Why we need a basic income for kids

Note: A version of this post has been cross-posted at Quartz.

A universal basic income is all the rage in policy circles across the globe.  And increasingly, UBI advocates are realizing that the best place to start is by providing a basic income for kids.

It’s a simple idea: to help families mitigate the costs of raising children, the government should send each household with minor kids a monthly check.  Unlike a full UBI, which is just now being piloted in a handful of cities, a basic income for children (often called a “child allowance” or “child benefit”) has already been successfully implemented in many other developed nations.  Countries like Canada, the Netherlands, and the Nordics all have one.  Britain used cash grants to families to help cut its child poverty rate by half in just fifteen years.

There are a lot of good reasons for the United States to import this tried and true policy.  On a basic moral level, a child’s wellbeing should not be dependent on her parents’ ability to earn market income.  But that’s exactly what we have allowed in the United States, and some 20 percent of all children suffer in poverty because of it.  Poor children are poor through no fault of their own, having simply had the misfortune of being born into low-income households.  We shouldn’t accept this fate.

Indeed, rampant child poverty makes equality of opportunity a fiction for poor children.  Poverty is a massive handicap for kids, impairing their ability to learn in school and literally scrambling their brain compositions from the permanent effects of stress.  The weight of poverty tragically holds kids back.

Conversely, children that get income boosts do better in school and grow up to earn more money.  Making sure that children are raised on at least a basic income gives them a fair shot to seize opportunity and achieve in school and their future careers.

A children’s basic income is also fair for parents.  Having a child is a huge financial burden, costing parents over a quarter million dollars on average.  Yet parents typically have children relatively early in their working careers, when their incomes are at their lowest.  This makes having and raising children a significant risk of poverty.  With more mouths to feed, family income just doesn’t stretch as far.

Our public policy typically tries to support and encourage childrearing, not implicitly penalize parents with the prospect of financial ruin.  Yet many millennials are finding themselves unable to afford to have children, a trend with bad long-term impacts for the size of the workforce, the prospects for the economy, and the stability of programs like Social Security.  A children’s basic income would provide the support parents need to securely raise children.

In fact, a children’s basic income would finally treat raising children like real valued work.  In 2012, when a Democratic surrogate bone-headedly bashed Ann Romney for foregoing private employment to stay home with her children, the Romney campaign rightly fought back by insisting that raising children is real work.  Most of us would undoubtedly agree, and paying parents to raise children would put our money where our mouths are.

Such a program would also be great for the economy.  Because parents have more expenses, they are more likely to spend new money they receive.  More spending generates more growth, boosting the economy as a whole.  That’s why, when the economy began to sputter in 2008, President Bush and Democrats in Congress responded with an initial stimulus plan that in part gave an extra $300 per child to parents as a sort of one-off child allowance.  Parents could be counted on to spend the money.  And when money is earmarked for children, parents do indeed tend to spend it on their children rather than on vices like alcohol or tobacco.

A children’s basic income is also a wise long-term investment in the future of the economy.  By one estimate, child poverty costs the economy a whopping  $672 billion each year.  By ensuring that all children can capitalize on their potential, we’ll have more productive workers in the future and ensure that talent does not go squandered by the bad luck of being born poor.

On the campaign trail, Donald Trump has proposed a new child care tax deduction that would, predictably, only help rich parents.  Hillary Clinton’s plan is better, but would only help parents who put their kids in commercial childcare, and not those who raise children at home.  In Congress, Rep. Rosa DeLauro has proposed a new refundable young child tax credit that would go far to help the youngest children who are most ill affected by poverty.

It’s a good sign these issues are finally being debated, but ultimately, something bolder is needed.  A basic income for children would alleviate child poverty and give parents the support and flexibility they need.  So aspirants for a universal basic income should start where it’s needed most: America’s children.

The real problem with Obamacare

What happens to a universal healthcare system dependent on private insurers when those insurers don’t show up?  The good people in Pinal County, Arizona, may be about to find out.

On Monday, Aetna announced that it was withdrawing from two-thirds of the states where it had previously been selling Obamacare plans on state marketplaces.  This threatens to leave many communities with much slimmer insurance options, and Pinal County without a single insurance offering available on its health exchange in 2017.

Amazingly, Obamacare never anticipated this circumstance.  Its drafters assumed that at least some insurers would sign up to sell insurance everywhere in the country.  And they didn’t create any kind of fail-safe or backstop in the event that private insurers bailed en masse.  The only mechanism the federal government has to enlist insurers into Pinal County (or any market, for that matter) is to plead and cajole.

Sure, Pinal County is just one unfortunate insurance black hole for now.  But Aetna has reported the same struggles that a number of other insurers (but by no means all) have had in the marketplaces: sicker than expected enrollees, and insufficient risk compensation.  As more and more insurers head toward the Obamacare exit, more states and counties will be left with one or no insurance choices.  So Pinal County may just be the tip of the iceberg.

There are a number of ways we could shore up the health exchanges to avoid this dilemma.  The fundamental problem Aetna and other insurers have encountered is that Obamacare enrollees have been disproportionately sicker and expensive to insure.  To stabilize the marketplaces and make insuring these enrollees a viable business, one (or both) of two things needs to happen: the exchanges need to enroll more healthy people, or else insurers need to be compensated for taking on the risk of insuring a sicker population.

To enroll Obamacare’s relatively healthy opt-outs, policymakers could take two different tracks.  For one thing, they could make the penalty for going without insurance stiffer.  Raising the cost of disregarding the individual mandate will, naturally, persuade more people to comply and buy insurance.

For another, policymakers could make the insurance offerings on the exchanges more appealing.  Many people fall between a rock and a hard place under Obamacare.  Bronze plans provide cheap but flimsy coverage, with low premiums and high out-of-pocket costs.  Silver plans, on the other hand, provide better coverage but are more expensive.  At the same time, the government kicks in cost-sharing subsidies for silver plans but not bronze.  This is meant to encourage more people to spring for better coverage, but also creates a gulf between the silver and bronze plans that many people seem to be falling into.

So some of the uninsured are logging on to their state’s exchange and seeing a silver plan they can’t afford and a bronze plan with outrageous deductibles.  Faced with this unpleasant choice, some consumers are just throwing their hands up and walking away.  And those most likely to say “thanks but no thanks” are the young and healthy, who feel the safest to gamble by going uninsured.  These are the exact consumers insurers need to draw in to stabilize their marketplace business.

There are clear ways to close this gulf and make Obamacare’s plans more attractive to more people.  We could make the law’s tax credit subsidies more generous to make silver plans more affordable.  Or we could extend cost-sharing subsidies to bronze plans to help cushion the cost of deductibles and co-pays.

The problem is that either of these things requires legislative action to constructively improve the law—something that Congress has shown no appetite for.  Instead, it has gone the other direction entirely, voting over and over and over to repeal the law in total.

While repeal efforts have failed, congressional Republicans have succeeded in weakening the law in ways that have made it harder for insurers to operate.  For instance, the law originally provided several mechanisms to compensate insurers if the marketplaces’ first few cohorts of enrollees proved to require more care (and therefore more costs) than anticipated.  Republicans slammed these mechanisms as an insurer bailout.

Eager to rack up some anti-Obamacare bonafides during his failed presidential campaign, Senator Marco Rubio succeeded in gutting one of these risk adjustment provisions.  This crippled a number of the law’s insurers, and particularly the non-profit co-op start-up companies authorized by the law as a replacement for the abandoned public option idea.  Now, even Aetna attributes part of its decision to exit on the law’s “current inadequate risk adjustment mechanism.”

So the health exchanges could be shored up by making insurance more desirable for more people, and by boosting (rather than kneecapping) the law’s compensation for insurers that take on added risk.  But perhaps a deeper structural fix is needed.  Even these reforms still leave universal coverage dependent on the voluntary participation of private insurers.  By letting the private sector provide a fundamental right, the government leaves itself vulnerable to demands and rent-seeking from for-profit corporations (which some speculate is already happening).

Michael Hiltzik argues that insurers shouldn’t be able to cherry-pick only the lucrative public health programs.  “If you want to reap the profits from participating in public health programs,” he writes, “you’ll have to participate in the Affordable Care Act too.”

That’s one option.  But there’s another option that has a history of bipartisan support, and that’s providing a public health insurance option in markets without enough (or any) private offerings.  It’s an idea that was supported during the law’s drafting by both Republican Sen. Olympia Snow and Obama’s then-Chief of Staff Rahm Emanuel.  Obama himself recently seemed to revive something like this as a way to contend with lagging competition across the exchanges.

This would reconceive the public option as a backstop—as an insurer of last resort in communities that aren’t adequately served by the private market.  It would inject competition and keep prices low.  And unlike private insurers, the public plan could be regulated from monopoly pricing if it’s the only insurer in town.  So if all else fails, consumers would at least be able to buy affordable coverage from a publicly-run insurer.

And indeed, Obamacare should have this kind of backstop.  Universal healthcare shouldn’t be left at the mercy and whims of private insurers, and shouldn’t be subject to the veto of countless decisionmakers.  That’s why Obamacare created the fallback option of federally-run exchanges if states refused to create state marketplaces (as 37 ultimately did).  Consumers in those states shouldn’t lose out on affordable health insurance just because their elected officials decided not to participate in Obamacare.

The same is true within the exchanges.  Private companies shouldn’t get the final say on whether universal healthcare gets to be actualized.  That was never in the intent or spirit of the law, but it’s what you get when you graft a universal health insurance program on to a predominantly privately-run system with no general public fallback.  Now that insurer non-participation is becoming a live reality, Congress must step up and create the fallback option that should have been there in the first place.

Like all major new social insurance systems, Obamacare, in its extraordinary complexity, needed tweaking after enactment.  But Congress has adamantly refused to do this, continuing to attack the law’s very existence.

Aetna held the door open for one day returning to the Obamacare business, saying that it “may expand [its] footprint in the future should there be meaningful exchange-related policy improvements.” We know what those improvements are, but we just aren’t doing them.  There are flaws in Obamacare’s design, but those aren’t what are truly getting in the way.  The real problem with Obamacare is our broken political system.

Trump, Clinton, and the fate of the economy

As Hillary Clinton and Donald Trump duke it out on the campaign trail, the economy hangs in the balance.  Contrary to Trump’s doom and gloom non-reset speech yesterday, the economy continues to gain steam and add jobs.  But the fate of the recovery may rest on the outcome of the November election.

A team of respected economists at Moody’s Analytics attempted to forecast the economic implications of each presidential candidate’s policy agenda, and the difference couldn’t be more stark.  Put simply, a Clinton presidency would strengthen our economy’s steady growth, while a Trump presidency would be an all-out economic calamity.

Clinton’s policy platform is carefully crafted to build up the economy.  The Moody’s team looked at the suite of Clinton’s major policy proposals, including increased spending on education and infrastructure, higher taxes on the rich, guaranteed paid family leave, and a higher minimum wage.

Moody’s found that if Clinton’s agenda were fully enacted, it would boost economic growth and create 3.2 million new jobs by the end of her first term.  The biggest benefits would flow to low- and middle-income families, and the average household’s after-tax income would rise by some $2,000.

Unemployment would fall as low as 3.7 percent—a level of full employment not seen since 2000.  With a new paid leave program and subsidies for child care, more parents would join the labor force.

These staggering employment figures are all the more remarkable because Moody’s expects Clinton’s new $12 minimum wage to eliminate 650,000 jobs.  This is somewhat controversial, and economists are largely split on how the minimum wage affects employment.  Some think a higher minimum wage makes workers more expensive and costs jobs; others think it gives workers more spending money and grows the economy to generate new jobs.  Regardless, Moody’s still sees a higher minimum wage as a net win for the economy, because the pay raise for low-wage workers substantially outweighs the lost income for those who might lose their jobs.

Importantly, Clinton’s tax plans wouldn’t drag down the economy either, even though she intends to impose new taxes on the rich.  This is because the economy can stomach these kinds of taxes, and so can the wealthy.  “[A]ffluent taxpayers,” the analysts explain, “are much less likely to change their spending behavior due to a tax increase than lower- and middle-income consumers.”  Because individual spending isn’t harmed, taxing the rich doesn’t inhibit economic activity.

All told, Clinton’s economy would build off of the steady growth and 70 months (and counting) of job creation of the Obama economy—the longest streak in American history.

And what of President Trump?  Batten down the hatches and stock up on canned goods.  According to Moody’s, the only thing “great” that Trump will make for America is another Great Recession.

Moody’s found that Trump’s major campaign promises—mass deportations and curtailed immigration; tearing up and rewriting trade deals; and slashing taxes on the rich—would cause economic catastrophe.  “By the end of his presidency, there are close to 3.5 million fewer jobs and the unemployment rate rises to as high as 7%,” Moody’s calculated.  The economy would plunge into recession for two years starting in 2018 and would shrink by 2.4 percent.

It gets worse.  Trump’s agenda would produce no income gains for the typical American family.  Stock prices would plummet, and the federal budget deficit would balloon by an additional $1 trillion.  As Trump rounds up and exiles undocumented immigrants, the economy would struggle from the loss of workers.  Not to mention, Trump’s overt hostility (in both rhetoric and policy) to Mexico and China would spark a retaliatory trade war, costing the United States $85 billion in exports.

A Trump administration would be an abject economic disaster, quickly collapsing the fragile momentum the economy has painstakingly gained since digging out of the last recession.  As Moody’s puts it, under Trump, “the U.S. economy will be more isolated and diminished.”

Now it’s true that this analysis fancifully assumes that either candidate will be able to swiftly enact their entire agenda upon taking office.  This is exceedingly unlikely, as Clinton may find herself stymied by a Republican Congress, and Trump could get bogged down in the courts.

Be that as it may, the White House under President Hillary Clinton would be an active aid to the economy.  Under President Trump, it would be a constant drag and an unprecedented risk.

The economy is perpetually the foremost issue on Americans’ minds.  As they go to the polls in November, voters face an unparalleled choice—a choice between growth or recession, between 3 million new jobs or 3 million lost.  The candidates’ agendas present a vast chasm in economic fortunes for the next four years.  Voters must decide which side they want to be on.

 

Hillary Clinton’s bold defense of government

Government is in deep disrepute in the United States.  Dismayed by gridlock and scandal, and prodded by endless right-wing anti-Washington invective, public faith in government reaches perpetual new lows.  Which is why it’s so remarkable and refreshing to see Hillary Clinton sticking up for the old-fashioned notion that acting through government, we can achieve great things by working together.

Clinton’s defense of government is in part a reaction to Donald Trump.  Political scientists Norm Ornstein and Thomas Mann have argued that Trump’s rise is the logical conclusion of the Republican Party’s three-decade war on government.  “[T]he dysfunction of the Republican Party, [. . .] its obstructionism, anti-intellectualism, and attacks on American institutions were making responsible governance impossible,” Ornstein and Mann write.  “The rise of Trump completes the script[.]”

In resisting the mean-spirited nihilism of the Trump campaign, Clinton has emphasized the benefits of unity over the pitfalls of Trumpian divisiveness.  And by arguing that we are greater than the sum of our parts, Clinton has implicitly pushed back against thirty years of GOP anti-institutionalism and made a positive case for robust government.

Clinton’s acceptance speech at the Democratic National Convention was laden with tributes to the virtues of collective action.  Arguing that when we must “work together so we all can rise together[,]” Clinton reminded us that “[o]ur country’s motto is e pluribus unum: out of many, we are one.”  The message of her 1996 book “It Takes a Village,” Clinton explained, was that “[n]one of us can raise a family, build a business, heal a community or lift a country totally alone.”

It’s a message Democrats have been honing for years.  In 2012, video of then-Senate candidate Elizabeth Warren’s living room meet-and-greet went viral, where she argued that we all rise together.  “There is nobody in this country who got rich on his own,” Warren argued.  Success is built on the back of communal goods like public roads, protections of property, and publicly educated workers.

That same summer, President Obama tried to echo Warren.  “If you were successful, somebody along the line gave you some help,” Obama argued.  “If you’ve got a business — you didn’t build that. Somebody else made that happen.”  Republicans treated Obama’s somewhat clumsy case for communal success as an epic gaffe, spending an entire day of their 2012 convention insisting that “We Built It.”

But Clinton hasn’t shied away from making the case for an interconnected American destiny.  Faced with Trump’s “I alone” strongman act, Clinton has lifted “stronger together” beyond a mere slogan, proclaiming it to be “a guiding principle for the country we’ve always been and the future we’re going to build.”

Her policy priorities back this up.  Clinton aims to create an “economy that works for everyone, not just those at the top.”  To Clinton, public infrastructure investment has the awesome capability to “not only create jobs today, but lay the foundation for the jobs of the future.”  By pursuing debt-free college, a livable minimum wage, a full-employment economy, and tax hikes on millionaires, Clinton expresses a profound faith in the ability of government to shape economic life.

And rightfully so.  The mixed economy is the key to American prosperity, with government and the private sector working in tandem to create broad-based and sustained growth.  Government produces public goods like health, roads, infrastructure, education, and research, laying the groundwork for dynamic markets to monetize and innovate off of public investment.

And contrary to conservative revisionism, an active government has always been part and parcel of American history.  From Hamilton’s national bank and absolution of state debts, to Jefferson’s advocacy for government land grants to all citizens, to FDR’s New Deal adoption of modern social insurance, government has been a force in structuring the economy throughout our history.  Government has also been an ever more diligent steward of freedom, liberating minorities from discrimination and protecting workers from the tyranny of excess employer power.  Government has thus created a richer and more meaningful American freedom.

In the United States, we too often fall into the false belief that a free and productive economy is a natural occurrence.  This takes for granted the role of government in setting the ground rules for the economy: the antitrust regulations that preserve competition, the property rights that promote innovation, and the government investments that produce a healthy, knowledgeable labor force, among many others.

Clinton and the Democrats are reminding us of this.  Contemporary problems like rising inequality aren’t hopeless laws of nature, but can be tamed by smart, determined government action.

The specter of Trumpism has made Democrats bolder.  If Trump is the end result of the conservative campaign against government, Democrats have responded by doubling down on the virtues of community and the common good.  When confronted with a candidate manifestly unfit to serve, Democrats have increasingly embraced their role as proud, effective managers of government to meet the needs of the twenty-first century.

 

A tale of two think tanks

Hillary Clinton declared her long-known intention to run for president in April 2015.  In the months before and after her announcement, the think tanks in the orbit of Democratic policy jockeyed for position to influence the agendas of the party and its presumed nominee going into the 2016 election.

In January 2015, the Center for American Progress released a comprehensive white-paper authored chiefly by former Obama economic adviser Larry Summers.  The white-paper prescribed a broad series of policy proposals to promote “Inclusive Prosperity” in the United States.  Since its founding, CAP has served as the Democrats’ primary bank for policy ideas, and has strong ties to the Clinton campaign.  (CAP is run by Neera Tanden, a former Clinton aide.)  The white paper ticked off the gamut of mainstream center-left policy goals: paid family leave, infrastructure investment, universal pre-K, and the works.

Many rightly expected that the CAP report would be strongly indicative of Clinton’s eventual platform.  For instance, Matthew Yglesias at Vox wrote that it was “the best guide to what Hillarynomics is likely to look like.”  And indeed, when Clinton launched her campaign from Roosevelt Island in New York, the policy ideas she endorsed closely tracked CAP’s report, even mimicking its theme of inclusive prosperity by arguing for “fair growth,” as John Cassidy of the New Yorker noted at the time.

Meanwhile, a month after Clinton announced her candidacy, the left-leaning Roosevelt Institute released a comprehensive white-paper of its own.  Authored by one-time Bill Clinton economics adviser Joseph Stiglitz (a rival of Summers’s in the Clinton White House), the Roosevelt report aimed to “rewrite the rules” of the American economy, proposing to fundamentally restructure the laws, regulations, and institutions comprising economic life to even out the balance of power and rewards between employers and workers.

The Roosevelt paper was widely seen as trying to provide a modicum of leftward pressure as a counterweight to the more conventional center-left CAP agenda.  And as the New York Times Magazine reported this week, Roosevelt has been in frequent communication with Clinton officials, and has achieved a striking deal of success in pitching its policy ideas to the campaign and the national Democratic Party.

In a primary campaign that saw token left-wing opposition from Bernie Sanders bloom into a bona fide movement, it’s interesting to see how these two dueling think tank reports wielded their influence now that the dust has settled.  There’s a good deal of overlap between the CAP and Roosevelt reports—both want to strengthen collective bargaining; both want to better regulate the shadow banking system; both want to negotiate fair trade deals that protect labor and the environment, among other points of agreement.  But they diverge in interesting ways—and at times, both wound up getting outflanked by the historically progressive platforms that ultimately came to be embraced by both Clinton and the Democratic Party.

Take the issue of housing.  CAP wanted to promote homeownership and affordable housing by tinkering with existing institutions like the Fair Housing Act and the Federal Housing Finance Agency to make home loans affordable to more buyers.  Roosevelt, on the other hand, took a more interventionist approach: proposing a public option for the mortgage industry.  “Rather than trying to nudge the private mortgage system with federal backstops, subsidies, and implicit bailout guarantees,” Roosevelt wrote, “lawmakers should create an explicitly public mechanism in the housing market.”  (Neither Clinton nor the DNC have taken specific stances on housing policy.)

That’s fairly typical of a side-by-side reading of the two reports: CAP tends to prefer tweaking existing programs and institutions to create a fairer economy, while Roosevelt will often propose a more wholesale overhaul to create new institutions.  Indeed, the Roosevelt report is heavy on public options, endorsing new government-run offerings in healthcare (Medicare for All), banking (financial services offered at the post office), and retirement (a supplemental Social Security program for IRA-style investment).

On tax reform, CAP proposes to make the tax code more equitable by taking homeownership tax deductions—which disproportionately benefit the wealthy—and converting them into tax credits.  Roosevelt, however, would go even further, converting all tax reductions to credits, and capping the number of credits that can be claimed by the wealthy.  Again, neither Clinton or the national party have broached the idea of reforming popular tax deductions.

Similarly, on early childhood, both CAP and Roosevelt support popular programs like universal pre-K, subsidized daycare, and expanded nurse home visiting, all of which have been embraced by Clinton and the Democrats.  But Roosevelt would also kick in a child benefit—“a monthly tax-free stipend paid to families with children under 18 to help offset part of the cost of raising kids.”  This would draw on the success of countries like Britain in slashing child poverty through direct financial investment in kids.  CAP didn’t endorse a similar program in its report—the closest it has come otherwise is proposing a new refundable young child tax credit.

But on some issues, both CAP and Roosevelt underestimated the ambition of Democrats in 2016.  On higher education, both think tanks proposed a relatively modest reform based on Australia’s system for financing college.  Students would have 25 years to repay their student loans, and would make payments based on their income level.  Interest rates would be lower, and under CAP’s plan, students would receive a voucher equal to the cost of public college tuition to cover some of the cost, to be repaid to the government.  But driven by the Sanders campaign, both Clinton and the Democratic Party have gone further.  Both now want to make public college completely tuition free for most low-income and middle-class families.

The Democrats also went beyond both think tanks’ recommendations for raising the minimum wage.  CAP proposed increasing the federal minimum wage to just $10.10.  Roosevelt didn’t endorse a specific federal increase, but did suggest that “States and cities should look at raising the minimum wage to reflect local conditions; many cities and metro areas can easily justify a minimum wage of $15 an hour.”  That the Democratic Party has embraced a national $15 minimum wage is a sign of just how far this debate has come in only a few years.

Both think tanks had other key wins too.  Both Clinton and the DNC have endorsed CAP’s plan to incentivize corporate profit sharing with employees.  And both think tanks’ push to raise the salary threshold for overtime pay was already enacted by the Obama administration.

Moreover, Roosevelt’s proposal to assess a capital surcharge to “too big to fail” financial institutions, while breaking up banks that are too massive to orderly unwind in a potential bankruptcy, has been adopted virtually wholesale by the Clinton campaign.  The Democratic platform picked up Roosevelt’s proposals to prohibit the appointment of any Federal Reserve members with conflicts of interest with regulated banks.  The platform endorsed Roosevelt’s plea to strengthen antitrust rules to promote market competition.  Roosevelt also wants to assess new taxes on carbon, short-term financial trading, and the ultra-wealthy—those are all in the Democrats’ platform, too.  The platform committed itself to a “full-employment economy,” echoing Roosevelt’s call to refocus Federal Reserve policy toward full employment rather than low inflation (a stimulative change that can be instituted without congressional action).  And the Democrats even adopted Roosevelt’s plans for postal banking options and to let more student debtors discharge their loans via bankruptcy.

This is all a testament to the bold ambition of liberals in the twilight of the Obama administration.  And much credit must go to the leftward push from the Bernie Sanders campaign.

But while their policy prescriptions may differ, both CAP and Roosevelt are speaking degrees of the same language.  In Why Nations Fail, economists Daron Acemoglu and James Robinson argue that the most successful economies are those whose political, social, and cultural institutions promote inclusive growth, which creates a virtuous cycle of widely-shared and robust economic activity.  When economies become extractive, benefiting only the elite, growth slows and the virtuous cycle turns vicious.

CAP and Roosevelt are in broad agreement on this basic understanding of economic success and failure.  Roosevelt takes on the notion that inequality is inevitable, arguing that it’s in fact a political choice brought about by deliberate institutional arrangements to shift the bargaining power in our economy.  We don’t need to sacrifice growth and efficiency in order to reduce inequality.  Similarly, CAP embraces middle-out economics that believes that our economy thrives when a thriving middle-class is its central engine.  The platforms espoused by the Democratic Party and the Clinton campaign merge the two dueling policy agendas in the best way possible: rewriting our economic rules to promote broadly shared inclusive prosperity.

Resurrecting the public option

Don’t call it a comeback, but the public health insurance option is having a boomlet of sorts.  After being unceremoniously axed from the Affordable Care Act by the centrist Democrats who provided the clinching Senate votes in 2010, the idea for a widely available government-run health insurance plan spent years in the political wilderness.

But murmurs on the left about resurrecting the public option have been percolating lately.  And the public option’s biggest boost came from President Obama this week.  Writing a reflection on the effects of the Affordable Care Act for the Journal of the American Medical Association, Obama called on Congress to “revisit a public plan to compete alongside private insurers in areas of the country where competition is limited.”

Obama’s re-endorsement of a plan he shelved six years ago is significant.  The public option was a favorite among liberals, who saw it as a compromise on single-payer that gave Americans the freedom to choose insurance from outside the private sector.  And if the public option could price like Medicare, it could have imposed significant cost pressure on its competitor private insurance plans by benefiting from government purchasing power and holding down administrative costs.

Granted, Obama knows a public option has no chance of getting through Congress, so he won’t be converting his JAMA piece into legislative language anytime soon.  And he also seems to envision a much more limited public option than what was originally debated during national health reform.  His refocus on the public option comes principally from a desire to expand consumer choice particularly in those markets that lack a robust marketplace of competing insurers.  As the president notes, some 12 percent of Obamacare enrollees live in counties with only one or two insurance options.  These tend to be lightly populated rural areas that private insurers aren’t eager to do business in.  Obama wants a public option in these specific areas as a means of injecting competition into stagnant marketplaces.

It’s worth remembering that during the health reform negotiations, there was briefly a bipartisan proposal to include a public option “trigger,” where the public option would only go into effect in certain states that fell short of sufficient insurer competition and cost control.  This proposal was endorsed by both Obama’s then-Chief of Staff Rahm Emanuel and Republican Senator Olympia Snowe.  This trigger was modeled off of a feature of the Republican-led 2003 Medicare prescription drug benefit, which included a similar trigger if competition lagged in that market.  Had the Emanuel-Snowe proposal made it into the final bill, Congress would have no occasion to “revisit” the public option today—such an insurance option in non-competitive areas would be automatic.

But Obama isn’t the only one rediscovering the public option.  Hillary Clinton too recently endorsed building on Obamacare to provide a public option.  She also seems to envision the public option existing on a state-by-state basis, and wants to work within the law’s existing infrastructure to do so without involving Congress.  Specifically, she promises to “work with interested governors, using current flexibility under the Affordable Care Act, to empower states to establish a public option choice.”  What Clinton presumably has in mind is working through Obamacare’s innovation waivers to let states build and run their own public options.

This proposal, coupled with her plan to let people above a certain age (but below retirement age) buy into Medicare, was seen as a meaningful effort to appropriate some of Bernie Sanders’s agenda.  And indeed, Sanders, who has called for a Medicare-for-all single payer system, applauded Clinton’s new healthcare plans, saying that it was an “extremely important initiative” and “an important step forward.”

It’s worth remembering, however, that the details of the public option matter immensely, particularly details regarding its reimbursement structure, federalism, and eligibility criteria.  The strongest version of the public option would offer reimbursement rates tied to Medicare’s, benefiting from Medicare’s purchasing power and ability to offer providers low rates.  It would also be a single national plan run by the federal government in all fifty states.  This would maximize purchasing power and minimize administrative overhead.  And the plan would be offered to a broad base of customers, such as all non-elderly adults without access to employer- or government-provided insurance.

Eroding these characteristics leads to a weaker public option.  Based on her description, Clinton’s plan sounds like it will be run by individual states, meaning it likely won’t be tied to Medicare reimbursement rates.  Tying it to Medicare rates would almost certainly require an act of Congress, and it’s hard to see how Clinton or individual states could do so on their own.  And any move to tie the public option to Medicare rates would draw cries of unfairness from insurers afraid they couldn’t compete, and howls of socialism from conservatives fearing creeping single-payer.  Clinton’s plan therefore appears to be a relatively weak version of the public option.  (It’s not clear what eligibility requirements she would attach to it.)

But Clinton does seem to see the state-based public option as only an intermediate stopgap to something stronger.  According to her campaign website: “As she did in her 2008 campaign health plan, and consistently since then, Hillary supports a ‘public option’ to reduce costs and broaden the choices of insurance coverage for every American. To make immediate progress toward that goal, Hillary will work with interested governors, using current flexibility under the Affordable Care Act, to empower states to establish a public option choice.”  For Clinton, then, a weak public option may be the best she can do through existing executive authority, but the long-term end-game may be a more robust government plan.

Indeed, as healthcare experts Helen Halpin and Peter Harbage note, the genesis for the public option started as a state-based idea in California in the early 2000s.  Only later did politicians like John Edwards and policy experts like Jacob Hacker build on the state-based idea to propose a stronger national public option.  Perhaps we need to return to the idea’s state-level roots to truly resurrect the public option from health reform’s scrap heap.

The meaning of freedom

In the debate over national health reform in 2009-2010, the law’s conservative Tea Party opponents regularly claimed the mantle of freedom.  Where reform supporters relied on moral and technocratic arguments to make the case that health care must be affordable for all, the Don’t-Tread-On-Me backlash to reform was largely allowed to monopolize the powerful American virtue of freedom.

It was a curious sort of freedom that conservatives endorsed.  At its extreme, opposition to the Affordable Care Act stood for the freedom to succumb to the consequences of un-insurance.  This conception of freedom defended the “choice” to go without health insurance as a calculated, rational personal decision that ought to be respected.  Compelling individuals to carry insurance amounted to a tyrannical invasion on this autonomous decision.

Falling shortly after the maligned bank bailout during the 2008 financial crisis, the fury over moral hazard spilled into the health reform debate.  The economic term “moral hazard” holds that individuals and firms must be allowed to feel the consequences of their choices, or else shielding them from risk will perpetuate irresponsible behavior.  Just as bailing out the banks was thought to reward reckless financial conduct, bailing out those who opted to go without insurance let reckless decision-making off the hook, too.  Call it a “You Reap What You Sow” brand of freedom.

Though muted, pro-reform policymakers could stake a claim to enhancing freedom as well.  The entire point of health reform was to expand freedom from risk.  It would insure people who had the misfortune of falling ill so that they could access health services without bankrupting their future.  And it moved us closer to the day when health insurance is wholly separate from our jobs, freeing us from dependency on our employers for our healthcare.  This is an important kind of freedom, too.

In his 1941 State of the Union address, President Franklin Roosevelt four fundamental freedoms thought to be inherent to all people.  Among these was “freedom from want.”  To Roosevelt, basic protections from scarcity, risk, and poverty were necessary to truly effectuate individual freedom.  Without basic necessities, freedom was wholly illusory.  As he put it three years later, “We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence.  Necessitous men are not free men.”

Roosevelt helped solidify the modern liberal conception of freedom—a freedom to economic security.  This freedom puts affirmative obligations on government to provide a degree of protection from the risks and hazards of markets and modern life.

On the other side, the conservative (or perhaps more aptly, libertarian) conception of freedom emphasizes freedom from government.  This kind of freedom aims to protect the unbounded autonomy of the individual from government interference.  Markets are thought to be sacrosanct aggregations of autonomous individual choices, preferences, and desires.  Government intercedes on this laissez-faire freedom only by imposing its will and disrupting individual choice.

Because of the American origin story—casting off the yoke of tyrannical British authority—many seem to assume that the conservative brand of freedom has a stronger claim to our history.  The liberal alternative, it’s thought, is just a socialistic perversion concocted by pro-centralization New Dealers.  But that’s just not the case.

In his magnificent book The Story of American Freedom, historian Eric Foner chronicles the different ways that the American ideal of freedom has been deployed in political rhetoric throughout our history.  As political and social contexts have shifted, so too has the rhetoric around freedom, liberty, and independence.  As Foner shows, the dueling claims of what it means to be truly free have been with us for centuries.

The earliest seeds of the modern debate begin to appear during the Jacksonian era.  Whig leaders like John Quincy Adams and Henry Clay argued that government action could enhance freedom.  They argued that the capacity to wield one’s freedom depended on one’s power, and that freedom was dependent on prosperity.

Jacksonian Democrats, on the other hand, began railing against the faraway federal government as the preeminent threat to American liberty.  “Building upon laissez-faire economics,” Foner explains, “Democrats identified government-granted privilege as the root cause of social injustice.”

In the antebellum period, freedom was often employed in relation to its looming antithesis: slavery.  Latching on to the abolitionist cause, populists and reformers condemned the industrial economy for crafting a system of wage slavery that restricted individual freedom at the hands of business.  The idea underlying wage slavery was that the market posed a threat to freedom.  But this idea fell out of mainstream circulation for a time, as abolitionists resisted the characterization and sought free labor as the goal of the antislavery movement.

During the post-war period, the Gilded Age ushered in a period of laissez faire freedom dominance in the end of the nineteenth century into the early twentieth.  Freedom was defined as the liberty of contract—that the ability of individuals to freely enter into economic and financial arrangements ought to be unimpeded.  It was a period that grounded a sense of freedom in meritocracy and Social Darwinism.

But some resisted.  The American Economic Association was established in 1885 to combat “laissez-faire orthodoxy,” declaring, “We regard the state . . . as an educational and ethical agency  whose positive assistance is one of the indispensable conditions of human progress.”  Similarly, the sociologist Lester Ward determined that “individual freedom can only come through social regulation.”

Ultimately, the association of “freedom” and Gilded Age Social Darwinism temporarily made freedom a dirty word in American politics.  The Progressive movement situated its policy goals in the language of democracy rather than freedom.

Still, the central concern of progressivism, according to New Republic editor Herbert Croly, was how Americans could be free in a modern industrial economy.  Croly explained that “Hamiltonian means” of government intervention into the economy were necessary to achieve the “Jeffersonian ends” of democratic self-determination and individual freedom.  The Progressives thought that robust, energetic government was necessary to create the social conditions for meaningful freedom.

In 1912, former president Theodore Roosevelt campaigned for president under the Progressive Party mantle.  The party’s platform, Foner writes, “laid out a blueprint for a modern, democratic welfare state,” replete with plans for health and labor regulation, an eight-hour work day, a living wage, union protections, and a national system of social insurance for unemployment, healthcare, and old age.  Roosevelt’s freedom meant liberty from corporations effectuated through government power and regulation.

Theodore Roosevelt’s progressive version of freedom gained wider acceptance and circulation two decades later under FDR.  On the heels of the Great Depression, the nation saw how economic devastation can render theoretical freedoms meaningless.  Accordingly, FDR sought to guarantee freedom from want, establishing welfare state programs to protect Americans from the vicissitudes of modern economic life.

Left-wing pressure in the United States helped contribute to Roosevelt’s bold social democratic platform.  But after World War II, hostility between the Soviet Union and the United States made Americans define freedom in contrast to the Soviet Union, veering once more back toward laissez faire freedom.  Moreover, the economic abundance during this time produced great faith in capitalist institutions.  “Cold War affluence,” Foner writes, “greatly expanded the constituency that identified freedom with free enterprise.”

In the 1960s, President Johnson launched a War on Poverty, but implicitly deviated from the New Deal’s diagnosis of economic struggle.  “In a departure from the New Deal, when poverty had been seen as arising from an imbalance of economic power and flawed economic institutions,” Foner writes, “in the 1960s it was attributed to an absence of skills and opportunity and a lack of proper attitudes and habits.”  Therefore, many of Johnson’s antipoverty initiatives eschewed direct interventions—like a guaranteed minimum income for the non-elderly or government-created jobs—in favor of skills training and education.  Johnson’s programming aimed to enable individual self-liberation from the “enslaving forces of his environment.”

Nonetheless, Foner marks the 1960s as the era when “freedom” began to be co-opted by conservatism and relinquished by the left.  “As the social movements spawned by the sixties adopted first ‘power’ and then ‘rights’ as their favored idiom,” he writes, “they ceded the vocabulary of ‘freedom’ to a resurgent conservatism.”  This left conservatism with free rein to equate freedom with unfettered capitalism, as Milton Friedman (and later, Ronald Reagan) did, or to proclaim resistance to government economic and anti-discrimination regulation under the guise of freedom, as Barry Goldwater did.

This inexorably led to a resurgence of 1900s-style Social Darwinism.  This brand of conservatism, ostensibly grounded in principles of freedom, warned against government intervention into the “natural” workings of the economy; held that the distribution of wealth reflects individual merit; and deemed the plight of the unfortunate, too, a product of their own failings.

Left unchecked, this conception of “freedom” grew to dominate political discourse in the United States.  Liberals argued for their policies in technocratic terms, promising to provide economic help to a struggling middle class.  But conservatives relentlessly assailed any intervention as Big Government stepping on the throat of individual freedom.

Liberals seemingly forgot that they too have a claim to the virtues of freedom—a claim that their intellectual predecessors invoked countless times from the nation’s founding onward.  The free market has no mind for any individual’s particular well-being, autonomy, or bodily security.  In a time of ever expanding economic volatility, “freedom from want” still resonates as an audacious ideal.  So does the social insurance platform that flows out of it.

Foner shows that in the political debates that have raged throughout our history, the side that lays a stake to the rhetoric of freedom tends to seize the upper hand.  Freedom goes to the core of the nation’s identity, self-conception, and perceived purpose of its founding.  Reformers and policy advocates would be wise to listen to Richard Armey, former House Republican leader, who said, “No matter what cause you advocate, you must sell it in the language of freedom.”

The raw end of the free trade deal

Any economic change creates winners and losers.  “Creative destruction” is the economic concept that innovative, efficiency-promoting advancements also tend to displace segments of the preexisting status quo.  Uber generates benefits for consumers, but disrupts the taxi industry.  Automation makes consumer goods cheaper, but imperils jobs for workers.

Globalization has been one of these economic changes.  The rise of globalization promised vast new global wealth from lifting barriers on the movement of goods and people.  And on the whole, American consumers have immensely benefited from cheaper consumer goods and the bounties of global trade.  But globalization also triggered tectonic shifts in American workplaces.  Industries that, in a pre-globalized world, provided a good living to millions of working-class Americans suddenly faced international pressure and increasingly offshored their workforces to faraway countries.  Spurred by globalization, these companies picked up and left countless American communities in the dust.

In a fair political economy, the deal is supposed to be that we take a slice of the gains from broad economic innovation to compensate those on the losing end.  In theory, we could take some of the surplus wealth generated by free trade and direct it to those Americans who have been hit hardest by this creative destruction—those whose jobs have vanished and whose towns have dried up.

But that hasn’t happened.  Despite the diffuse gains of globalization, we haven’t provided much in the way of targeted help to those who have been net losers.  And those who perceive themselves to be net losers have noticed.

The missing compensation from globalization is becoming the defining political issue on both sides of the Atlantic and is scrambling political divisions.  At the New York Times, Nate Cohn writes that the Brexit vote signals “the emerging split between the beneficiaries of multicultural globalism and the working-class ethno-nationalists who feel left behind.”  Pro-Brexit votes flowed in from traditional Labour Party strongholds in working-class neighborhoods, with the dagger for “Remain” coming when 62 percent of Sunderland, a once reliable pro-Labour region, voted to “Leave.”  Similarly, at the Washington Post, Matt O’Brien writes that Brexit marks the beginning of the revolt by globalization’s losers—disproportionately concentrated in the working- and middle-classes of rich-world countries.

And let’s not forget Donald Trump, who has made walling off borders and tearing up trade deals—in effect, reversing globalization—the calling card of his nationalist campaign for president.  And who formed the core of Trump’s base?  A “certain kind of Democrat,” according to Cohn; specifically, less educated white registered Democrats who nonetheless identify as Republicans in the South, Appalachia, and the deindustrialized North.  Just like the “Leave” vote sweeping through working-class Sunderland, Trump’s ethno-populism has resonated with white working-class voters and the economic devastation they face in 2016.

So what to do?  Must globalization either march forward or else reverse itself to stem the political unrest fueling its working-class resisters?  Not necessarily.  There is a third option between globalization and no globalization, and it’s global capitalism paired with robust social insurance regimes.  As Marshall Steinbaum of the Center for Equitable Growth points out, “we once solved the problem of the conflict between capitalism and ethno-nationalist backlash with social democracy.”

We’ve fallen far short of that solution.  Whether a Bernie Sanders-style social democratic overhaul or a more targeted approach to aid those displaced by free trade, we have done little to cushion Americans against economic upheaval.  The rise of globalization has dovetailed with decades of stagnant income growth, mounting inequality, and ever-growing financial strain on American families.  Yet the United States hasn’t adopted the kinds of social insurance protections needed to match the increasing volatility and insecurity of twenty-first century capitalism.  And while we provide a small program to retrain and compensate certain workers who have lost out due to free trade, we do relatively little to otherwise target help to the communities that are hit the hardest.

Which means we’ve failed to live up to our end of the bargain.  Creative destruction is immensely valuable and can do wonders to improve overall well-being.  But it inherently causes destruction, and that destruction doesn’t just dissipate with time.  We’ve reaped the diffuse benefits of globalization, but have done little to level with those bearing the targeted costs.  This failure is a big part of the discontent we’re seeing rock both sides of the Atlantic now.

The House GOP’s you’re-on-your-own replacement for Obamacare

For six years, congressional Republicans have been screaming to “Repeal and Replace” Obamacare.  They proved quite adept at making symbolic efforts toward the “Repeal” half of this talking point, voting more than 60 times to tear up the national nightmare that has driven our uninsured rate to record lows, with the most recent vote fittingly falling on Ground Hog’s Day.

Coalescing around a single serious and workable replacement for the law, however, proved more elusive.  But this week, House Republicans finally put pen to paper, inching closer toward the conservative legislative solution to the nation’s healthcare crisis that they have promised for six years.  And it isn’t pretty.

To fill the Trump-sized conservative policy vacuum in 2016, House Republicans have been rolling out an affirmative conservative policy agenda called “A Better Way,” led by Speaker Paul Ryan.  And on Wednesday, Ryan and company released a policy paper finally detailing how GOP lawmakers would tackle the project of health reform.

The report begins with the standard right-wing airing of grievances about Obamacare.  It has caused premiums to increase; if you like your plan, Obama took it away from you; it cuts reimbursements to hospitals and providers—all the classics make a cameo.  Most notably, the plan accuses Obamacare of hampering the economy and employment—even though we’ve now had seventy-five months of continuous private sector job growth since the law was passed.  (But why abandon old disproven talking points now?)

With that aside, the plan gets to the heart of the matter: the conservative vision for health reform.  It turns out to be a barely warmed rehash of typical conservative healthcare ideas.  But assembled all together once more, it draws out what the conservative vision for health insurance really looks like: simply providing less of it.

Less insurance from private insurers for workers without employer-based coverage

For individuals who received insurance through their employers, it’s largely business as usual under the conservative plan.  Like Obamacare, the House plan has little impact on employer-provided coverage.  But it does seek to cap the tax exclusion for employer-based insurance.  Though the plan professes otherwise, this is essentially indistinct from Obamacare’s much-maligned (and much-delayed) Cadillac tax on lavish health insurance plans.

For those without employer-provided insurance, the House plan scraps Obamacare’s health exchanges and income-based subsidies.  It replaces them with a refundable tax credit for individuals to purchase “a plan of their choice, rather than the current offering of expensive, one-size-fits-all, Washington-approved products.”  Newly unbound health shoppers, freed from the shackles of Obamacare’s quality-regulated marketplaces, could take their tax credit and buy anything, anywhere called “insurance.”

The refundable tax credit would be adjusted by age, rather than by income.  The conservatives also provide no guarantee that it will cover the entire cost of insurance, like Obamacare does now for many working families.  It only promises to “help offset the cost” of insurance.  While the tax credit will supposedly be sufficient to purchase a “typical pre-Obamacare health insurance plan,” this entirely banks on cost savings from tossing out Obamacare’s regulations around the type of benefits plans must offer—meaning the savings come from muddying the quality of insurance.

To that end, conservatives would promote flimsier insurance with greater out-of-pocket costs.  A conservative health reform staple, the plan encourages high-deductible insurance plans that kick in only for the most devastating healthcare costs, leaving patients on the hook for everything else.  It then couples this insurance with tax-advantaged health savings accounts, in which individuals can save to cover out-of-pocket costs.

Rather amazingly, the plan boasts that it would come to the rescue of those trapped in the Medicaid coverage gap.  “[A]s a result of Obamacare’s poor design and incentives, many Americans— who do not have an offer of health insurance through their employer— have fallen into a coverage gap between their state’s Medicaid eligibility and the eligibility criteria for the Obamacare subsidies.”  The reason for this gap at all, of course, is that conservatives in 19 states have refused to adopt Obamacare’s Medicaid expansion that would provide coverage to these nearly 3 million people today.

And on the Medicaid expansion, the plan complains that Obamacare, which covers more than 90 percent of the states’ expansion costs, is too generous.  It argues that this leaves the federal government covering a bigger share of the cost for near-poor adults than it does for the disabled, elderly, or children in poverty, so the federal match for this less-deserving population should be cut.  Which is pretty remarkable, given that the chief justification for conservative opposition to the Medicaid expansion in the states has been that the federal government wouldn’t follow through on its funding commitment and would leave the states holding the bag–that is, that the federal government wouldn’t be generous enough.

The plan retains two of Obamacare’s most popular features.  It would continue to let children stay on their parents’ coverage up until age 26.  And it keeps the law’s monumental guarantee that no one can be denied coverage on account of a preexisting condition.

But it unravels Obamacare in countless other significant ways.  The plan would weaken Obamacare’s age-rating rules, which currently require insurers to charge older people no more than three times the premium rate charged to the young.  Conservatives would up this to five times, increasing the cost of insurance for older Americans and chipping away at universal health care’s communal ethic.  And even this limit is a mere default suggestion, because the GOP would give states the ability to “narrow or expand” this ratio.  (“After all, states understand what their residents want and need better than Washington.”)

The House plan would allow for state experimentation in a number of ways.  And given that the plan allows for buying health insurance across state lines (removing Trump’s “lines around the states”), conservatives seem downright eager to create a race to the bottom beholden to whichever state offers the loosest regulations, weakening the quality of insurance.

And of course, the plan would repeal Obamacare’s mandate to purchase insurance.  In lieu of an individual mandate, the conservatives would penalize those who go without insurance by (1) forfeiting their continuous coverage protections (which would provide HIPAA-style insurance portability after certain life events to those in the individual insurance market, in addition to those in the employer market), and (2) imposing higher coverage costs in the future.

Less insurance from Medicaid for the poor

For the poor, the conservatives would block grant Medicaid to the states in order to cut federal funding.  This is the same tack conservatives and President Clinton took to shrink the federal obligation for welfare benefits, devolving that program to the states, where the protection the program provides has been allowed to shrivel away.

The House conservatives would pay the states a fixed amount to manage their own Medicaid programs.  By putting a cap on federal Medicaid spending and turning the program over to the states, conservatives claim to be looking out for the “freedom and flexibility” of the states.  “For too long, states have been treated like junior partners in the oversight and management of the Medicaid program[,]” the plan mourns.

But ultimately, the plan admits, the real purpose of block granting Medicaid is to “[r]educe federal funding over the long term.”  Conservatives would kick the healthcare cost conundrum down to the states, who face their own fiscal pressures and are constitutionally blocked from running budget deficits.  At the end of the day, the conservative block-grant scheme will shore up the federal budget by providing less health insurance coverage to the poor.

No more guaranteed single-payer Medicare for retirees

For retirees, the GOP would transform Medicare from a single-payer, guaranteed benefit system into a competitive marketplace with only a guaranteed contribution toward premiums from the federal government.  Under the new system, seniors would receive a subsidy from the government, which they would then take to a marketplace where they could pick from a variety of competing private health insurance plans.  Sicker seniors would receive greater benefits, and low-income seniors would receive additional cost-sharing subsidies.  Premium support would be means-tested, paying less to high-income seniors.

Stop me if this sounds familiar.  This structure is nearly identical to Obamacare’s health exchanges for those who lack employer-provided insurance.  Which is ironic, given the litany of horrors that the House GOP rattled off at the beginning of their report.  If Obamacare is such a nightmare, why would Republicans want to enact the same reform for retirees?

Importantly, in the mix of insurance options on the conservatives’ new retiree health marketplace, one stands out: traditional Medicare.  Under this plan, Medicare becomes a public option competing with private plans for enrollees.  But what happened to the conservative fear that private insurers could never compete with the pricing of a public option?  Given the plan’s objections to Obamacare, maybe this is a tacit admission that competition from a public option would help constrain premium costs.

Notably, the GOP provides no specifics on how exactly it would calculate the level of premium support to Medicare recipients.  Low-balling the scheduled increase in the premium support subsidy has been the key to the estimated cost savings in Ryan’s previous Medicare privatization plans.

Ultimately, the House GOP wants to dismantle traditional, wildly popular, single-payer Medicare and submerge it as one option among competing private health insurance plans.  Maybe all seniors will just choose the Medicare option anyway, but it’s a first stab at shifting seniors away from a government-provided guaranteed-benefit program and toward private sector plans.

* * *

In sum, the conservative health plan would shift Obamacare’s exchange-based structure from workers to retirees.  For those with insurance through their jobs, your insurance continues to go largely untouched.  And for everyone else, you just get less insurance.

And ultimately, the conservative vision of health reform just repeats the same tune.  The solution is always to block grant: to block grant Medicaid to the states, to block grant a tax credit to individuals, and to block grant premium support to seniors.  Block granting gets the federal government out of the business—and away from the risk—of actually insuring people.

But who picks up that risk?  Individual Americans do.  With high-deductible plans and HSAs, individuals bear the burden of funding their own healthcare for all but the most catastrophic injuries.  With block-granted Medicaid, the poor wind up on the receiving end of federal and state budget slashing, with little institutional voice to stick up for them.

In truth, hacking away at the security provided by insurance has long been a conservative goal.  The whole point of insurance is to spread risk from the individual to the larger community.  But conservatives fear that this creates moral hazard, weakening the individual incentive to spend less and engage in responsible behavior.  To control costs and impose individual responsibility, people need to have “skin in the game”—to have their own dollars on the line.

The GOP dresses this up in language about promoting choice, flexibility, and consumer-driven care.  “One way to immediately empower Americans and put them in the driver’s seat of their health care decisions is to expand consumer-driven health care,” the report claims.  But what being in the driver’s seat really means is that you’re on the hook if you get sick.  By shifting health care risk back on to individuals, conservatives erode the very point of insurance.  So after six years, “Repeal and Replace” still just means “You’re on Your Own.”

The case for a children’s basic income

A guaranteed basic income is becoming the pipedream du jour on the left, making it all the way to a favorable review in the pages of the New Yorker.  Experiments are underway in towns in Finland and the Netherlands to give all citizens a government-provided minimum income.  Venture capital firm Y Combinator is planning a basic income pilot program in Oakland, and non-profit GiveDirectly is trying to alleviate extreme poverty in East Africa with a pilot of its own.  In Switzerland, a basic income ballot referendum went down to defeat, but more than half a million Swiss voters supported creating such an entitlement.

It’s an intriguing idea, and one that serves a broad range of policy and ideological interests.  To Silicon Valley types, basic income can prepare for technology-driven labor displacement.  To some liberals, basic income combats poverty and rising inequality.  To others, a sense of utopian curiosity wants to see what happens when, unbound by scarcity and the grind of eking out a living, individuals can flourish to become their best selves, freed to pursue their passions, ideas, and humanitarian instincts.  And to conservatives, a basic income can elegantly replace most of the welfare state altogether.

As interesting as a basic income may be, it’s undoubtedly a politically farfetched scheme for the United States in the near future, to say the least.  But can we seize the principles of a basic income to take incremental steps to help those who would gain from it the most?

I’ve argued that those who support a basic income should make providing a child allowance to families with children one of their top priorities.  Children are entirely morally blameless for their poverty, and poverty holds back their academic achievement, making a mockery of the American ideal of equality of opportunity.  They also stand to gain the most from living in households with more money.

And among children, the youngest are likely to substantially gain the most from more income support.  In Congress, Rep. Rosa DeLauro has introduced a bill to create a new Young Child Tax Credit to provide relief to families with children under three years old, recognizing both that families need support during this special (and costly) time in their lives, and that young children would benefit immensely from extra resources.

The Empirical Case for a Young Child Allowance

The strongest empirical case for boosting the household incomes of poor kids comes from a 2014 paper by Greg Duncan, Katherine Magnuson, and Elizabeth Votruba-Drzal.  Reviewing the evidence, Duncan et al. conclude that “children from poor families that see a boost in income do better in school and complete more years of schooling.”

Duncan et al begin by reminding us of the long-lasting destructive consequences of child poverty.  Some 16 million American children live in poverty—more than one in five.  And the disadvantages to a child growing up in poverty reverberate for a lifetime, suppressing her years in school, halving her earnings in her 30s, slashing the hours she’ll work as an adult, increasing the odds of her landing on food stamps in adulthood, and raising her likelihood of ill health.  Growing up in poverty doubles the probability of young boys being arrested during their lives, and it quintuples the odds of teenage pregnancy among girls.

Poor children enter school behind their peers by the time they are in kindergarten.  On every basic metric, low-income children face a yawning gap between more privileged children, from recognizing letters to counting.  Poverty thus strongly appears to impede child development early in life.

Duncan et al explore three different explanations for why poverty hinders development: family and environmental stress; resources and investment; and culture.  Under the family and environmental stress theory, poor households face a mountain of constraints and limits that produce harmful stresses.  Parents contend with economic pressure and are forced to cut back on basic essentials.  This pressure causes psychological stress, producing depressive and hostile feelings.  This psychological stress can also distort decision-making and render parents less able to pursue long-term goals.  Financial scarcity creates marital tension and tends to lead to developmentally harmful parenting techniques.  And of course, economic scarcity leads to a whole host of bads, like dilapidated housing, dangerous neighborhoods, struggling schools, and exposure to pollution.  Studies show that when children are chronically exposed to elevated stress levels, the region of their brains responsible for self-regulation suffers.

Under the resources and investment theory, poor parents are too crunched for time and money to fully invest in their children.  Because of their parents financial constraints and work obligations, poor children “lag behind their wealthier counterparts in part because parents have fewer resources to invest in them.”  Poor parents are more often at the mercy of inflexible and irregular work hours, making it harder to make time for their children.  And poor children are exposed to far fewer enrichments like books, computers, and camps than wealthy children—an inequality that has grown substantially over the last forty years.

Under the culture theory, the structural impediments from living in poverty produce maladaptive norms and behaviors in individuals, which are then transmitted to children and cause another generation of poverty.  In this view, poverty and the welfare state inadvertently promote single motherhood, male joblessness, and increased crime.  A “culture of poverty” also influences parents to focus on keeping their children safe, regulating their behavior, and enforcing discipline, whereas better-off parents focus on letting their children grow and flourish.

Scholars like William Julius Wilson have pushed back against the cultural explanations of poverty, showing, for example, that poor women strive for marriage and motherhood, but run up against high rates of male incarceration and unemployment that make marriage unattainable or less desirable in practice.  Others acknowledge the role of structural social and economic factors, but aim to impart middle-class norms and behaviors to low-income children in order to compensate for the apparent political and cultural immovability of entrenched poverty.

While poverty is abhorrent at all ages of childhood, Duncan et al show that it’s most destructive at the earliest ages.  “[D]uring early childhood,” they explain, “the brain develops critically important neural functions and structures that will shape future cognitive, social, emotional, and health outcomes.”  Poverty gravely interferes with this development.

Duncan et al point to the famous high-quality childcare studies demonstrating the importance of the earliest years of life.  The long-term benefits to at-risk children placed in high-quality care in the Abecedarian and Perry Preschool programs show that infancy and toddlerhood are fruitful points to make positive interventions in a child’s development.

Next, Duncan et al evaluate the empirical evidence for boosting family income to help child development, focusing on experimental and quasi-experimental randomized studies from policy changes and pilot programs.  Between 1968 and 1982, six towns across the United States experimented with a negative income tax, essentially a basic income-style precursor to the modern Earned Income Tax Credit.  Studies measuring outcomes for children receiving these benefits found significant achievement gains for children in elementary school, but no corresponding impact for older children.  The studies did not measure the effects in early childhood.

Welfare reform in the 1990s, which encouraged parents to work and thereby increase their incomes, also provided an opportunity to study the effect of income gains on poor children.  Studies found that when welfare reform’s wage supplement programs took effect, children in early elementary school scored significantly higher on achievement tests.  In fact, a $3,000 increase in annual income was associated with an achievement gain of one-fifth of a standard deviation for these children.  Again, however, no gains were seen among older children.

Between 1993 and 1996, Congress greatly expanded the generosity of the Earned Income Tax Credit, which rewards work among long-income families.  Researchers found that the expansion of the EITC coincided with improved academic achievement among low-income children between the ages of 8 and 14.

In Canada, researchers studied the impact of variations between provinces in the country’s national child benefit on test scores.  Among children between 6 and 10 years old, more generous benefits were associated with both higher math scores and a lower likelihood of receiving a learning disability diagnosis.  There were also signs of gains among younger children, particularly boys.

Last, in North Carolina, a tribal government opened a casino and began paying $6,000 to each member of the tribe every year.  A study found that children in families receiving these casino payments had increased school attendance rates and were more likely to graduate high school.

Duncan et al conclude that these experimental and quasi-experimental studies suggest that elementary school-aged children have the highest academic gains.  Gains among adolescents were more muted, but did boost educational attainment like increasing years of schooling and high school graduation.  The authors noted that few of these studies estimated the impacts of higher family income during the early childhood period.

Duncan et al also point out that in the non-experimental Panel Study of Income Dynamics, researchers found that among families earning below $25,000, an annual boost to household income before their children turned 5 was associated with increased working hours as adults, increased earnings, and lower rates of food stamp receipt.  Older children saw no statistically significant impact.

The authors then examine the policy implications of these findings.  “If the evidence ultimately shows that poverty early in childhood is most detrimental to development during childhood and adolescence,” they posit, “then it may make sense to consider income-transfer policies that provide more income to families with young children.”  They specifically suggest creating more generous supplements to the EITC and/or the Child Tax Credit for families with young children—essentially the proposal introduced by Rep. DeLauro.  This mirrors the strategy adopted by several European countries like Germany and France that offer age-dependent income subsidies for families with young children.

It would also draw on the conditional cash transfer programs like the EITC and other programs in the developing world that give cash grants to individuals who engage in beneficial behavior, like working.  In New York City, the Bloomberg administration tested a Family Rewards program from 2007 to 2009, which gave cash incentives to promote a host of work, education, and health goals.  While the program lifted significant numbers of New Yorkers out of poverty, it failed to boost the academic achievement of elementary or middle school students.  However, the program was weighed down by a confusing multitude of incentives and irregular payments.  Family Rewards 2.0 is now underway in the Bronx and Memphis, Tennessee.

Finally, Duncan et al conclude by warning that the policy implications cut both ways: just as young children would gain from policies that boost household incomes, they would also suffer from policy choices that slash incomes and in-kind benefits like food stamps—the kinds of cuts pushed by Speaker Paul Ryan and other congressional conservatives.

Social Security for the Young

A young child allowance, or some permutation of it, would be a confluence of several of the principles animating the push for basic income.  For progressives, a young child allowance would combat inequality and poverty among the most vulnerable Americans.  For techies, it would invest in the faculties of young children to some day dream up the next frontier of innovation.  If Social Security for the elderly is a reward for a life’s work, “Social Security for the young” is an investment for future productive years to come—a pair of policies nicely bookending the life cycle.

While it would be wonderful if Congress saw the light and quickly passed Rep. DeLauro’s young child tax credit, Washington gridlock makes that a virtual impossibility in the near term.  And sure, if you squint hard enough and suspend some disbelief, you can see how a President Hillary Clinton’s childcare reform plan could morph into a quasi-child allowance through negotiations with congressional Republicans.  But I’m not holding my breath.

In the meantime, then, policy experimentation around this issue will need to take place at more local subsidiary units of government.  As I’ve written, this could take the shape of a child allowance with or without conditions: “One could imagine an enterprising city, school district, or even a well-funded and ambitious charter school trying out an initiative that (1) provides each family with a monthly ‘scholar success stipend’ for each of their children, and (2) conditions receipt of a full payment on children meeting certain basic expectations in school.”

This would seem like a particularly apt place for adventurous charter schools, whose appeal stems in part from their ability to innovate around providing added resources for low-income children, like highly-paid teachers and wraparound social services.  Why not try providing income support, too?

So the socially impactful venture capital firms and non-profits of the world should step up and partner with a town or a network of schools to see what happens when families with poor children suddenly get more money.  As the empirical evidence shows, these experiments should foremost target the youngest children who will reap the greatest developmental gains.  Just as a childhood in poverty can reverberate for decades, so too can a childhood of ample means — one that allows children to be children, to develop and thrive.  That’s an investment that would truly transform our society, and would be a big legitimizing down payment toward a basic income for all.