The Return of the Age of Activism
By Joe Klein
It now seems clear that George W. Bush will be remembered for symmetrical disasters. His presidency began with the destruction of the Twin Towers by al-Qaeda terrorists. It is ending with the devastation of the Twin Trillions -- the money spent on a foolish war in Iraq ($653 billion and counting) and on the bailout of a financial industry gone hog wild during the Reagan-initiated Era of Deregulation. Bush has revived Big Government in the worst possible way: the middle class will pay, in perpetuity, for the sins of the powerful.
It is hard to put a smiley face on this stinker. A crash -- and this one seems a doozy -- usually announces the arrival of hard times. The real economic woe is yet to come, as credit dries up and the economy slips into recession. The power of the next President seems destined to be severely constrained by huge debts and diminishing tax receipts -- unless he finds some creative ways out of the morass ... and if he doesn't, his presidency will be a failure. One plausible path to success is proposed by the moderate Democratic scholars William Galston and Elaine Kamarck in a new Third Way paper appropriately titled, "Change You Can Believe in Needs a Government You Can Trust." Galston and Kamarck believe the next wave of activism is going to have to be different from government past -- precise, streamlined and accountable. In order to build credibility with a severely skeptical public, it will have to be accompanied by a major government reform effort.
Both John McCain and Barack Obama have promised reform if they are elected. Both have promised to reregulate the markets (although McCain has always been a vehement deregulator). Both have promised to scrub the Federal Government for waste, fraud and abuse -- a perennial pledge, but one that will actually need to be met if either man hopes to have the credibility to propose any new government spending. Obama wants to spend more than McCain, so he has to work harder to prove his reform chops. Indeed, Obama has tacitly acknowledged the prevailing skepticism by building accountability into some of his policy proposals. Galston and Kamarck like Obama's proposed Infrastructure Reinvestment Bank "because it would take specific ... decisions [like the 'Bridge to Nowhere'] out of the hands of politicians" and put them under the control of an independent five-member panel, similar to the Federal Reserve Board.
Obama's Infrastructure Bank illustrates two other principles that could work to the next President's advantage. First, at a cost of $6 billion per year, it is less than 1/100th the size of the proposed financial bailout -- a lot of programs that used to sound big seem like peanuts now. Second, it is a program that would create jobs and strengthen the economy. The next President will have to argue that any new policy program will be an investment in economic growth. Given the budgetary realities, it will be easier to get money through Congress for energy programs that produce tangible results -- like building windmills (or nuclear plants) -- than for complicated regulatory regimes to control carbon emissions.
Galston and Kamarck argue that the next President should start simple and build gradually on success, although they do acknowledge, "When an ambivalent public is demanding large changes even as it mistrusts government as the agent of change, patient incrementalism can convey the impression of weakness and lack of purpose."
Which is why a major overhaul of the health-insurance system may be worth a try, especially if it can be sold as a reform -- as a means to make U.S. companies more competitive and the economy more efficient. The ground seems particularly ripe for a plan that would provide universal coverage while relieving U.S. businesses of their suffocating health-insurance responsibilities and does it without socializing medicine. Senators Ron Wyden (Democrat, Oregon) and Bob Bennett (Republican, Utah) have made such a proposal, the Healthy Americans Act, which has gained the support of 15 Senate co-sponsors, evenly divided between Democrats and Republicans. It would have employers "cash out" their health-care benefits to employees and then would provide a tax deduction of up to $15,210, according to income and family status, for individuals to buy into a government-supervised group of private insurance plans. According to the Congressional Budget Office, the Wyden proposal would eventually be revenue-neutral (that is, it wouldn't cost any additional money). According to health-insurance experts at the nonpartisan Lewin Group, it would save money for those making less than $150,000 per year. "It sounds good, but it's really hard to pass anything this complicated," Kamarck warns. "You tell people you're going to take their employer-provided health insurance away, and they'll rip your guts out. It would have to be done gradually."
And it would have to be sold brilliantly. But we have seen our system of high finance transformed overnight. It may be time for a dramatic Information Age renovation of government as well. (To see how TIME has covered Wall Street over the years, click here.)
(See a gallery of campaign gaffes here.)