Strengthen the Economy

Mario Cuomo

Strengthen the Economy

This is the fourth installment in a series by former Governor Mario Cuomo.

mario cuomo.jpg What we must do to strengthen the nation's economy:

1. Provide the Education Demanded by Today’s World. Our workers need, at a minimum, two-to-four years of college, technological literacy and lifelong updating of skills to meet current needs. Our education must emphasize research, modernized technology, infrastructure, math and science. More than 150 years ago as we entered the age of industrialization and embraced technology, it was clear that we needed to assure a minimum level of skills in our work force and public schools. Schools free to all who used them were established. The minimum level of skills has risen dramatically since then but free education to assure that our workers achieve it has not kept pace with the need. That must change and some states are beginning to show the way – like Massachusetts which has assured it will provide two year community colleges. Our federal government should respond by participating in the expansion of free higher education by providing resources to states willing to do their part. At the same time elementary and secondary education must also be strengthened. In that regard Senator Chuck Schumer is worth consulting: he has proposed an intriguing set of initiatives to increase reading and math scores particularly in our public schools with a new Federal program that would subsidize the nation’s public schools in return for their dropping the regressive local property tax that is so disliked nationwide. The subsidies would be paid for in part by reducing tax avoidance and evasion.

2. Adequate Healthcare. Indisputably, the current system for financing health care is not working well enough to provide the health care we need. Although the United States now spends far more per person on healthcare ($7000 per person) than other nations, our infant mortality rate, maternal mortality rate and longevity are among the worst in the industrialized world. Americans with good jobs and complex needs virtually all receive good healthcare but a child born today in Bosnia Herzegovina or Puerto Rico is expected to live longer than an American child born today and people without health insurance in our country face a 25% greater chance of dying early. Today some 47 million Americans, many solidly middle class people, go without any kind of health insurance because they are not poor enough for Medicaid, old enough for Medicare or fortunate enough to have an employer providing coverage. In the long run that increases the cost of health care to everyone else who is insured and exacerbates the already huge burden on our industries that provide healthcare to employees. That burden has forced more and more companies to give up their policy of providing employees with insurance and to support requirements that every individual provide his or her own insurance with subsidies to those who can’t afford to pay.

The clearer it becomes that our current healthcare system is much better at producing massive profits for insurance companies, pharmaceutical companies and other private health care businesses than it is at providing adequate healthcare for all Americans, the more likely we will give more consideration to a single payer system.
While we’re waiting for Americans to learn that such a system is, as a practical matter, nothing more than expansions of Medicare and Medicaid, there are a series of incrementally beneficial steps that would help. Among them is increasing child-health coverage through State Children’s Health Insurance Program or “SCHIP” for 9 million uninsured children, a program that was first adopted by New York State during my governorship. In this regard, President Bush has sought to limit resources that would allow more middle class children to be covered, not because they don’t need the help but for “philosophical and ideological reasons”, believing it might move voters toward accepting “single payer healthcare”, which the President abhors. This is a good example of ideology at war with common sense and benign pragmatism.

Other steps that will help reduce healthcare costs include a bipartisan effort to reduce paperwork, duplication and medical errors by setting standards for exchanging electronic healthcare information including records by doctors and hospitals, and helping consortiums create regional data that works, reorienting Medicaid and Medicare to home care and community-based services, safe and legal registration of prescription drugs, expanded use of generics, rethinking and redesigning how emergency rooms relate to the rest of the hospital environment and a host of other small but useful steps that can have a significant impact cumulatively.

Perhaps the most vital change would be increasing primary care and healthful eating and exercise habits for people of all ages: prevention is still the cheapest and best remedy.

Medicare faces a serious insolvency problem. There are a number of things that could and should be done: strong efforts against fraud and waste; more modern record and date technology; emulating the Federal Employees Health Benefit Plan (FEHBP) which provides members of Congress and employees with a benefit package that preserves consumer choice, holds down costs and promotes quality care and allowing negotiation of Medicare prescription drug prices.

All these steps would be useful but that should not rule out continuing efforts to find a way to do universal health care. States like Massachusetts and California are considering state wide approaches and Senators John Edwards and Barack Obama have proposed significant plans, paying for some of it by taxes on wealthy Americans. Other candidates have also stepped forward. Hillary Clinton, for example, has promised complete American health care coverage by the end of her second term and says she will provide details later in the campaign.

3. Social Security. The number of Americans who have private resources sufficient to provide a comfortable retirement is relatively small and shrinking, in part because corporations, overburdened by healthcare costs and retirement plans have responded by reducing both healthcare and retirement benefits. That makes Social Security more important than ever. Two-thirds of retirees rely on the Social Security program for most of their income. Nearly half – especially women and minorities – would fall into poverty without it. Surviving children and disabled Americans in the many millions would also be bereft. Because Social Security is a pay-as-you go system in which today’s workers pay for today’s retirees and the number of retirees are greater than the number of workers, solvency is threatened. By 2042, Social Security will be able to pay only 74% of benefits as calculated by today’s prescribed benefits. In fact, the Federal government has been using funds raised by the taxes for Social Security for other government purposes as well, leaving a “bond” in the Social Security fund that promises to pay back what it owes. Since 1983 Congress has spent $1 trillion of Social Security money on other things. They will dip into the Social Security fund for $693 billion more over the next decade.

Savings accounts as described in the Ryan-Sununu legislation proposed by Republicans in Congress would allow earners to give part of their FICA taxes to their own investment vehicles. Proponents of Ryan-Sununu said investing that money in the market would return much more than investments in the Social Security Fund. The opponents’ reply, besides “the market is risky”, was that in seventy-five years the Social Security fund would be owed another 8.5 trillion dollars in today’s dollars for the use of the payroll tax by the Savings Accounts.

That leaves the question: how should we, or could we, pay for our Social Security, avoiding insolvency? The “popular” proposals appear to be: increasing the wage cap on Social Security taxes which is $97,500. Indeed, if removed altogether there would be virtually no threat of insolvency. If 2.0% of the 6.2% Social Security tax applied to all income, and 67 became the minimum age for benefits, and the cost of living increases were reduced a little, we could assure solvency for the next 75 years.

There are other possibilities like raising the payroll tax which would be further punishing to the middle class and employers, or reducing benefits, which is also a distasteful possibility. On the other hand, if we can get back to the kinds of surpluses we were left by the Clinton Administration in 2000, we could use the surplus from the Budget to deal with the Social Security problem. President Clinton was going to do it in 2000 and Republican leaders in Congress agreed but then Al Gore lost the election and George W. Bush, the new President, didn’t want to use the surpluses for anything but tax cuts, especially to the rich.

The Social Security fund could also set up a parallel fund for investment in the stock market operated not by individual potential retiree/recipients but by “experts”. This is done by some states in connection with their retirement funds. (See Gene Sperling’s book on Progressive Agenda; The Pro-Growth Progressive pp 286-287.) (See Pete Petersen’s Running on Empty; pp 201-203). Universal 401K outside of Social Security system*NOT A COMPLETE SENTENCE*. This would be much better than the George W. Bush plan which would have shifted money out of the Social Security pot and put it into a new pot leaving Social Security with more debt which would require $8.5 trillion in transfer payments over 75 years.

4. Fairer Trade. Of course trade is essential and we are still the world’s largest exporter of goods and services. The trade liberalization measures put in place after World War II produce now, by one estimate, an additional $1 trillion in income for Americans annually and millions of new jobs. The inexpensive foreign goods that arrive here because of free trade keep prices down. Low prices are good for consumers and by keeping inflation and interest rates in check; they encourage economic growth and job creation.

But there is a downside as well. The economic suffering by workers in places like Ohio, Indiana and Michigan is very real and so is the political backlash that results from lost jobs. There are stirrings in Congress about bills to put tariffs on some Chinese exports because of violation of WTO standards, but the long-term answer will have to include dealing with the vexing question of how to train American workers for a new world of jobs. Besides better education and training, and assistance for disadvantaged workers, we also need balanced trade instead of “free trade.” Our tremendous trade imbalance weakens our economy significantly, especially with respect to China and Japan as we have given more than we have gained. Our best deals are with Canada and Australia and other closer-to-comparable economies. We should require all of our trading partners to meet specific human rights, labor and environmental standards, bringing them closer to our own. What good reason is there not to insist on these requirements? Consider NAFTA, Mexico’s poverty increased and real wages went down. Opponents of NAFTA point out we lost 900,000 jobs and our trade deficit went from 100 million dollars to 13 billion in 1994.

5. Supplying the Energy We Need While Protecting the Environment. The sudden escalation of oil prices brought back into focus the need for alternatives to oil as an energy source for the nation. We will not be able to replace the use of oil entirely but we can reduce our dependence on foreign oil which makes us vulnerable, by finding less noxious alternatives. What will it take to find a real solution? Strong political leadership. Although space exploration by the United States began under President Eisenhower in the late 1950s, it was given permanence and priority by President John Kennedy. He did it by making it a rhetorical centerpiece of his Administration’s advocacy. He inspired the nation with a sense of urgency and grand expectation, captivating the attention of all Americans and the support of most of them by publicly explaining the advantages of being the first country to reach the moon and the dangers of allowing a competitive nation to beat us to it. He made exploring space a big idea that Americans liked... and it still is. Every year for the last four decades we have spent billions of dollars in space exploration with brilliant success. Now we should make conservation and new forms of energy that same kind of big idea. We must work more intelligently and more vigorously to improve conservation techniques and reducing noxious byproducts from automobiles using gasoline fed engines. We must also get serious about developing all useful alternative sources – wind, water, bio-fuels, clean coal, battery driven automobiles and all the others that would allow us to free ourselves from dependence on oil and noxious fuels. That would reduce the economic and military threat implicit in that dependence, as well as help us deal with the “Inconvenient Truth” which is global warming. (See the Intergovernmental Panel on Climate Change's Global Warming Declaration.) Our growing population and developing industries demand more-and-more energy, while the increasing threat of global warming grows constantly more severe. We must move quickly to regulate global warming emissions here at home. Al Gore advocates an immediate freeze on CO2 emissions and a campaign of sharp reductions. Auto companies should be convinced to cap carbon monoxide. We should stop building old-fashioned coal burning power plants, instead the new technology that captures carbon should be used and taxing carbon emissions should be also considered.

We should also take a fresh look at nuclear energy that uses uranium, a fuel that is available, less expensive and a good replacement for fossil fuels that produce dangerous carbon dioxide emissions. Until now nuclear energy in the United States has been discouraged because the construction technology has been imperfect, siting has been done carelessly and there is not yet a safe and convenient way to dispose of nuclear wastes. If we can find a way to travel to the moon and back we can solve all these technological problems as well, especially since it’s clear that France has been doing it for many years.

Ultimately the use of nuclear power for energy instead of destructiveness should be a vital part of our non-proliferation strategy with Iran, North Korea and other nations.

6. Homeland Security. We remain frighteningly behind in the race to protect against all the possible attacks we have envisioned. The bureaucratic Homeland Security goliath has been a grotesque blunder; by jamming together a bevy of smaller bureaucracies it has made things worse instead of better, as demonstrated in the Katrina disaster. In fact, Homeland Security’s most obvious effect has been to line the pockets of favored private contractors and former federal officials with lucrative contracts.

FEMA, which has always had a reputation for efficiency, should be separated from this mega-bureaucracy and so should some of its other units.

You don’t have to be Lou Dobbs to know we must also secure our borders. The presence of twelve million or more undocumented aliens proves how frighteningly penetrable those borders are today. Container ships from all over the world must be scrutinized. Only 20% of containers reaching our shores are inspected for biological, chemical or nuclear weapons. Our energy, water supply systems and nuclear sites must be protected as well as our trains and subways. Effective homeland security must be enhanced with new technologies all made in the USA including: 3-D face detection system; facial fingerprinting; voice identification; “smart” videos; surveillance cameras and faster super cargo scanners.

7. We Must Deal with Illegal Immigration Humanely and Efficiently. No nation in the world owes as much as we do to immigrants: without them there would be no United States of America. They were invited to come here in our nation’s Declaration of Independence and they came from all over the world seeking and finding opportunity here, including my mother and father. In the process they built us into the most powerful nation in the world and blessed it with the fruits of foreign cultures they had been born to.

Now we have 12 million or more undocumented immigrants. That is too many to try to send home even if we wanted to and the truth is we don’t really want to because American business and households that use and exploit them consider them too valuable. In trying to find ways to deal with them problems have been created by the fact that we made laws to limit and regulate the number and kind of immigrants we wanted but then failed to enforce those laws, leaving us with millions of technically illegal aliens. That’s what happened after we tried amnesty for some 3 million immigrants in 1986. Senator Alan Simpson who sponsored the law and was its prime supporter admits today the law has failed terribly largely because it failed to stem the continuing stream of illegal aliens. The result, instead of 3 million, we now have 12 million – or more – undocumented immigrants that we have virtually seduced into coming here by failing to enforce our laws and being otherwise accommodative to them. Recent efforts to pass a new law have been stymied by a number of complaints but the principal one remains the importance of assuring that the flow of illegals will be prevented. The deterrence of illegal entrants would have to include serious sanctioning of employers who knowingly seduce, use and exploit workers who entered our nation illegally. The Federal Government has promised to do that in 1986 but as of November 2006, 20 years later, only four prosecutions against such employers had ever been conducted.

Until that is assured there appears to be no real chance of getting an agreement between the President and the Congress.

The first thing we should do is help currently legal immigrants who seek citizenship to realize their dreams for a green card which are disgracefully frustrated by a failed natural bureaucracy. Then the Democrats should lead the way to real deterrence of illegal border crossing and a practical, humane policy with respect to our immigrants and their families, especially those who are already here. That will call for gradual legitimating of some of them over a period of years during which they would have to admit violation of our laws and pay a fine, work, pay taxes and commit no crimes. They would be able to earn citizenships but only after legal immigrants who had come before them had the chance too.

8. Assured Privacy and Protection of Constitutional Rights. We should be able to take for granted freedom from excessive government intervention and intrusion upon individual private lives like the President’s order scrutinizing millions of American phone calls. President Bush’s clumsiness, jurisprudential insensitivity and naively greedy attempt to seize governmental powers that were not his are so well known and documented that they need little if any explanation. In fact, it is fairly clear that Bush’s taking it upon himself as President to in effect declare war on Iraq was an unconstitutional act, notwithstanding the Congress did not object. Article I § 8 of the Constitution clearly gives the right to declare war to the Congress and not the President. We must do everything we can to choose as our next President someone who understands and respects the Constitution.