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11/12/15

One debate, two perspectives

In contrast to the previous two Republican presidential debates, which were criticized for quirky and “gotcha” questions, the one held in Milwaukee on Tuesday night by Fox Business Network got right into meaty issues with a question on the minimum wage. Bloomberg View’s Ramesh Ponnuru and Paula Dwyer give their blow by blow of some of the issues discussed.

Dwyer: Donald Trump says he’s not sympathetic with people who want a $15 minimum wage. I wonder if that’s going to cost him support among working-class voters.

Ponnuru: Wasn’t much of his case for immigration restriction that it would raise wages? Now he says wages are too high.

Dwyer: Ben Carson says only about 20 percent of black teenagers have a job because of high wages. I’m not sure that’s the reason. I think it’s more because there are just not enough jobs available where they live.

Ponnuru: Marco Rubio is doing a nice job of sketching an alternative way of thinking about expanding opportunity, so that his hostility to raising the minimum wage does not come across as lack of sympathy for people working in low-wage jobs.

Dwyer: Jeb Bush says his economic plan would create “an explosion in investment” in part by cutting Obama’s regulations, including those for controlling carbon emissions and the Dodd-Frank financial reforms. I’m not convinced that Obama rules are strangling economic growth, judging by how profitable many companies have been the last several years.

Ponnuru: The funny thing about the prevailing line on the Fed from my fellow conservatives is that they overestimate its power. They think that low interest rates are entirely a function of Fed policy, and not larger economic conditions. It’s an assumption they rarely defend.

Dwyer: Trump applauds this week’s court decision blocking Obama’s executive order on immigration. He isn’t backing down on the wall, or on sending illegal immigrants out.

Ponnuru: Right, but he has talked out of both sides of his mouth on legal immigration — and has sometimes suggested that he would let a lot of deported illegal immigrants back in.

Dwyer: Bush says it isn’t possible to send back 12 million immigrants, that it would go against American values and tear communities apart. And even having this conversation sends a powerful signal that cheers Democrats, he says. I think he’s absolutely right, but it further makes it hard for Jeb to win over primary voters.

Ponnuru: Anti-immigration activists already hate Bush, and he’s not going to win them over by failing to make his case forcefully. It feels like Ted Cruz is setting up a contrast with Rubio on immigration, and will finish the argument later.

Dwyer: Carly Fiorina mentions state-managed high-risk pools as an Obamacare alternative. But that has been thoroughly debunked. Those pools didn’t work out in the states that tried them. Also, they require subsidies because people with pre-existing conditions face very high premiums in these pools. They are hardly an Obamacare alternative.

Ponnuru: Fiorina has, however, also talked about continuous-coverage protections, which would work alongside high-risk pools. If she also proposed tax credits along the lines of the Hatch-Upton plan, I think you could make a pretty good case that high-risk pools would work better than they have in the past. But in general, Fiorina has avoided committing to much policy substance.

Dwyer: Continuous coverage seems just as unworkable. Most workers don’t understand that, once they are fired or resign from a job, if they don’t keep up their insurance premiums (on their own, without the employer contribution), they become uncovered and have to go into the individual market. And that’s where pre-existing conditions can be devastating financially.

Ponnuru: Both Cruz and Paul are touting tax plans that involve value-added taxes, but they’re not saying so. And Paul is talking about getting rid of payroll taxes without noting that his VAT takes back most of that tax cut for workers.

Dwyer: Rubio is forced to defend his call for a $2,500 child tax credit, which would increase the deficit. He says the family is the most important institution, and is proud of being pro-family. But as Paul points out, it’s a new form of transfer payment, and doesn’t qualify as conservative.

Ponnuru: Paul does not know what he’s talking about. He says that the child credit would be a transfer payment because it doesn’t just give people their tax money back — it gives them money beyond that. That’s not true.

Dwyer: Trump calls the Trans-Pacific Partnership a horrible idea, designed to let China come in through the back door. I expected nothing less from Trump, the Ross Perot of our day. Trump doesn’t understand the $50 billion trade deficit the U.S. has with Mexico. Relative to the increase in global trade, it’s peanuts. Trump also doesn’t seem to understand, as Paul just said, that China isn’t part of the TPP deal.

Ponnuru: Yes, that was a nice moment from Paul.

Dwyer: Trump accuses other countries of manipulating their currencies to get an advantage. That may be so — and no doubt China does that, though less so now than before — but a trade agreement isn’t the place to deal with that. Imagine how handicapped the U.S. would be if a Fed interest-rate cut were judged by trading partners as prohibited currency manipulation?

Ponnuru: Right. The only way to avoid that would be to come up with a definition of manipulation that is highly unlikely to apply to us — but then, why would other countries agree?

Dwyer: Bush calls for higher capital requirements on big banks, which have control over more assets than they did pre-crisis. He’s right on that score. Carson sounds like a Democrat — Bernie Sanders even — when he says we should have policies that stop banks from getting big.

Ponnuru: I’m sure someone else will do a count, but it seems as though Bush is hitting Clinton a lot more than anyone else. The original theory of a Bush campaign was that he was going to be working harder than the rest of the Republican candidates to position himself for the general election. Tonight, at least, he is actually delivering on that promise a little.

Dwyer: Cruz says he’d let a faltering Bank of America fail. Moderator Neil Cavuto is incredulous. Now Cruz is blaming the Fed for tightening in 2008 and collapsing the real estate bubble. So he realizes he stepped into it by saying he’d let a big bank fail, with all the chaos and cascading defaults that would trigger. So he tries to recover by calling for “sound money” and a weaker central bank.

Ponnuru: Conservatives have generally (rightly in my view) criticized the Fed for being too loose from 2003-06, but almost nobody in politics, left or right, criticizes the Fed for being disastrously tight in 2008, which it was. So I was glad to see Cruz make that point.

Dwyer: Kasich says turning the Fed over to Congress scares the heck out of him. Cruz challenges Kasich for saying he’d save Bank of America but not a community bank. Kasich should (but doesn’t) say that’s exactly right — a community bank presents no systemic issues, while BofA does.

Ponnuru: I thought it was a good, relatively substantive debate. If Bush’s backers needed him to have a spectacular performance to reassure them, he failed the test. If they needed steady improvement, he passed it. Rubio and Fiorina had solid performances again. I cannot see Republicans liking what they heard from Rand Paul and John Kasich. I continue to think that Trump is getting more boring as he becomes a regular candidate. And Ben Carson’s appeal doesn’t seem to have a lot to do with his debate performances, which is lucky for him.

Dwyer: I think Rubio really outshone the others. Cruz and Carson were just OK. Bush didn’t stumble but he didn’t sparkle either. Fiorina sounded like a broken record on government-as-socialism and a three-page tax code. Kasich and Paul had their moments, but they weren’t consistent.  And Trump, as usual, faded when the debate turned to actual substance. But at least the moderators didn’t lose control of the discussion this time.



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