Obama vs. Obama’s Economic Advisors on Healthcare

To make things interesting, I’ll lead off with the typical monkey dung slinging. From CNN:

In a Saturday morning radio address, Sen. John McCain said his administration would give every family a $5,000 tax credit to buy their own health insurance or keep their current plan. “And we will open up the national health care market to expand choices and improve quality,” he said.

Obama, speaking at a rally in Newport News, Virginia, said it’s not that McCain “doesn’t care” about what people are going through, “I just think he doesn’t know.”

“That’s the only reason I can think of that he’d propose a health care plan that is so radical, so out of touch with what you’re facing and so out of line with our basic values.”

Interestingly enough Jason Furman, Deputy Director of the National Economic Council for Barack Obama, wrote this in early 2008 (PDF):

The most promising way to move forward in all three dimensions – coverage, cost, and long-run fiscal situation – is to replace the employer exclusion with a tax credit, a step that has
been proposed many times before (e.g., Butler 1991 and Pauly and Hoff 2002).

Furman was an economic advisor for John Kerry and Al Gore as well. So the fact that Furman’s plan, which is identical to John McCain’s, is labeled as “radical” is a bit ironic. The Butler 1991 paper that Furman referenced as supporting the tax credit plan was published in the Journal of the
American Medical Association. The Pauly and Hoff paper was published by American Enterprise Institute. Also, the Nobel Laureate Milton Friedman supported a similar plan in his book “Freedom To Choose”. A book that is well worth reading. In other words, there are major players in every end of the political spectrum that support this plan.
The only question I have is why would Obama turn his back on his own advisors? Was it political incentives like those that pushed Nixon to turn his back on his advisors and enact damaging price controls? Or was it true-believer ideology?

As a side note, I’d love to see Nate Silver’s reaction to this.
Hat Tip: Harvard’s Gregory Mankiw

CNN, Obama blasts McCain’s health care plan as ‘out of touch’, October 04, 2008
Butler, Stuart M. 1991. “A tax reform strategy to deal with the uninsured.” Journal of the
American Medical Association 265 (19).
Pauly, Mark and John Hoff. 2002. Responsible Tax Credits for Health Insurance. Washington,
D.C.: AEI Press.

Reforming the Tax Treatment of Health Care: Right Ways and Wrong Ways
Jason Furman, Senior Fellow and Director of The Hamilton Project
The Brookings Institution, February 24, 2008


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