TCS Daily


The Problem: Liberals, Conservatives, and Independents

By Ramesh Ponnuru - January 7, 2004 12:00 AM

The subtitle of Matthew Miller's book The Two Percent Solution promises that it will "fix America's problems in ways liberals and conservatives can love." Love is a strong word. "Accept under certain conditions" would be more accurate. The idea is to provide high wages, health insurance, campaign-finance reform, and a decent education for all for an additional investment of two percent of GDP.

Right away, we have been taken away from neutral territory. The purpose of government has been assumed to be the solving of problems. And not just any problems, but the ones that most concern liberals. There are no chapters on how to "solve" problems of family instability or cultural balkanization. Conservatives are supposed to be happy about Miller's solutions because it would leave federal spending, as a percentage of GDP, at the same level it was at the end of the Reagan administration. He says that percentage is "the best measure of the 'size' of government." I have never quite understood why federal spending had to rise in tandem with economic growth -- one might think that a richer country would need less social spending -- but let that pass. What Miller is suggesting is that conservatives should be ecstatic that a share of the economy that used to go to defense will now go to social spending.

The goal of Miller's exercise is not merely to come up with deals that liberals and conservatives could support -- a daunting task in itself -- but to come up with sound policies that incorporate those liberal and conservative insights that are actually true. He wants to be able to think about policy as though political constraints did not exist. For the purpose of policy advocacy, it can be imagined that liberals and conservatives will come to accept his thoughtful compromises rather than stick rigidly with their ideological positions. Yet Miller assumes the continuation of other political constraints. He assumes that only a fraction of corporate welfare can be cut out of the federal budget, for example, thus necessitating more tax increases to fund his program. Why not cut it all? He offers no principle to distinguish among the constraints that we can, and cannot, drop for the purpose of devising policy alternatives.

Conservatives should compromise because they come to understand that they are wrong to believe that people deserve their good fortunes. If they acknowledged the role that luck plays in human life, they would support redistribution. But it does not seem to me that the central conservative argument against redistribution has been that people with money are more deserving than people without it. Two other arguments have been far more prominent. First is the Hayekian argument: the market does not "distribute" income in the first place, and a just "distribution" of wealth is that which results from fair rules. The second is the practical objection that the governmental redistribution of wealth has negative effects.

Modest Proposals

All of the above said, Miller's specific proposals are interesting. His suggestion for a wage subsidy for employers makes a lot of sense, although I would prefer this to be a replacement for the minimum wage rather than a supplement to it (as he advocates).

Miller's best chapters concern education (although his brief passages on Social Security are terrific). He wants to spend a lot more federal dollars on it, in return for teacher-tenure reform and vouchers. He elicits some great quotes from the teachers' unions heads. Sandra Feldman of the American Federation of Teachers is reformist and impolitic: "We have been saying for years now that [teaching is] attracting from the bottom third. This is a hard thing for us to say because we represent all these people." Miller tells Bob Chase, then the president of the National Education Association, about his vouchers-in-a-few-cities-for-higher spending deal.

He asks: "Is there any circumstance under which that would be something that..."

"No."

"...you guys could live with. Why?"

"No."

"Double school spending..."

"No."

"...in inner cities?"

"No."

"Triple it..."

"No."

You get the picture. Miller's analysis of the politics of school choice is, unfortunately, too optimistic. He thinks that lavish subsidies will get the civil-rights groups to break ranks with the teachers' unions, and the unions will therefore get rolled. But he does not reckon with the hostility of suburban parents to school choice.

Universal Problem

The worst grand deal Miller offers is his proposal for universal health insurance coverage. In this area, he is not radical enough. He is not even, in a way, sufficiently hostile to the insurance industry. He would have the government stop bribing people to get their health insurance through their employers. But he does nothing to address the government's favoritism toward insurance, as against out-of-pocket expenses, in the first place. That favoritism results in the use of insurance to pre-pay routine and predictable medical expenses. If "universal coverage" means getting the entire population this form of insurance, it is not an appropriate goal for health policy. It would be good if everyone had catastrophic coverage, but we have an over-insurance problem as well as (and linked to) an under-insurance one.

Miller wants to continue using insurance to socialize costs rather than just pool risks. It's a bad deal, especially for young and healthy people. He wants "community rating": Insurers would not be able to charge people differently based on age. How many 23-year-olds would jump at the chance to buy health insurance with their grandparents, splitting the premiums 50-50? Miller says that the benefits have to be made generous to the young. But no amount of generosity will make this deal good for young people, because the whole point of the exercise is to suck money out of them. So Miller has to mandate universal participation. It's a grossly unfair solution.

Why Miller thinks that the rising proportion of GDP devoted to health care is a problem is a mystery to me. In a more economically rational system, we could get more health care for the dollar. But over time the share of the economy devoted to health care might well go up. As people get richer and live longer, it makes sense that they will spend more on health.

Miller wants to reconceive the role of journalism, too. He would have the Washington Post run a regular feature on the bottom of its front page called "Still True Today." One day's entry would remind people that "44 million Americans still lack health insurance." Miller denies that this idea would bring us back to the days of openly partisan papers. It seems to me that the hope that it would bring those days back is the only thing this idea has to commend it.

Miller has commissioned some polling to establish that people would be willing to pay higher taxes to get universal coverage, a living wage for all, etc. I simply don't believe any of these polls. Saying you are willing to pay higher taxes is not the same thing as being willing to pay higher taxes.

The Enemy Is Us

What are the prospects for Miller's ideas' taking off? In his view, there are two obstacles to the realization of his goals. The first is the power of interest groups under the current campaign-finance set-up. The NRA blocks "sensible gun reforms," the teachers' unions block vouchers, public-sector unions tried to keep the president from having hiring flexibility in the Department of Homeland Security. Miller's complaint here is silly. More than two million teachers are going to have political influence as long as they're organized, whether or not they're funding candidates. Public-sector employees will always be an important constituency for the party of government. And if the NRA did not exist, it would still be true that millions of voters would passionately oppose gun control and that rural voters would see it as an attack on their way of life.

The second obstacle itself has two components. First, the parties have inflexible, ideological bases that do not want compromise. Second, the pursuit of undecided voters encourages timidity. In other words, Miller has said that the problem is liberals, conservatives, and independents -- pretty much the whole electorate. That is an obstacle.

The author is senior editor at National Review.


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