Paul, Hillary, and Bernie (and Unicorns!)

So once again, Paul Krugman is battering Hillary Clinton’s opposition. It really feels like 2008 all over again. Apparently Bernie Sanders believes in magical unicorns and will be even less effective in office than Hillary would be, never mind that if both face a Republican Congress than neither one is going to get anything done. My own opinion is that a recession is likely at the beginning of the next President’s term and that may end up dooming whoever is in the Oval Office to one term.

But I’d like to talk about what I think is going on in the Democratic primaries right now and why I’m not totally satisfied with either candidate. Clinton, like her husband before her, clearly represents what has become the middle of the road politically. That means while she supports a social safety net, she also doesn’t seem overly convinced that inequality is a problem, doesn’t see finance as a big problem, and does not believe that much can be done in the way of single payer health plan.

Bernie, on the other hand, is totally on board with most progressive policies, but may be more of a liability in the general election, is older than anyone else we have ever elected, and may be presenting economic analyses that don’t make sense (more on that in a bit). There is also the real question of which candidate could accomplish more in four or eight years with a likely Republican House and potential Republican Senate. Sanders has spent more time in the Senate than Clinton, but she may be more willing to compromise.

The big problem with Clinton, in my mind, is that she appears untrustworthy when it comes to finance, one of the key drivers of both inequality and instability in the economy. Giving speeches for (almost) three times my annual salary, becoming a wealthy person from a key industry that needs more rather than less regulation, is very worrisome. Sanders appears to be much more likely to take a firm stand against financial and other corporate interests. What he could do from the executive branch would be somewhat limited, but the DoJ and FTC could certainly use existing laws to help increase competition and reduce rents.

And then there is healthcare. While I agree with Sanders that a single payer plan is preferable and likely to be significantly cheaper in the long run, I also agree with Krugman that a single payer plan is unlikely to be in our near term future. But one of the questions that has arisen is about the cost of health care and the potential savings of moving to a single payer plan. Bernie’s campaign has made one set of claims while many health policy wonks have made another.

It is worth while in this discussion to ask why we in the United States pay so much for health care. Are we paying more per unit? Buying more units? Or flushing it down the drain? It seems like the answer is some combination of the three. Certainly the administrative and marketing costs of health insurance companies basically result in flushing a certain portion of every health care dollar down the drain. So moving to a single payer plan would save a lot of that expense. We seem to buy a bit more units of health care than in other advanced economies, especially at the end of life, but get very little for it. A single payer plan would likely limit that spending (at least what would be covered by the public plan) and so there would be some savings there.

But the biggest problem appears to be that we spend more per unit. The two big pieces of which are that we pay more for prescription drugs and we pay our doctors more. The question is then whether a single payer plan would help reduce these costs to a level similar to those seen in other developed countries with universal coverage. And the answer, I’m afraid, is that I don’t know. As Paul Krugman says in his textbook and as I tell my students to chant to themselves every night as they are falling asleep, “One Person’s Spending Is Another Person’s Income.” What that means is that if we want to spend less on health care, like other countries do, then some people are going to earn less. Health insurance companies will be out of business. Pharmaceutical companies will see profits fall. And doctors will see their paychecks shrink significantly. Do we have the political will to do that? I don’t know.

So who is the best candidate to lead us to the Progressive Promised Land? It’s hard not to feel like it’s Elizabeth Warren. But she’s not running. I think it’s likely that Bernie and Hillary get the same amount accomplished on the progressive agenda over the next four years: not much.


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