. For the first time in history, you will be taxing people's health care benefits.

By the way, the average policy costs about $12,000. So if you've got $5,000 and it's going to cost you $12,000, that's a loss for you.

I raised this concern about the $5K last debate :)

MCCAIN: Now, Joe, you're rich, congratulations, and you will then fall into the category where you'll have to pay a fine if you don't provide health insurance that Senator Obama mandates, not the kind that you think is best for your family, your children, your employees, but the kind that he mandates for you.

I'm confused. Like one pagescreen up, Obama said:

OBAMA: I just described what my plan is. And I'm happy to talk to you, Joe, too, if you're out there. Here's your fine -- zero. You won't pay a fine, because...

MCCAIN: Zero?

OBAMA: Zero, because as I said in our last debate and I'll repeat, John, I exempt small businesses from the requirement for large businesses that can afford to provide health care to their employees, but are not doing it.

I exempt small businesses from having to pay into a kitty. But large businesses that can afford it, we've got a choice. Either they provide health insurance to their employees or somebody has to.

Anyway, McCain goes on:

That's big government at its best. Now, 95 percent of the people in America will receive more money under my plan because they will receive not only their present benefits, which may be taxed, which will be taxed, but then you add $5,000 onto it, except for those people who have the gold-plated Cadillac insurance policies that have to do with cosmetic surgery and transplants and all of those kinds of things.

(1) Isn't the 95% Obama's talking point? (2) I winced at the idea of transplants as luxury.

MCCAIN: And the good thing about this is they'll be able to go across America. The average cost of a health care insurance plan in America today is $5,800. I'm going to give them $5,000 to take with them wherever they want to go, and this will give them affordability.

Can I get a fact-check? Is there a difference between a "plan" and a "policy" which allows both candidates to state such discrepant figures?

Edit: TaxFoundation.org Tax Policy Blog (via Greg Mankiw) says:

McCain got his figure from this report, which says this: "Nationwide, annual premiums averaged $2,613 for single coverage and $5,799 for family plans in the 2006-2007 period. For single policies, annual premiums ranged from $1,163 for persons under age 18 to $5,090 for persons aged 60-64. For family policies, premiums ranged from $2,325 for policies covering children under age 18 to $9,201 for families headed by persons aged 60-64.

Obama's $12,000 figure appears to come from this Kaiser report.

[...]

On the issue of whose tax plan would provide more relief to middle-income taxpayers, Barack Obama once again brought out this line:

And 95 percent of working families, 95 percent of you out there, will get a tax cut. In fact, independent studies have looked at our respective plans and have concluded that I provide three times the amount of tax relief to middle-class families than Sen. McCain does.

The 95 percent figure is correct. Even though many conservatives have argued that you can't cut taxes for people who pay no income taxes, most of those who are receiving refundable tax credits on the income tax side are still net taxpayers given that they do pay payroll taxes, corporate income tax, excise taxes, etc. (And even that assumes the fact a person is a net taxpayer even matters versus the net fiscal incidence of the person, and once we go down that road, at least we are actually getting somewhere on the core questions of public finance and the role of government in distributional outcomes.)

The independent study that Sen. Obama is referring to comes from Tax Policy Center, which does indeed verify this fact for middle-income tax units when you exclude the effects of the two candidates' health care plans. What Sen. Obama doesn't tell you is that Sen. McCain's health care tax plan (which he criticizes on many occasions and runs about a billion television ads a day on) would actually provide more savings to middle-income tax units (as a group) than Sen. Obama's health care plan. And when you include the effects of these health care plans, the three-times as much tax relief claim no longer holds. When TPC ran the tax plans, they analyzed the health care plans separately from the other parts of the candidates' tax plans.

Speaking of Sen. McCain's health care plan, Sen. Obama once again made this invalid comparison about it:

By the way, the average policy costs about $12,000. So if you've got $5,000 and it's going to cost you $12,000, that's a loss for you.

Sen. Obama's saying outright that Sen. McCain's plan is a loss for you is nonsense.

The $12,000 cost and $5,000 credit are not comparable unless one assumes two facts for McCain's health care tax plan: (1) the worker will be dropped by his employer, and (2) the worker's wages will not increase to offset the lost health care. For most workers, this isn't going to happen. If somebody is receiving $12,000 in health insurance that is now taxed as ordinary income (and there is no dropping of coverage), a $5,000 credit is going to more than offset the additional tax a person must pay on his/her employer-provided health insurance. Eventually, since the credit is indexed for inflation and not health-care costs, the credit's value would diminish. But over the next ten years, Tax Policy Center has estimated that McCain's health care tax plan is a $1.3 trillion tax cut for American taxpayers, and they have shown that the average middle-income tax unit would be better off under McCain's health care tax plan than Obama's in that time period. Now it is true that the average doesn't hold for everyone in the middle and some will gain a lot in the middle and some could lose a lot in the middle (such as those whose coverage is dropped), but the reality is that the health care tax plan is the most progressive part of Sen. McCain's plan. It would make the federal income tax more progressive.

Mankiw also quoted a WSJ article which points out, "Sen. Obama hasn't said where he would mark the line between the large employers who would be punished for not offering insurance and the small ones who would be rewarded if they do."

/edit

Nice closing speech, Obama; way to make it all about the American people (in contrast to McCain's which, understandably, focused on himself); well-done.

***

Greg Mankiw recently linked back to a December 2007 post of his own on "How do the right and left differ?" (from an intro econ class lecture). After the debate, he posted about the "spread wealth around" issue (Rawls versus Nozick).

Matthew Yglesias posted:

James Fallows liked Bob Schieffer but noticed that he, too, has fallen prey to the neo-Hooverite bug:

2) Notwithstanding general praise for Schieffer, he like all the other debate moderators seemed to be unduly interested in how either of the candidates is going to “balance the budget.”

NEITHER OF THEM IS GOING TO BALANCE THE BUDGET — nor should they be mainly concerned with trying, right at the moment. We’re in the middle of a potential economic collapse. One of the lessons Herbert Hoover inadvertently taught is that you shouldn’t try to tighten up on public spending during a huge downturn. For details, see the works of JM Keynes, passim.

In semi-defense of Schieffer, arguably he was simply giving both candidates an opportunity to say that in light of present circumstances they were going to revise budget promises they’d made when the macroeconomic situation looked more favorable. But neither candidate really did that. Obama stuck to policy guns that are inconsistent with an emphasis on deficit reduction, but got defensive about it and insisting that vaguely specified cuts elsewhere would make up the gap rather than simply arguing that an emphasis on deficit reduction would be inappropriate. McCain continued to make fiscal policy promises that imply gargantuan cuts in programs outside the favored circle of defense, veterans, and, I guess, autism.

David Weigel at Hit and Run (Reason) talks about the "incoherence" of McCain's economic plan/s.

Will Wilkinson remains HYSTERICAL (a liveblogging, of sorts).

From Megan McArdle's liveblog:

9:12 Having recently suffered a water pipe leak, I am second to none in my appreciation of the many contributions that plumbers make to Our American Way of Life. Nonetheless, I am slightly concerned that we are spending so much time focusing on the effect of our national policy on Plumbing-Americans

[...]


9:30 I cannot believe that John McCain's extended whining about how mean Obama has been to him in his ads is proving so popular with CNN's uncommitted voters.

9:32 That said, Obama's defense of Lewis' over-the-top remarks is pretty weak.

9:39 Markets dropped 8% today, and John McCain wants to spend 20 minutes of the debate discussing the critical question of just how nice Obama was to Bill Ayers, and who has the meaner co-ideologists.

9:40 The people with whom I am watching the debate have given up listening to the blather and are now focusing on the analyst ratings which CNN displays on either side of the screen. Mostly, they are wondering whether David Gergen, who has barely updated for thirty minutes, has fallen asleep, or is simply refusing to analyze in protest of the utter banality of this discussion.

9:47 McCain tries to draw a distinction between good foreign oil from Canada, and bad foreign oil from Venezuela. Can someone sit down with him and explain, using small words and charts, the meaning of the words "global market" and "fungible commodity"?

9:48 Not to be outdone, Barack Obama claims that he, too, thinks we can get off that nasty Venezuelan oil in 8-10 years. All right, let's get down to brass tacks: which one of these two candidates has more pull with the Fairy King? Because that's where you get the really cool sustainable technology. You never see fairies using fossil fuels, do you? No you don't.

10:12 A friend who has a young special needs child emails: "I like that McCain and Obama are using the VP question to talk about who will be better for families with autistic children and other special needs, but only McCain could take a great point about Palin's willingness to raise a special-needs kid and make a hash of it: he just said that Palin "understands (special needs families) better than almost every American I know." Let's be blunt here: she has NO [expletive deleted] IDEA what it is like to raise a special-needs kid -not because of any personal failing, but because her kid is only six months old and she hasn't had to deal with most of the issues that come up with raising a Down's kid yet. And yes, we have NO [censored] IDEA either, because we haven't experienced so much of what is undoubtedly in store for us over the next several years and decades. I am sure that if you check in with us then, we will look back at us now and say that we had no idea what we were doing."

10:13 Okay, I wasn't voting for him anyway, but I find McCain's focus on attacking Obama, rather than his own policy, unbelievably grating. His strongest performance of the night has been talking about the benefits of his own health plan, drawing a reasonable distinction between his philosophy and Obama's, and coherently explaining that difference, without resorting to either whining or calumny.

10:16 I don't know why it's so hard for these two candidates to admit that each election is, in part, a war over Roe and who gets to cram the court with justices who support their position. The kabuki ritual in which both claim there is no litmus test, while attempting to clearly indicate that they will not nominate any justice who disagrees with them, is both ridiculous and tiresome. I believe we may have actual issues that could be discussed during this useless time.

Oh, and similar to something I read after the first debate, Kevin Drum comments:

Conventional pundit wisdom seems to accept that a vigorous attack shows strength. But that's not true. Think of all the genuinely strong people you've known in your life. What sets them apart is that they stay calm when other people are attacking. McCain doesn't seem to get this, and neither do the conservatives who were insisting that McCain needed to haul out the heavy artillery tonight. Obama does.