Rethinking the Safety Net
The Case for a Center-Right & Democratic Coalition
Pollster Stefan Hankin is back with a modest proposal for a new American safety net. What if we didn’t make businesses responsible for providing health care and retirement savings. And — now hear him out — what if the solution wasn’t another government program? What if there was a free market solution to taking care of everyone?
by Stefan Hankin
Once an alliance of conservative economic enthusiasts, religiously guided voters, and yes, the “states’ rights” cohort, the Republican Party has been on an unsustainable rightward trajectory since 2009 when the party decided to embrace the tea party. Thanks to President Trump’s unparalleled leadership, it has finally reached its breaking point. If the non-Trumpian faction of today’s GOP has any interest in shaping the future of American politics, they must do two things immediately. First, as we have previously argued, they need to distinguish themselves from the MAGA clad groupies of the Trump Administration by forming a new center-right party that is far removed from the callow policies and xenophobic rhetoric espoused by this administration. And second, in order to have instant political impact while also garnering momentum, this nascent center-right party needs to form a mutually beneficial coalition with the Democratic Party. In the same vain as what Angela Merkel’s CDU party has accomplished in Germany, an American coalition made up of the center-right and Democratic Party would have more than enough political power to make real, forward-looking change, potentially bringing our government and policies into the into the 21st century in a way that is embraced by a super-majority of Americans.
Establishing a new center-right party also necessitates the adaptation of “conservative economics” for today’s world. The pillars of the GOP economic platform (i.e., trickle-down economics, pro-big business, anti-union, anti-regulation, anti-trade) are outdated by several decades and by several degrees of separation from reality. Meanwhile, the pandemic has greatly accelerated the way our economy functions, thereby widening the gap between the actual economy and the Republican conception of what an economy looks like. When the pandemic inevitably ends, the GOP’s economic vision will be further behind the curve while the demand for practical and competitive policies will have only inflated.
The pillars of the GOP economic platform are outdated by several decades and by several degrees of separation from reality.
The antiquated mindset of Trump’s GOP is something along the lines of the following: large companies manufacture products, workers are on the assembly line (proverbial or literal), the more products you can squeeze out of each worker the more money there will be, and more money means everyone is happy. Said differently, company profit margins are the only metric that anyone should ever focus on. For some large corporations – the ones that tend to moonlight as people during election season and spend lots money influencing Republican politicians – the GOP’s business model is not so far from the truth. However, this framework does not reflect the U.S. economy of today or of tomorrow.
Decades have passed since the fate of the American economy was determined by large corporations maximizing the profits of factory style assembly lines. The heart of today’s economy is based more on knowledge than manufacturing, which is even more true now that the pandemic has accelerated automation and other technological trends.
Since businesses around the world were forced to give the virtual workplace a try, we now have a global workforce that is capable of working from anywhere with an internet connection. Virtual work has permanently entered the mainstream consciousness, and we can expect a future surge in hiring for fully remote positions. Very soon, companies will not limit themselves to people working remotely from different cities or states but will also aim to hire top talent from around the globe. In response, countries may adapt their work requirements so that citizens can stay put while working for a company outside of its borders. Governments are likely to devise an employment tax for residents working out-of-country, because who wouldn’t want to make a little money while keeping the best and brightest rooted at home regardless of where their employer may be?
In this new era of work, American workers are going to be at a considerable disadvantage.
In this new era of work, American workers are going to be at a considerable disadvantage because their reliance on employers to provide them with a social safety net will make them much more expensive employees. Simultaneously, American businesses will continue to be bogged down by their onerous responsibilities as social safety net providers. This is a ridiculous model and every other first world nation has figured that out. The number of HR man-hours US companies spend each year equates to billions of dollars, most of it wasted on picking healthcare and retirement plans as well as administering them (two things that have little to do with profits or advancing a company’s value). Further, one of the largest line items for a company is an expense no one can know until the end of the year despite needing to make budgeting plans months in advance. Find me a business owner who likes dealing with healthcare costs (hint: they don’t exist). Yet somehow, to the detriment of American business owners as well as millions of uninsured Americans, this system continues to be defended to death.
The first step towards a more coherent healthcare plan in America is to get US companies out of the business of providing healthcare by creating a partnership system similar to that of Germany and Japan. This is an urgent cause that both the American center-right and Democratic Party should enthusiastically get behind. The move would be great for businesses and is a huge step towards universal coverage.
Here is one way it could be dealt with: from cradle to grave, every American has health insurance from a private company (United, BCBS, CVS Health etc.) There is a minimum level of coverage and max out of pocket everyone can pay (probably a sliding scale based on income). With the support of the government, insurance companies negotiate their rates for the next 10 years and establish mandates on how quickly services must be paid for, which is key to keeping hospitals and providers happy and solvent. Insurance companies can offer better plans for more money, but that cost would be on the individual. If you are working, the company you work for pays the monthly premium. Companies can also try to attract people by paying for better plans, but that decision would be on the individual companies.
If you are unemployed – including those who are retired or too young to work – the government steps in and covers the cost of your monthly premiums. The government would also set up rules to ensure that companies are not hiring people as “consultants” so as to avoid paying premiums etc., but that is a detail that can be addressed later by the policy experts who are passionate about building a healthcare structure that works for America.
There are several decisive reasons why this partnership system is good for American businesses. First, healthcare would be a known cost, so unlike now, it would be a predictable expense that companies can easily account for. Second, it makes the cost of American employees more in line with workers in the rest of the developed world while ensuring that the growing population of American workers doing remote work as well as entrepreneurial work have healthcare coverage. And third, this system makes American businesses evermore competitive with foreign companies because the resources that were previously spent managing employees’ safety nets can be devoted elsewhere.
No more Medicare. No more Medicaid. Companies save money, creating a more prosperous economy. Sounds like a playbook that conservative thinkers should fully support. And for the progressives: near instant universal coverage is hard to argue with.
Companies save money, creating a more prosperous economy. Sounds like a playbook that conservative thinkers should fully support.
The logical extension to this healthcare plan is a more robust retirement infrastructure. On top of Social Security, why not add in a 401K/IRA type plan for all Americans. This would be similar to the system as it currently exists, but instead of being based on companies, it would be up to individuals to pick their plan(s), which would follow them throughout their career. Analogous to the healthcare plan, companies can choose to be more competitive by offering bigger matching amounts. Baby bonds, a policy championed by Senator Cory Booker, should also be included in the plan to revamp America’s economic social safety net.
Like the blueprint for healthcare, this retirement infrastructure is good for conservative thinkers because it saves companies money and time, while also moving people away from a reliance on government run programs (Social Security) and towards a market-oriented system. This is also good for progressives because the safety net is being increased by tenfold and because it protects workers from companies who do not provide sustainable retirement plans. The proposed infrastructure also keeps individuals in control of their own future, and ultimately, provides greater access to the 90% of Americans who do not benefit from this country’s entrenched wealth building mechanisms.
At the end of the day, protecting individuals is not only good for the people, but also for businesses.
At the end of the day, protecting individuals is not only good for the people, but also for businesses. Reform of America’s social safety net should be supported by people from both sides of the ideological spectrum. It makes us nimbler as an economy and as a country. It prevents the need for the government to bail out companies when they can’t pay for their employee’s healthcare and pensions. It prepares us for future disruptions; one need only to look outside in the US to see how unprepared our current system was to deal with the turbulence of 2020, or the economic crisis of 2008. And, it creates a freer market by allowing businesses to focus on building the best version of themselves without getting caught in the web of burdensome social safety net obligations.
For the more right leaning individual: it is time to rethink and reform America’s social safety net in order to keep American companies competitive and to ensure that our own best and brightestare able to live comfortably in their own country. For the more left leaning thinker: We need to be protecting people, not jobs. This means universal health insurance, access to wealth building systems, and the flexibility to take risks and drive our economy forward in a way where we are elevating the chances success for everyone, regardless of zip code.
If there is any hope that we can accomplish these goals, certain members of the GOP need to come to their senses and break ranks with their colleagues who have continuously disappointed the nation and who history books will remember as being complicit in the deconsolidation of our democracy.
Stefan Hankin is the founder and president of Lincoln Park Strategies. His previous bylines for “The Day Data Died,” “Rule by Minority,” and “End the GOP.” Follow him on Twitter at @LPStrategies.
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