Ms. Clin­ton, why hurt U.S. work­ers?

The Washington Post Sunday - - SUNDAY OPINION - RUTH MAR­CUS ruth­mar­cus@wash­post.com

The mis­chievous colum­nist in me wants to ask: Why is Hil­lary Clin­ton try­ing to lose jobs and lower wages?

My more re­spon­si­ble colum­nist side quickly adds: Of course that’s not Clin­ton’s goal. Yet it is the pre­dictable — in­deed, it’s the pre­dicted — out­come of two im­por­tant re­cent pol­icy pro­nounce­ments. First, her call to re­peal the so­called Cadil­lac tax on high-cost health plans. Sec­ond, her new­found op­po­si­tion to the Trans-Pa­cific Part­ner­ship trade agree­ment.

This is not my eco­nomic anal­y­sis. It’s the as­sess­ment of the Obama ad­min­is­tra­tion.

Let’s start with the Cadil­lac tax on health-care plans that cost more than $10,200 for a sin­gle per­son and $27,500 for fam­i­lies. Be­gin­ning in 2018, em­ploy­ers who of­fer such in­sur­ance will have to pay a 40 per­cent tax on the ex­cess amount.

The the­ory is that the tax will help re­duce health-care costs by dis­cour­ag­ing em­ploy­ers from pro­vid­ing overly gen­er­ous cov­er­age. A sec­ond ben­e­fit in­volves the bot­tom line; the tax will re­duce deficits by an es­ti­mated $91 bil­lion over the next decade and more than $500 bil­lion in the 10 years af­ter that.

But that’s not be­cause the tax alone will gen­er­ate so much rev­enue. It’s mostly be­cause of the third, and, for pur­poses of this col­umn, most rel­e­vant ben­e­fit: The Cadil­lac tax will raise wages.

How’s that? Asmy Post col­league Cather­ine Ram­pell has ex­plained, health ben­e­fits pro­vided by your em­ployer, un­like your wages, aren’t sub­ject to tax­a­tion. That has the per­verse ef­fect of en­cour­ag­ing em­ploy­ers to pay you more in the form of tax-free health in­sur­ance, less in the form of your ac­tual, taxed salary. The Cadil­lac tax would re­duce that in­cen­tive, and, eco­nomic the­ory pre­dicts, raise wages over time as com­pen­sa­tion pack­ages shift.

Raise wages sig­nif­i­cantly, in fact. Jason Fur­man, chair­man of the Coun­cil of Eco­nomic Ad­vis­ers, made this point in a speech at the Brook­ings In­sti­tu­tion last week, es­ti­mat­ing that the tax “will in­crease take-home pay by $45 bil­lion per year by 2025.”

That amount, Fur­man noted, is twice how much the Con­gres­sional Bud­get Of­fice es­ti­mates low- and mid­dle-in­come work­ers would ben­e­fit from in­creas­ing the min­i­mum wage to $10.10 per hour.

Trans­lat­ing eco­nomic the­ory into cold hard cash can take time, Fur­man ac­knowl­edged. In the mean­time, he ob­served, low­er­ing health in­sur­ance bills “would ben­e­fit work­ers through another chan­nel: by re­duc­ing em­ploy­ers’ com­pen­sa­tion costs and thereby boost­ing hir­ing.”

Which reawak­ens my mis­chievous side: Sec­re­tary Clin­ton, why do you want to lose jobs and lower wages?

Same ques­tion on trade. Clin­ton says that her con­cerns about the TPP in­volve its fail­ure to crack down on cur­rency ma­nip­u­la­tion and the agree­ment’s al­leged ca­pit­u­la­tion to phar­ma­ceu­ti­cal in­ter­ests.

This is bunk. If any­thing, the deal is stronger on both phar­ma­ceu­ti­cals and cur­rency than it was when Clin­ton, as sec­re­tary of state, pro­claimed it the “gold stan­dard” of trade deals and pre­dicted it would “help cre­ate new jobs and op­por­tu­ni­ties here at home.”

Then, ad­min­is­tra­tion ne­go­tia­tors were press­ing for 12 years of in­tel­lec­tual prop­erty pro­tec­tion for so-called biologic drugs, the stan­dard in the United States, and, in­deed, the stan­dard in a 2007 Se­nate bill cospon­sored by . . . Sen. Clin­ton.

The fi­nal deal grants mo­nop­oly rights for be­tween five and eight years — less gen­er­ous to phar­ma­ceu­ti­cal com­pa­nies.

As to cur­rency ma­nip­u­la­tion, in­clud­ing en­force­able sanc­tions for cur­rency in the TPP, it is a poi­son pill as Clin­ton well knows— and knew when she was talk­ing about how the deal would cre­ate Amer­i­can jobs — was never go­ing to be part of the fi­nal agree­ment. The new agree­ment, though, in­cludes a side deal lack­ing in teeth but that at least re­quires mem­ber coun­tries to re­port on and dis­cuss cur­rency prac­tices.

“I wish more had been done,” said C. Fred Berg­sten of the Peter­son In­sti­tute for In­ter­na­tional Eco­nom­ics, a lead­ing hawk on cur­rency ma­nip­u­la­tion. “But it is churl­ish, or worse, to im­ply that the is­sue has been left unat­tended.”

Still, let’s as­sume both crit­i­cisms are valid. Are they se­ri­ous enough to jus­tify op­po­si­tion? As Fur­man noted in a dif­fer­ent Brook­ings ad­dress, the most com­pre­hen­sive eco­nomic anal­y­sis of the TPP found that it would in­crease U.S. in­comes by 0.4 per­cent yearly by 2025, or $77 bil­lion.

Clin­ton wrote in her memoir, “Hard Choices,” that “it’s safe to say the TPP won’t be per­fect — no deal ne­go­ti­ated among a dozen coun­tries ever will be — but its higher stan­dards, if im­ple­mented and en­forced, should ben­e­fit Amer­i­can busi­nesses and work­ers.”

What has changed since then? You don’t have to be a mis­chievous colum­nist to sug­gest an an­swer.

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