Considering Hillary’s Recent Proposals

Glenn Reynolds has pointed out that Hillary’s American Retirement Accounts plan owes a lot to the thinking of Gene Sperling, one of her husband’s former advisors. Sperling offers a sort of economic middle path:

The progressive response to supply-side economics cannot simply be its mirror-image: policies so exclusively directed at redistribution and combating insecurity that they ignore private-sector growth, upward mobility, innovation, savings, and entrepreneurship. We shouldn’t replace a focus on growth regardless of equity with a focus on equity regardless of growth. The answer lies neither in following the 1990s Clinton playbook word-for-word nor in an overreaching populist reaction focused only on how to divide the 2007 economic pie. The rise in insecurity and wage pressure certainly demands a stronger public commitment to the social compact, as well as greater scrutiny of trade deals than what existed in the 1990s. Yet we must also be cautious of policies that unduly and unnecessarily deny our nation the pro-growth and pro-equity benefits that can flow from fully engaging in the global economy with a stronger social compact. Link.

Later on, he suggests:

Two ideas which promote wealth creation are a universal 401(k) and a flat 30 percent tax incentive for savings. The universal 401(k) would be offered to every working family and include matching tax credits and even greater incentives for the working poor. A refundable 30 percent flat credit would mean that both the highest-paid executive and the lowest-income workers at a firm would get 30 percent savings incentives. If such a plan were funded by freezing the estate tax at a $7 million-per-couple exemption (denying a further estate tax cut to only wealthiest three-tenths of one percent of estates), progressives could spread wealth-creation opportunities by offering effective savings incentives to over 50 million households. Lnk.

Healthcare--a Heritage Foundation official sometimes thinks the Republicans deserve to lose:

Republicans need a clear, more appealing alternative to the plan they opposed. "You can't beat something with nothing," Heritage officials argued in the closed-door congressional meeting. Heritage proposes a straight reauthorization of SCHIP, along with a child health-care tax credit for similarly needy middle-income families.

"Conservative lawmakers should rally around an alternative that enables the working poor to own their own coverage and not depend on the inferior coverage that comes with programs such as SCHIP," Mr. Franc said in a strategy critique circulated on Capitol Hill.

But Republicans apparently had not thought through the health-care fight they triggered in such strategically political terms. The Democrats did, and they appear to have the high ground in the debate, while Republicans are made to look anti-children.

"Democrats are going to pound Republicans on this in the campaign," a disgusted Heritage official told me. "Sometimes, I think [Republicans] deserve to lose." Successful legislative battles are the result of good policymaking and sophisticated political calculation. In the fight over SCHIP, the Republicans have neither. Link.

The Heritage Foundation’s alternative would have created a win-win situation by covering millions of additional uninsured children while also providing financial incentives for parents whose children are already insured to retain their existing private coverage:

Reauthorize SCHIP for eligible children. Congress should approve a straight reauthorization of the SCHIP program for uninsured children in families with incomes at or below 200 percent of the FPL. The legislation should include provisions to increase outreach to enroll eligible children who do not have private health insurance coverage. Congress should allow for reasonable accommodation for those states that have previously obtained waivers from the Administration to increase the income eligibility.

Enact a child health care tax credit. For families with incomes between 200 percent and 300 percent of the FPL (the core population targeted by supporters of the SCHIP expansion), Congress should provide assistance to help them purchase private health insurance or retain the private coverage they currently have. Congress should permit these families to claim a $1,200 tax credit that could be used to enroll their children in dependent coverage through an employer or the individual market. This credit would take two forms: a non-refundable tax credit for taxpaying families, and a refundable tax credit (in effect, a voucher) for families that do not pay enough in taxes to secure a credit. The credits would be paid for in two budget-neutral ways. Link.

I think the baby bond proposal is a good starting point for discussion, but I fear that it would cause an increase in college tuition costs that would largely swallow up the money. From the LA Times:

The notion of a baby bond is grounded, according to supporters, in the concept of the American ownership society, which was a tenet of President Bush's 2004 campaign (when the practical application was privatizing Social Security).

"The intellectual history of this idea is property ownership -- the Homestead Act, the GI Bill -- conscious efforts to spread property ownership through the population," said Ray Boshara, director of the Asset Building Program at the nonpartisan New America Foundation, which helped craft the ASPIRE legislation and advised British officials on their program. "That has broad bipartisan support."

The idea, he said, is to put children on a path toward lifetime savings and wealth accumulation, a notion that appeals to conservatives and liberals. Link.