An Economic Agenda for Democrats


If the public-opinion polls and online betting markets are correct, Democrats will be running one or both houses of Congress come Jan. 3, 2007. But if that moment does arrive, will their congressional leaders find themselves repeating the famous question asked at the end of the 1972 Robert Redford film The Candidate, "What do we do now?" Let me quote from an E-mail I recently got from Jacob Hacker, a Yale political science professor and author of The Great Risk Shift, a new book in which he identifies growing income volatility as the prime cause of widespread worker angst. His bleak take on the Dems' economic agenda in the upcoming 110th Congress: "One thing that's clear is that Democrats are focusing right now on taking down the GOP and very little on what they might do once elected–which may work as an electoral strategy but is going to leave them with a pretty blank slate if they actually win one or both houses."

Hacker is a liberal who would dearly love to see Democrats offer the American public some big and bold proposals–something beyond raising the minimum wage and rolling back President Bush's tax cuts. So I asked him to come up with his own "Contract With America," a list of game-changing economic ideas. (Don't fret, GOP-ers; I'm running the same racket for you tomorrow.) Here is Hacker's four-point agenda:

1) "Expand Medicare to move toward health security for all." Under Hacker's Medicare Plus plan, Medicare coverage would be available to all legal U.S. residents not covered by an employer-sponsored health plan. And companies would be required to either provide a minimum level of coverage to their workers that is as good as an upgraded Medicare plan or pay a payroll tax. Workers and their dependents in firms that choose to pay the tax would be covered under the Medicare Plus program. Individuals in the program would also pay an income-related premium of $50 to $140, depending on marital status and family size. As for the improved Medicare program, it would also cover outpatient prescription drugs, preventive services, mental health, and maternity and child health.

2) "Move toward universal 401(k)'s." These savings plans would be available to all workers whether or not their employers offered retirement plans. All money would remain in the account throughout a person's working life even if he or she changed jobs. The government would give tax breaks to companies to fully match employee contributions, especially for lower-income workers.

3) "Upgrade unemployment insurance." A first step would be to expand a wage-loss insurance program–known as Trade Adjustment Assistance–created in 2002 to help older workers displaced by trade trends such as globalization and outsourcing. Hacker would bring in older workers displaced by structural changes in the economy as well as by trade. Under the current program, eligible workers age 50 or older who obtain new, full-time employment at wages of less than $50,000 may receive a wage subsidy of 50 percent of the difference between the old and new wages, up to $10,000 paid over a period of up to two years.

4) "Spearhead a pilot program to provide stop-loss protection against catastrophic income losses." This is Hacker's "universal insurance" idea, which would help preserve family incomes from huge drops, say, 20 percent or more or where out-of-pocket health costs in one year amounted to 20 percent or more of their combined income that year. The program would be most generous for lower-income families, which have the fewest resources with which to weather economic shocks.

Now, Hacker wouldn't expect all, if any, of these proposals to be enacted as long as there's a Republican in the White House. But among Democrats, the upgraded employment insurance may be the most controversial item. In the past, unions have called such proposals "burial insurance" since they merely ameliorate the impact of globalization and outsourcing rather than preventing the effect of these seemingly unstoppable trends. Former Clinton economic adviser Gene Sperling once told me a story about how he advised 2004 Democratic presidential candidate Wesley Clark to advocate these sorts of policies. One try on the campaign trail among core Democratic audiences–he got a hostile response–and Clark stopped pitching them.