The 2-Percent Illusion

The 2% Solution: Fixing America's Problems in Ways Liberals and Conservatives Can Love
By Matthew Miller, Public Affairs, 320 pages, $26.00

Matthew Miller is a serious, well-read man of genuinely public-minded impulses. A veteran of Bill Clinton's budget office, he writes an often-liberal syndicated column and co-hosts a nationally syndicated public-radio program called "Left, Right & Center." Now he has written a book around the appealing idea that for just 2 percent of our national income (currently about $220 billion), we can give everyone a living wage, good health insurance and decent schools, plus get big money out of politics.

Miller is scandalized that millions of American kids go to bad schools, that tens of millions of American families lack health insurance and that hard-working breadwinners earn poverty wages. To him it is just common sense that each side should give a little and embrace his intelligent ideas. He does deserve credit for calling for more public spending.

Miller calls this agenda "radical centrism." What stands in its way, he argues, is partisan deadlock, in which both parties are about equally to blame. "What American politics urgently needs," he writes, is "not a new left but a new center." Presumably illustrating the potential of his program to cut across old ideological divisions, the book jacket carries blurbs by Paul Krugman and Barbara Ehrenreich, on the left, and by David Frum and David Brooks, on the right. So what could be wrong? Plenty.

Unfortunately, Miller's assessment of what ails our society is flawed by a bizarre conception of politics and wishful programmatic fixes. While preparing his book, he went around the country interviewing leaders of both parties and proffering his plans. He managed to convince himself that Democrats and Republicans alike would accept his grand compromise of "using conservative means to achieve liberal ends," if only old shibboleths and interest groups didn't stand in the way.

To read Miller, you'd think that American politics was deadlocked and that the blockage was roughly symmetrical. But that's hardly the real story of the era since Ronald Reagan. As we all know, the far right has won one victory after another, and even after the Clinton interlude, the center is much farther to the right than it was in 1980. The fact that 42 million people have no health insurance, that too many jobs pay poverty wages and that schools are failing is not the result of partisan deadlock but of conservative hegemony.

Liberals have solutions. What they don't have is political power. Even under Clinton, as Miller notes in passing, federal outlays were cut from 22 percent of the gross domestic product to 20 percent. Federal revenue is now at its lowest share of national income since Dwight Eisenhower.

Scour the conservative think tanks and you will find no Matt Millers commending a grand bargain with liberals. You will find right-wing ideologues who are serious about winning. Bill Kristol, Karl Rove, and Grover Norquist did not prevail by disdaining a new right and commending a new center. Rather, the conservative strategy is simply to destroy liberalism and take no prisoners.

When the right splits the difference, as Bush pretended to do with the No Child Left Behind Act, and as the House leadership hopes to do with a Medicare drug benefit, it is simply this year's tactical feint. The grand bargains don't stick because the right feels free to walk away from deals. The Republicans mobilize their base and play hardball. (Franklin Roosevelt, incidentally, mobilized his base and played hardball, too.) The hard agenda of dismantling social investment is camouflaged with compassionate rhetoric, but the right is dead serious about its ultimate aims.

Miller isn't. He projects his own concern for the common good onto the Republicans. He can't quite seem to comprehend what the right is up to. Miller reports that his interviews "with conservative thinkers and activists left me stumped. Most of them insisted they were as concerned with equal opportunity and the problems of disadvantaged Americans as were Democrats, and resented the way their party was caricatured as heartless or indifferent." Miller offers several hypotheses to explain this apparent puzzle of seeming Republican indifference to social justice. In the end he concludes that the right is suffering from, of all things, "cognitive dissonance." Evidently they really do care about the poor; they just don't grasp that their program screws the poor.

Earth to Miller: Forget cognitive dissonance and remember Occam's razor. There is a much simpler and more plausible explanation: They really don't care about the poor. The right is absolutely sincere in its loathing of government and its belief that, in George Gilder's immortal words, "The poor, most of all, need the spur of their own poverty." The right blends ideology with opportunism when it guts regulation and cuts taxes in order to deliver for its elite political base.

Miller's proposed use of the $220 billion a year in federal revenue that his 2-percent solution would generate is almost as feeble as his political analysis. On health care, he would have government mandate and then subsidize what he calls a "Chevrolet" of an insurance policy -- nothing fancy, just basic transport. Existing insurance companies would stay in the game. He seems oblivious to the fact that tens of millions of nominally insured people already have below-Chevrolet-quality coverage, with massive cost shifting from employers and health plans to individuals. He also neglects to address the massive regulatory challenges of assuring that such a system would not invite insurers to "cherry-pick."

Miller also ducks the biggest source of waste in the system: the huge administrative and marketing costs of private insurance. "Think of it as a jobs program," he urges liberals. On the living-wage challenge, Miller's solution is equally flip: Just have taxpayers subsidize low-wage employers. Unions and minimum-wage laws are old hat. The new idea is that if an employer can get someone to work for, say, $6 an hour, the government should go far beyond the Earned Income Tax Credit and spend another $35 billion a year making up the difference between what employers pay and what it takes to live.

For failing schools, Miller's panacea is a huge pay raise for teachers. Miller wants to link this reform to a lot of experimentation with vouchers and incentive-pay schemes. Unfortunately, it's becoming increasingly clear that the evidence showing dramatic gains from voucher schools is fraudulent or based on taking the easy cases. Teachers are surely underpaid, but if teacher pay is the silver bullet, let's do it within the public system.

Miller borrows Bruce Ackerman's proposal to give voters "Patriot Dollars" -- vouchers to bestow on a favored candidate, to dilute the influence of big money in politics. A good idea. He also favors repealing some tax preferences and a portion of the Bush tax cut. Also fine.

But it's a shame that someone as smart and decent as Miller thinks that liberal leadership means acquiescing to the right's salami tactics, and that he doesn't look more deeply into the actual politics or substance of policy. This brand of centrism is a recipe for continued shifts to the right. It's no surprise that Miller is emerging as the conservatives' favorite liberal.

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