Obama and Clinton: Economic Policy Differences

The economic policy difference between Senators Obama and Clinton is explained nicely in a New York Times article by David Leonhardt.

Short summary: both believe in a big role for government, but Clinton tends to favor well-crafted, specific programs.  Obama, in contrast, prefers broader, simpler programs that don’t rely on people to learn the specifics of the programs.

Any government program will have unintended consequences.  One of them is that if you set up a program for people who meet a specific profile, and estimate that exactly 1.34 million people fit that profile, you will find that another 2 or 3 million people adjust their own profile to fit the program.  Now your costs are 2x or 3x what you had budgeted. 

The solution (for those who insist on this government program) is to write more details, limitations, exclusions and sliding scales.  One result, however, will be people you really wanted to help who don’t fit.  So what do you do?  You’ve got it.  Set up another program. 

For instance, how many different government programs does the government have to help parents pay for their children’s college educations?  There are Coverdell plans, special savings bonds, 529 plans, special exceptions for IRAs and Roth IRAs, Hope Scholarship Credit, Lifetime Learning Credit, and I don’t know what I’ve missed.

So which approach is better?  Obama’s approach will lead to large-scale misapplication of funds.  Clinton’s will result in a bewildering array of confusing programs.  Take your pick.