In the Arena

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On the need for Barack Obama to renew his domestic policy focus. This column could easily have been longer, and I know there will be some disagreement over the positions I favor. Here are a few notes and further explanations:

1. On the carbon tax and the inadequacy of cap-and-trade, here’s a terrific paper by Elaine Kamarck putting those choices in perspective. The most important point here is that policies like this, which are difficult for most people to understand (and which, in this case, according to the polls, is far down the list of voters’ priorities), have to be kept as simple as possible. And they have to work. A carbon tax swap–the revenues used to lower payroll taxes–not only would send important price signals about the use of fossil fuels, it would benefit workers at the lower end of the economic spectrum, especially those, as Jesse Jackson used to say, who “take the early bus” to work. I think that if Barack Obama spends this year focusing on the economy and health care, he could focus–and convince the public–on the need for this sort of tax swap next year. As written, the Waxman-Markey bill will achieve very little in term of carbon reduction, could create a huge new bureaucracy to monitor emissions and will give polluters an excuse to raise rates unduly (although the various carrots included for alternative energy research and deployment are obviously worth enacting). According to several Administration sources, it’s dead in the water for this year, in any case. 

2. On health care, readers may be wondering why I haven’t had much, if anything, to say about the “public” option. That’s because I think it’s a worthy experiment, but ultimately a sideshow. The most important jobs here are to get as close to universal coverage as possible and to start changing the incentive structure of the medical system, to move doctors toward best practices and away from unnecessary tests and procedures. It seems inevitable that the public option will be a bargaining chip, used by Obama at the last minute to close the deal. And that deal will represent historic progress…and the beginning of a process. Once everyone is guaranteed coverage–once the insurers are forced to cover everyone at community rates–we can move on from there, make adjustments, experiment with a public option and other changes to the system. But it’s important to take the first step, no matter how imperfect–that’s the lesson Ted Kennedy, Bill and Hillary Clinton learned after holding out for too much in the past.

3. The Obama stimulus plan is a topic for another column. It was never going to be a quick fix, although it’s important to note that an awful lot of state and local employees–cops, firemen, teachers–would have been laid off without it. Given that it’s going to be a long, slow climb out of the doldrums, the states are probably going to need a similar relief package next year.