The Audacity of Hope (23 page)

Government policies can help these workers, with little impact on market efficiency. For starters, we can raise the minimum wage. It may be true—as some economists argue—that any big jumps in the minimum wage discourage employers from hiring more workers. But when the minimum wage hasn’t been changed in nine years and has less purchasing power in real dollars than it did in 1955, so that someone working full- time today in a minimum-wage job doesn’t earn enough to rise out of poverty, such arguments carry less force. The Earned Income Tax Credit, a program championed by Ronald Reagan that provides low-wage workers with supplemental income through the

tax code, should also be expanded and streamlined so more families can take advantage of it.

To help all workers adapt to a rapidly changing economy, it’s also time to update the existing system of unemployment insurance and trade adjustment assistance. In fact, there are a slew of good ideas out there on how to create a more comprehensive system of adjustment assistance. We could extend such assistance to service industries, create flexible education accounts that workers could use to retrain, or provide retraining assistance for workers in sectors of the economy vulnerable to dislocation before they lose their jobs. And in an economy where the job you lose often paid more than the new job you gain, we could also try the concept of wage insurance, which provides 50 percent of the difference between a worker’s old wage and his new wage for anywhere from one to two years.

Finally, to help workers gain higher wages and better benefits, we need once again to level the playing field between organized labor and employers. Since the early 1980s, unions have been steadily losing ground, not just because of changes in the economy but also because today’s labor laws—and the make-up of the National Labor Relations Board—have provided workers with very little protection. Each year, more than twenty thousand workers are fired or lose wages simply for trying to organize and join unions. That needs to change. We should have tougher penalties to prevent employers from firing or discriminating against workers involved in organizing efforts. Employers should have to recognize a union if a majority of employees sign authorization cards choosing the union to represent them. And federal mediation should be available to help an employer and a new union reach agreement on a contract within a reasonable amount of time.

Business groups may argue that a more unionized workforce will rob the U.S. economy of flexibility and its competitive edge. But it’s precisely because of a more competitive global environment that we can expect unionized workers to want to cooperate with employers—so long as they are getting their fair share of higher productivity.

Just as government policies can boost workers’ wages without hurting the competitiveness of U.S. firms, so can we strengthen their ability to retire with dignity. We should start with a commitment to preserve Social Security’s essential character and shore up its solvency. The problems with the Social Security trust fund are real but manageable. In 1983, when facing a similar problem, Ronald Reagan and House Speaker Tip O’Neill got together and shaped a bipartisan plan that stabilized the system for the next sixty years. There’s no reason we can’t do the same today.

With respect to the private retirement system, we should acknowledge that defined- benefit pension plans have been declining, but insist that companies fulfill any outstanding promises to their workers and retirees. Bankruptcy laws should be amended to move pension beneficiaries to the front of the creditor line so that companies can’t just file for Chapter 11 to stiff workers. Moreover, new rules should force companies to properly fund their pension funds, in part so taxpayers don’t end up footing the bill.

And if Americans are going to depend on defined-contribution plans like 401(k)s to supplement Social Security, then the government should step in to make them more broadly available to all Americans and more effective in encouraging savings. Former

Clinton economic adviser Gene Sperling has suggested the creation of a universal 401(k), in which the government would match contributions made into a new retirement account by low-and moderate-income families. Other experts have suggested the simple (and cost-free) step of having employers automatically enroll their employees in their 401(k) plans at the maximum allowable level; people could still choose to contribute less than the maximum or not participate at all, but evidence shows that by changing the default rule, employee participation rates go up dramatically. As a complement to Social Security, we should take the best and most affordable of these ideas and begin moving toward a beefed-up, universally available pension system that not only promotes savings but gives all Americans a bigger stake in the fruits of globalization.

As vital as it may be to raise the wages of American workers and improve their retirement security, perhaps our most pressing task is to fix our broken health-care system. Unlike Social Security, the two main government-funded health-care programs—Medicare and Medicaid—really are broken; without any changes, by 2050 these two entitlements, along with Social Security, could grow to consume as large a share of our national economy as the entire federal budget does today. The addition of a hugely expensive prescription drug benefit that provides limited coverage and does nothing to control the cost of drugs has only made the problem worse. And the private system has evolved into a patchwork of inefficient bureaucracies, endless paperwork, overburdened providers, and dissatisfied patients.

In 1993, President Clinton took a stab at creating a system of universal coverage, but was stymied. Since then, the public debate has been deadlocked, with some on the right arguing for a strong dose of market discipline through Health Savings Accounts, others on the left arguing for a single-payer national health-care plan similar to those that exist in Europe and Canada, and experts across the political spectrum recommending a series of sensible but incremental reforms to the existing system.

It’s time we broke this impasse by acknowledging a few simple truths.

Given the amount of money we spend on health care (more per capita than any other nation), we should be able to provide basic coverage to every single American. But we can’t sustain current rates of health-care inflation every year; we have to contain costs for the entire system, including Medicare and Medicaid.

With Americans changing jobs more frequently, more likely to go through spells of unemployment, and more likely to work part-time or to be self-employed, health insurance can’t just run through employers anymore. It needs to be portable.

The market alone can’t solve our health-care woes—in part because the market has proven incapable of creating large enough insurance pools to keep costs to individuals affordable, in part because health care is not like other products or services (when your child gets sick, you don’t go shopping for the best bargain).

And finally, whatever reforms we implement should provide strong incentives for improved quality, prevention, and more efficient delivery of care.

With these principles in mind, let me offer just one example of what a serious health- care reform plan might look like. We could start by having a nonpartisan group like the

National Academy of Science’s Institute of Medicine (IOM) determine what a basic, high-quality health-care plan should look like and how much it should cost. In designing this model plan, the IOM would examine which existing health-care programs deliver the best care in the most cost-effective manner. In particular, the model plan would emphasize coverage of primary care, prevention, catastrophic care, and the management of chronic conditions like asthma and diabetes. Overall, 20 percent of all patients account for 80 percent of the care, and if we can prevent diseases from occurring or manage their effects through simple interventions like making sure patients control their diets or take their medicines regularly, we can dramatically improve patient outcomes and save the system a great deal of money.

Next, we would allow anyone to purchase this model health-care plan either through an existing insurance pool like the one set up for federal employees, or through a series of new pools set up in every state. Private insurers like Blue Cross Blue Shield and Aetna would compete to provide coverage to participants in these pools, but whatever plan they offered would have to meet the criteria for high quality and cost controls set forth by IOM.

To further drive down costs, we would require that insurers and providers who participate in Medicare, Medicaid, or the new health plans have electronic claims, electronic records, and up-to-date patient error reporting systems—all of which would dramatically cut down on administrative costs, and the number of medical errors and adverse events (which in turn would reduce costly medical malpractice lawsuits). This simple step alone could cut overall health-care costs by up to 10 percent, with some experts pointing to even greater savings.

With the money we save through increased preventive care and lower administrative and malpractice costs, we would provide a subsidy to low-income families who wanted to purchase the model plan through their state pool, and immediately mandate coverage for all uninsured children. If necessary, we could also help pay for these subsidies by restructuring the tax break that employers use to provide health care to their employees: They would continue to get a tax break for the plans typically offered to workers, but we could examine a tax break for fancy, gold-plated executive health-care plans that fail to provide any additional health benefits.

The point of this exercise is not to suggest that there’s an easy formula for fixing our health-care system—there isn’t. Many details would have to be addressed before we moved forward on a plan like the one outlined above; in particular, we would have to make sure that the creation of a new state pool does not cause employers to drop the health-care plans that they are already providing their employees. And, there may be other more cost-effective and elegant ways to improve the health-care system.

The point is that if we commit ourselves to making sure everybody has decent health care, there are ways to accomplish it without breaking the federal treasury or resorting to rationing.

If we want Americans to accept the rigors of globalization, then we will need to make that commitment. One night five years ago, Michelle and I were awakened by the sound of our younger daughter, Sasha, crying in her room. Sasha was only three months old at the time, so it wasn’t unusual for her to wake up in the middle of the night. But there

was something about the way she was crying, and her refusal to be comforted, that concerned us. Eventually we called our pediatrician, who agreed to meet us at his office at the crack of dawn. After examining her, he told us that she might have meningitis and sent us immediately to the emergency room.

It turned out that Sasha did have meningitis, although a form that responded to intravenous antibiotics. Had she not been diagnosed in time, she could have lost her hearing or possibly even died. As it was, Michelle and I spent three days with our baby in the hospital, watching nurses hold her down while a doctor performed a spinal tap, listening to her scream, praying she didn’t take a turn for the worse.

Sasha is fine now, as healthy and happy as a five-year-old should be. But I still shudder when I think of those three days; how my world narrowed to a single point, and how I was not interested in anything or anybody outside the four walls of that hospital room— not my work, not my schedule, not my future. And I am reminded that unlike Tim Wheeler, the steelworker I met in Galesburg whose son needed a liver transplant, unlike millions of Americans who’ve gone through a similar ordeal, I had a job and insurance at the time.

Americans are willing to compete with the world. We work harder than the people of any other wealthy nation. We are willing to tolerate more economic instability and are willing to take more personal risks to get ahead. But we can only compete if our government makes the investments that give us a fighting chance—and if we know that our families have some net beneath which they cannot fall.

That’s a bargain with the American people worth making.

INVESTMENTS TO MAKE America more competitive, and a new American social compact—if pursued in concert, these broad concepts point the way to a better future for our children and grandchildren. But there’s one last piece to the puzzle, a lingering question that presents itself in every single policy debate in Washington.

How do we pay for it?

At the end of Bill Clinton’s presidency, we had an answer. For the first time in almost thirty years, we enjoyed big budget surpluses and a rapidly declining national debt. In fact, Federal Reserve Chairman Alan Greenspan expressed concern that the debt might get paid down too fast, thereby limiting the Reserve System’s ability to manage monetary policy. Even after the dot-com bubble burst and the economy was forced to absorb the shock of 9/11, we had the chance to make a down payment on sustained economic growth and broader opportunity for all Americans.

But that’s not the path we chose. Instead, we were told by our President that we could fight two wars, increase our military budget by 74 percent, protect the homeland, spend more on education, initiate a new prescription drug plan for seniors, and initiate successive rounds of massive tax cuts, all at the same time. We were told by our congressional leaders that they could make up for lost revenue by cutting out