Since public consciousness is important for the effectiveness of a democracy, it is important to know the policies of the candidates before voting. Not only a superficial knowledge, but also a critical evaluation of the policies is essential. These evaluations should be made with regard to the outcomes on various fields such as sociology, economics and psychology. A macroeconomic analysis is fundamental to understand how these policies would affect the nation’s wellbeing as a whole. Every policy has different impacts on the macroeconomic level, even if it is not an economic policy. The leading Democrat candidate, Hillary Clinton, has diverging policies from what Bush government applies now. In order to have a stronger middle class, she proposes more accessible colleges and an increase in the minimum wage, in addition to a mandatory healthcare program for everyone. All these policies will bring about significant changes on the economy, if she becomes the first female president of the United States.
The Democrat presidential candidate thinks that America’s middle class is insecure. “People are working harder and longer for less and less”[1]: she thinks that as elite increases its income, the middle class receives a lower real income. In fact, statistics support this idea; the middle quintile earned 17% while the highest quintile earned 44% of income in 1990. However, in 2004, the middle quintile earned 15% while the highest quintile earned 48% of the income[2]. She offers a more affordable college education system as a solution. Thus, more people will be able to reach higher income jobs, which will not be an inherited privilege. In the long run, this policy will lessen the imbalance in the income distribution and additionally lower the unemployment rate. It may even enlarge the labor force by making more people able and willing to work. With a better and larger legal labor force, the GDP will also increase because of an outward shift of aggregate supply curve. The downside is that more government grants will worsen the federal budget deficit, while Mrs. Clinton aims at a balanced budget. Nevertheless, the benefits of a more common college education outweigh the costs associated with it.
Another policy given under the title of strengthening the middle class is an increase in the minimum wage, which is 5.85$ per hour at the moment. Essentially, this policy is not related to the middle class, but to the lower class. The policy, by causing the wages to less able to respond to the market shifts, can exacerbate the unemployment rate, which fell from 6.3 to 4.7 since 2003 June.[3] Pushing the labor costs higher and preventing some unqualified labor from participating in the economy, the higher minimum wage can result in a fall of the GDP. Hillary Clinton has good intentions about the middle class, but increasing the minimum wage would not help this aim, even can harm the lower class too.
Closely related to the middle class problem, the healthcare reform is one of the policies of Mrs. Clinton. If she becomes the president, all Americans will be required to have coverage, while her competitor, Obama, asks for a voluntary and affordable plan. A mandatory healthcare coverage will really pull the costs of the healthcare coverage down, because as more healthy people get the coverage, it is less costly for insurance companies to sell healthcare insurances. Thus, Hillary’s plan seems more secure than that of Obama. Also, this healthcare plan would bring about a change in the composition of the GDP due to the government sponsored more affordable insurance programs. As government’s share of the aggregate expenditure rises, private sector’s share will fall. The cost of the Hillary plan is estimated to be 110 billion dollars per year.[4] Consequently, the budget deficit will grow if there is no increase in taxes. The income distribution will be evened because of the alleviated health costs of the lower and the lower middle class. This redistribution can be supported further by eliminating the Bush tax cuts for the affluent. Although there is no assertion on the campaign website, many sources claim that Hillary would increase the taxes on the affluent to balance the federal budget. Besides redistributing the income and enlarging the government’s role, a mandatory healthcare plan can cause many social goods. Nonetheless, the costs both to the federal budget and to the private sector should not be underestimated.
Having analyzed policies on college education, minimum wage and healthcare plan, the voter can ascertain that Hillary’s policies have beneficial aspects and some harmful costs. Making it easier for common people to receive a college education is a good example of the well planned policies of Hillary. However, increasing the minimum wages seems irrelevant to the main point of a stronger middle class and can be too costly. Unlike these two easily evaluated policies, her healthcare plan is open to debate, with its macroeconomic advantages and disadvantages. Furthermore, its social goals should also be considered. Just like other candidates, Mrs. Clinton should be weighed with regard to economic plusses and minuses of her policies. Nevertheless, these pluses and minuses are not absolutes, and changes relative to the expectations of the voters from the economy.
Bibliography:
“Issues”. Hillary Clinton Campaign Web Site. www.hillaryclinton.com
Toner, Robin. “A New Populism Spurs the Democrats on the Economy”. The New York Times. July 16, 2007.
Healy, Patrick and Zeleny, Jeff. “In Iowa, Democrats Focus on Economy and Experience”. The New York Times. November 20, 2007.
Cooper, Michael. “It was Clinton vs. Obama on Health Care”. The New York Times. November 16, 2007.
Economagic: Economic Time Series Page. http://www.economagic.com/
[1] Issues – Strengthening the Middle Class, www.hillaryclinton.com
[2] Income Distribution in the U.S., 1947-2004 (handout)
[3] Unemployment Rate, Civilian Labor Force. http://www.economagic.com/
[4] Cooper, Michael, “It was Clinton vs. Obama on Health Care”. The New York Times. November 16, 2007
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