Obamanomics and The Matrix

This week's New York Times Magazine lead article is After the Great Recession, an interview with President Obama by David Leonhardt. It provides a great window into Obama's thinking on the ecomony and other issues, including health care. Here's an excerpt from the health care discussion:

LEONHARDT: And right now we’re footing the bill for a lot of things that don’t make people healthier.

THE PRESIDENT: That don’t make people healthier. So when Peter Orszag and I talk about the importance of using comparative-effectiveness studies as a way of reining in costs, that’s not an attempt to micromanage the doctor-patient relationship. It is an attempt to say to patients, you know what, we’ve looked at some objective studies out here, people who know about this stuff, concluding that the blue pill, which costs half as much as the red pill, is just as effective, and you might want to go ahead and get the blue one. And if a provider is pushing the red one on you, then you should at least ask some important questions.

LEONHARDT: Won’t that be hard, because of the trust that people put in their doctors, just as you said? Won’t people say, Wait a second, my doctor is telling me to take the red pill, and the government is saving money by saying take the blue —

This cracked me up, as Obama was evoking Morpheus, from The Matrix:

This is your last chance. After this, there is no turning back. You take the blue pill - the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill - you stay in Wonderland and I show you how deep the rabbit-hole goes.

This kind of red-pill / blue-pill symbolism can't be what Obama intended, and I'm sure I'm not the only person who will notice this. Ooops...

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A follow-up note: I pointed out this amusing little slip on the NYT's moderated article comment section; they declined to publish it. I guess levity has no place at the Times.

How could I NOT say something?

President Obama. Wow.

It's strange watching this unfold from Hyderabad. I watched a bit of TV this morning before going downstairs for breakfast. Seeing U.S. election results interleaved with Indian TV ads was a bit surreal.

One of my colleagues from California arrived Monday. She's originally from Minnesota (which went for Obama) and now lives in California (which is going for Obama). It's great to have at least one other American to share this with.

President Obama. I like it.

Economic Plans: What are the candidates really proposing?

This week's New York Times Sunday Magazine contains an excellent article on Barack Obama's economic philosophy and plans, by David Leonhardt. It refers to a study of the Obama and McCain tax proposals by the Tax Policy Center (TPC), a non-partisan joint venture of the Brookings Institution and the Urban Institute. The Times article is a great read, and I recommend it; the Tax Policy Center's study provides more detail (in particular, breakdowns of tax impact by quintiles, which I find far more useful than the usually-stated means).

Some interesting factoids:

The tax rates for individuals earning $5m/year (in current, inflation-adjusted dollars) have been:

• 1980: %60
• 1988 (end of the Reagan presidency): %35
• 1990s (Clinton era): %40
• current (GW Bush): %34

Both Obama and McCain would cut taxes for bottom 80% of population (those earning $118,000 or less). McCain's cuts would average $200/year for this group; Obama's would average $900. But the quintiles for Obama's plan are far more interesting than the single number:

Quintile	Top Income for Quintile	$ Change in Federal Tax Paid	Average Federal Tax Rate
20%	$19,740	-$617	-0.4%
40%	$38,980	-$950	8.0%
60%	$69,490	-$1,035	15.4%
80%	$117,535	-$757	18.9%
100%	Top	+$6,770	27.2%

The detail for the top 20% is interesting, too.

Percentile	Top Income for Quintile	$ Change in Federal Tax Paid	Average Federal Tax Rate
80-90	$169,480	-$442	21.7%
90-95	$237,040	+$448	23.3%
95-99	$619,561	+5,686	26.5%
Top 1 Percent	$2,832,449	+114,238	34.1%
Top 0.1 Percent	Top	+650,938	37.5%

Obama's plan is clearly targeted at cutting taxes for middle-income Americans, while fairly dramatically raising taxes on the very wealthiest Americans (but not back to even the top rates of the Clinton administration).

McCain's plan cuts taxes for everyone, including the wealthiest. Not surprisingly, this is reflected in projected increases in the national debt, as described in the TPC's summary:

Compared to current law, TPC estimates the Obama plan would cut taxes by $2.9 trillion from 2009-2018. McCain would reduce taxes by nearly $4.2 trillion. These projections assume the 2001 and 2003 tax cuts expire in 2010 and that the Alternative Minimum Tax is fully effective.

So who's the fiscal conservative here?