From the New Deal to the BFD

Posted March 24, 2010

You had to laugh. When Joe Biden introduced the President at the White House health care bill signing today, he leaned over and quietly reminded Obama that "this is a big fucking deal". His comment was off color but on target.

Health care reform is a watershed. Not only did the federal government finally grant tens of millions of people access to basic health care. It heavily regulates private health insurance — something every other civilized country has done for decades. It is testimony to the tenacity of Obama, who was willing to get his hands very dirty, and to Nancy Pelosi, who did an amazing job making the sausage. I herewith retract my previous snarky comments about Madame Speaker. She seriously rocked on health care. There are few speakers in our history with the skill to make this bill happen. Also, we owe a debt of thanks to those in Congress who tool serious risks with their political careers for this bill (credit a brilliant and moving speech to them from Obama).

Health care reform may set the high water mark for traditional liberalism. In the twentieth century, liberalism stood for expanding rights and benefits. The rights agenda granted new legal protections to women, racial minorities, workers, and consumers. The economic agenda provided a basic level of benefits to the poor, sick, and retired. Social Security, Medicare and Medicaid, Food Stamps, and Housing allowances represent the American federal safety net. Health care reform expands both citizen's rights (an end to lifetime exclusions and exclusions for preexisting conditions) and economic benefits (subsidies to enable low income Americans to buy health care).

Today's triumph likely spells an important step in a transformation from a liberal focus on rights and benefits to a focus on the fundamentals of progress and opportunity. This transformation is gradual, not sharp: gays, lesbians, and immigrants have a case for civil rights for example. But increasingly the job of protecting civil rights, labor rights, women's rights, and environmental rights is done by devoted civil servants and the courts. Likewise, once every American is guaranteed basic food, shelter, education, health care, and retirement income, the case for increasing state welfare provisions gets weaker. More fundamentally, the politics or rights and benefits is no longer the basis an enduring political coalition.

This will be confusing to liberals who have focused for the past century on rights and welfare. Many lack the vocabulary to understand or advocate for the fundamentals of human progress and opportunity. As a result, new leaders will come to define successful Democrats. They will focus on five areas, none of which grant new rights or benefits.

Education. We are producing students with the same capabilities as Costa Rica does. In today's economy, that means that in a generation we will either compete in the world economy like Costa Rica or, if we are very lucky, we will admit enough smart immigrants to continue to innovate. Democrats have quite literally sold the education agenda to the teacher's union — and the efforts of Obama and his Education Secretary Arnie Duncan to wrest it back are a profile in political courage that has been too little appreciated. They are doing more here, and faster, than any administration in US history. Their efforts deserve support.

Entitlement. There is no evidence that an elected legislature can deal with this issue. Like military base closings, it needs a bipartisan commission with the power to draft non-amendable legislation. Naming one recently was a good step by Obama, since neither party has an ounce of credibility on this issue. Democrats are learning to say the word deficit like it matters and Republicans no longer claim that they wish to "starve the beast" by running up huge deficits as Reagan and both Bushes did. Bad things happen to governments that debase their currencies — and very bad things happen to governments that debase the world's reserve currency and lose the privileges that come with that. Our goal does not need to be the full repayment of all debt, but it does need to be the full funding of all state and federal obligations, a balanced budget in all but very bad years, and maintaining debt at sustainable levels, say 3-5% of GDP.

Entrepreneurship. State and local governments can do a lot to help people start businesses and they can learn a lot from those who do. State and regional investment funds and startup incubators are working in several places, notably Maryland. Basic business literacy can help those wishing to start local small businesses to succeed. Democrats are deaf, mute, and dumb on this issue: notice once again that very few entrepreneurs serve in the senior ranks of the Obama administration. In California, the entrepreneurship agenda is being hijacked to mean tax cuts by two former technology CEOs who are running for office without ever having taken meaningful risk or started a company. Meg Whitman and Carly Fiorina did not create the businesses that made them wealthy — nor were either impressive as CEOs. Unfortunately, having toiled in the New Deal vineyards for so long, few Democrats have the basic vocabulary to improve the startup ecosystem or to adopt a startup perspective to government services — a huge weakness.

Environment. Neither party has a lock on wisdom or policy on this issue. Democrats need to find a voice that is economically and technologically more compelling than Al Gore and Republicans need to prove themselves capable of advancing ideas opposed by large oil companies. In political terms, much of this comes down to a serious commitment to alternative energy. If you want to measure progress in this area, check the difference between Danish and US gas prices. At the moment it is about $8/gallon. When it approaches zero, we will be making progress.

Research. Federal research dollars drive tremendous advances in basic and applied scientific knowledge. The dollars need not be huge — on the order of $100 billion. Federal research grants are administered by The National Science Foundation, the National Institutes of Health, The Department of Defense, The Department of Energy, and The National Institute of Standards and Technology in the Commerce Department. Oddly, the federal research agenda has withered for lack of a champion (Nobel physicist and Energy Secretary Steve Chu may be taking the lead for the administration on this). We get huge bang for our buck here and this is not something that the private sector can or will invest in.

In short, health care reform is a BFD not simply because it helps people who need help but because it will force Americans and especially Democrats to grow politically. Twentieth century liberalism was built on new rights and new benefits for citizens that had been denied the ability to participate fully in American life. Twenty first century liberalism is much more likely to focus on creating economic opportunities that make participation worthwhile.