Ted Halstead: All Publications, Events and Press

Washington Post Reports on Steve Coll, Next New America President

Communications — Mon, 23 Jul 2007 13:17:00 -0400

Steve Coll, a Pulitzer Prize-winning author and former managing editor of The Washington Post, will become the new chief of a Washington think tank, officials said last night.Coll, 48, will become president and chief executive of the New America Foundation, taking over in mid-September from Ted Halstead. His appointment will be announced today.Halstead, the organization's founder, said last night that he "simply could not imagine a more worthy successor."Halstead said he had achieved his goals for the foundation and was seeking someone who would not merely maintain and sustain it, but would "take it to the next level." Coll more than meets that standard, he added."I think he's going to do a fantastic job," Halstead said.The nonpartisan public policy foundation, based in Dupont Circle, says it aims to promote "exceptionally promising" new voices and ideas in American public life. Its purpose, Halstead said, is "to break out of the old boxes of left and right."Halstead said one of the group's goals is to help pioneer a new model of think tanks, with an emphasis on serving as a "content provider" for leading… more

New York Times Highlights Steve Coll, Incoming New America President

Communications — Mon, 23 Jul 2007 12:16:00 -0400

Steve Coll, whose résumé as a journalist includes two Pulitzer Prizes, a stint as managing editor of The Washington Post and a job as a staff writer at The New Yorker, is now ready to try his hand at something else: a Washington public policy institute.Mr. Coll plans to take over a nonpartisan public policy institute, the New America Foundation, in September, succeeding the founding president, Ted Halstead. Mr. Coll said he was drawn to the job by the caliber of ideas coming from the group and its interest in finding new ways to disseminate them.“Nonprofits have to fill up some of the space that newspapers are inevitably leaving behind” as the industry changes, Mr. Coll, 49, said Friday night by phone from Washington, where he lives. Some of the journalists and scholars at New America “might have been accommodated by newspapers a generation ago,” he added, but that is not the case anymore.Staff members of the foundation were informed last night in an e-mail message sent by the board chairman, James Fallows; the official announcement is scheduled for today.New America was started nearly… more

Steve Coll Named Next President of New America Foundation

adminn — Mon, 23 Jul 2007 06:00:00 -0400

The Board of Directors of the New America Foundation announced today the appointment of Steve Coll as the Foundation’s next President & CEO. Coll will succeed New America’s founding President & CEO, Ted Halstead, who will remain on New America’s Board.

“Ted Halstead has been a wonderful leader through an astonishingly successful first chapter in New America’s history,” said James Fallows, Chairman of New America’s Board of Directors. “What New America represents in 2007 exceeds in all ways the expectations with which the organization began nearly ten years ago.”

“Steve Coll has the right combination of intellectual energy and achievement, managerial experience, and personal stature and integrity to make New America even better in its second chapter,” said Fallows. “As a manager of creative talent, he is deeply experienced. And as a public intellectual and creative talent himself, he sets an admirable model for our organization.”

“It has been a great honor to work alongside such an exceptionally talented and diverse Board of Directors, Senior Staff and team of Fellows in building New America as a home to the ideologically homeless,” said Ted Halstead. “I could not imagine a more worthy successor than Steve Coll, whose intellectual depth, strategic vision and managerial savvy make him uniquely qualified to lead New America to ever greater heights in the years ahead.”

“New America has an exceptional record of innovation and influence in its relatively young life, and I’m thrilled by the opportunity to join such a talented group and help shape its next chapter,” said Steve Coll. “The Foundation’s emphasis on young, unorthodox, and independent thinkers, and its connections to the pioneering state of California, are among the many great strengths that we inherit from Ted Halstead and his colleagues – strengths that we should preserve and advance.”

“This is a critical period in the country’s life, one that demands a commitment to unconventional thinking and change – a time that only emphasizes how vital New America’s mission remains,” said Coll.

Steve Coll served as Managing Editor of The Washington Post from 1998 to 2004. He is currently a Staff Writer at The New Yorker, where his work will continue to appear. An author of numerous books, he won the Pulitzer Prize in 2005 for general non-fiction for Ghost Wars: The Secret History of the CIA, Afghanistan, and Bin Laden, from the Soviet Invasion to September 10, 2001. Coll also won a Pulitzer Prize in 1990 for explanatory journalism for his coverage of the Security and Exchange Commission.

The Foundation has made a significant impact on a wide range of domestic and foreign policy issues – and experienced tremendous growth – since its inception in 1998. With close to 100 staff and Fellows and an annual budget over $10 million, New America has 12 domestic and foreign Policy Programs, in addition to a Fellows Program and a California Program. Over the past nine years, New America scholars have published 33 books, convened over 650 public events, and published over 2,800 opinion pieces in leading newspapers and magazines.

The New America Foundation is a nonprofit, post-partisan public policy institute whose purpose is to bring exceptionally promising new voices and new ideas to the fore of our nation’s public discourse. Relying on a venture capital approach, the Foundation invests in outstanding individuals and policy solutions that transcend the conventional political spectrum. Headquartered in our nation’s capital, New America also has offices in California and New York.

Steve Coll will take over from Ted Halstead as President of the New America Foundation in mid-September, 2007.

U.S. Must Warm to Energy Efficiency

Cecille Isidro — Fri, 22 Jun 2007 12:43:00 -0400

Between record petrol prices at home, growing geopolitical instability abroad and mounting concern over climate change, the case for fundamental energy reform has never been stronger. Yet the U.S. energy debate remains disproportionately focused on the supply side: how to secure future supplies and finance alternative sources. Too often ignored is the other -- and far more cost-effective -- alternative: how Americans can use the energy they consume more efficiently.

New research by the McKinsey Global Institute finds that a concerted effort to boost energy productivity -- or the level of output achieved from the energy consumed -- could have spectacular results. If policymakers embrace a new drive to improve energy productivity, relying on existing technologies, the U.S. could reduce energy demand growth by the equivalent of 11m barrels of oil per day and greenhouse gas emissions by 1.3bn tonnes a year. This would cap energy demand growth and emissions at today’s levels, while strengthening the economy.

Substantial opportunities for energy productivity gains are available in virtually all sectors. The biggest potential, however, lies in the US residential sector, the single largest energy consumer in the world. If readily available technologies to boost productivity are adopted -- for instance by using high-efficiency building shells, compact fluorescent lighting and high-efficiency water heating -- the sector’s energy demand growth could be cut by one-third by 2020. All this would save families money too.

A typical household can replace incandescent bulbs with compact fluorescent lighting fixtures and get a payback in less than a year. It can also replace low-efficiency water heaters with demand-instantaneous or solar water heaters, which would save up to 65 per cent of the energy used in water heating and have a return on investment of some 11 per cent annually. Installing a state-of-the-art heat pump saves 25 per cent on the average annual heating and cooling bill for an extra cost of less than $1,000.

Why have consumers and businesses not seized these opportunities? The answer lies in a range of energy market imperfections that discourage them from seeking energy efficient products or making energy saving investments. Consumers often lack the information and capital to become more energy productive. Businesses, too, tend mistakenly to regard investments in energy efficiency as both costly and risky.

What can the U.S. do about this reluctance? One promising idea is to make energy efficiency tradeable, much in the same way as we trade oil and natural gas, or, indeed, carbon emissions. A system making energy efficiency tradeable in the U.S. -- companies would be able to sell credits when they exceeded new standards -- would quickly reduce total energy consumption while limiting carbon emissions. Adding a market mechanism to trade efficiency gains would make energy efficiency standards more palatable to industries that have resisted them in the past.

The U.S. should also establish tough energy standards for its biggest energy users. For instance, each 5 miles per gallon increase in corporate average fuel economy standards would reduce U.S. oil demand by 2m barrels per day by 2020. In homes, the standby power consumption of televisions can use up to 60 watts and account for up to 10 per cent of residential power consumption. Yet the technology is already available to reduce standby power to 1 watt. These are just a few of the cases ripe for a mandatory efficiency standard.

U.S. elected officials are taking some cautious steps in this direction. In May, the Senate committee on commerce, science and transportation passed a bipartisan bill to raise the fuel-economy standard for passenger vehicles to an average 35 miles per gallon by 2020, from 25 miles today. At the state level, reforms have been more aggressive.

The U.S. needs a fundamental change in how it approaches energy policy -- instead of simply trying to ensure supply, it must reduce demand by spurring a revolution in energy productivity. Without a course correction of this type, it will remain the world’s most voracious user of energy and producer of CO2 emissions per capita and continue to subject itself to worldwide criticism as a result. Worse still, it will be wasting its money on increasingly expensive energy that it does not need.

Voice of America Reports on New America's Ten Big Ideas Event

Communications — Sat, 03 Feb 2007 23:14:00 -0500

U.S. Senator Hillary Clinton, a Democrat from New York, and Senator Lindsey Graham, a Republican from South Carolina, were the keynote speakers at a conference this week unveiling a number of radical ideas meant to inspire change in U.S. policy on areas such as health care, climate change, and energy efficiency. Both senators, who say they are good friends despite political differences, said they believe the country needs courage and compromise to make the radical changes they say are needed to solve some long-standing problems. VOA's Marissa Melton reports from Washington.The theme of the Ten Big Ideas for a New America conference, hosted by the nonpartisan New America research group this week was, well, the Ten Big Ideas in the title, proposals by scholars on election systems, economics, health care, retirement, and higher education to improve long-standing problems in U.S. policy. But the big-name speakers, Clinton, Graham, and New America founder Ted Halstead, focused on a broader idea. Each said the results of November's congressional elections, in which Democrats gained control of both the Senate and the House of Representatives, signals a new feeling in the nation that this is the time for a new approach… more

Ten Big Ideas for a New America

Communications — Fri, 02 Feb 2007 02:00:00 -0500

A New America Event
01/31/2007 - 11:00am

The recent turnover in Congress, combined with a wide open presidential election cycle, creates a rare opportunity to bring new ideas into the political process. The spirit of this new era will be captured by those -- from either party or no party -- who embrace innovative yet pragmatic solutions to the foremost challenges facing our nation.

At this event, the New America Foundation released a major new report outlining Ten Big Ideas for a New America, and… more

Myrtle Beach Sun Times Profiles New America's Ten Big Ideas Event

Communications — Sun, 28 Jan 2007 20:55:00 -0500

WASHINGTON - Over the last few years, Sens. Lindsey Graham and Hillary Clinton have become a Capitol Hill odd couple, working across party lines on issues such as their mutual support for invading Iraq and their shared concern over vanishing manufacturing jobs and inadequate health care for military reservists.Now the two high-profile senators are at it again: They will deliver keynote speeches Wednesday on "big ideas for America" to a gathering of 400 prominent business, political, nonprofit and academic leaders, along with lobbyists, congressional aides and senior staffers for executive agencies.The event is hosted by the New America Foundation, a Washington think tank devoted to finding creative, bipartisan responses to the country's rapid technological changes and demographic shifts in the face of economic globalization.Ted Halstead, the foundation's president, said Clinton and Graham were natural choices to address the forum."In announcing her presidential bid, Hillary specifically talked about wanting to promote big ideas and a national discussion about where the country ought to be heading," Halstead said."As for Senator Graham, he has a strong reputation as an independent, maverick type of legislator who is himself interested in big ideas and who… more

The Financial Times Quotes Ted Halstead on State of the Union Address

Communications — Wed, 24 Jan 2007 23:54:00 -0500

Although it had been billed as one of the most important speeches of his presidency, there were few signs on Wednesday that George W. Bush’s State of the Union address had succeeded in stemming the rapid haemorrhaging of his authority.A number of leading Democrats, including Barack Obama, a front-runner for the 2008 presidential campaign, evinced cautious welcomes for Mr Bush’s modest proposals to address global warming and healthcare reform.But most Democrats and several prominent Republicans remained fixed on Mr Bush’s unwillingness to listen to his growing army of critics over the war in Iraq, to which he devoted about a quarter of the 50-minute speech on Tuesday night...In contrast to his six previous State of the Union addresses, Mr Bush appealed to Congress, which turned Democrat last November for the first time in his presidency, to work “across the aisle” in a bipartisan way in order to “achieve big things for the American people”. But the already-weak prospects for a fruitful White House legislative agenda over the next 18 months appear only to have waned further.“If you want to see bold bipartisan action between now and 2008 you should look to America’s… more

Sacramento Bee Focuses on Schwarzenegger's Embrace of New America Health Proposal

Communications — Wed, 03 Jan 2007 10:37:00 -0500

When Gov. Arnold Schwarzenegger wanted to build public support for his eagerly awaited health care overhaul, he turned to a study by the New America Foundation.

The report, released recently by the nonpartisan [New America Foundation], concluded that the average family in California pays a $1,200 "hidden tax" to subsidize health care for the uninsured.

Never mind that Families USA, a liberal advocacy group, released a similar study in 2005. The Schwarzenegger administration has cultivated a close relationship with the New America Foundation, whose centrist philosophy is more in tune with the governor.

Administration officials heard New America was working on the study and asked, " 'Hey, can we use this thing?' " recalled Len Nichols, director of the foundation's health policy program.

"I said, 'Well, sure,' " said Nichols, an economist, adding that New America also has been approached for advice by five presidential aspirants as rising health care costs become a top domestic issue.

As the governor prepares to unveil his health care plan in his Jan. 9 State of the State speech, New America's proposals on how to increase… more

Back to the Economy

Communications — Tue, 31 Oct 2006 18:45:00 -0500

A New America Event
10/30/2006 - 9:45am

This important New America conference features some of the nation's foremost economic experts. Video of the complete event is available at right.

Two new papers from our Economic Growth Program are being released as well -- one detailing the larger growth agenda, the other focused on developing America's Heartland. Both documents are now available below.

The Great Risk Shift

Communications — Fri, 20 Oct 2006 01:15:00 -0400

A New America Event
10/18/2006 - 12:15pm

The safety net on which Americans once relied is fast unraveling. With retirement plans in growing jeopardy and health coverage eroding, more and more economic risk is being shifted away from government and business and onto the fragile shoulders of the American family. And no matter how well educated and hard working, many Americans fear that bankruptcy could be just one unexpected lay off or health crisis away.

In The Great Risk Shift: The Assault on American Jobs, Families, Health… more

Guiding Principles of Competition, Featuring Microsoft General Counsel Brad Smith

Communications — Wed, 19 Jul 2006 14:00:00 -0400

A New America Event
07/19/2006 - 12:00pm

In the rapidly evolving technology industry, software platforms offer the benefits of innovation broadly to a wide "ecosystem" of partners and competitors. As successful high tech companies develop new products and platforms, they must balance the demand of consumers and partners for cutting-edge technology with the need to fully preserve opportunities for others to offer technologies that may complement or compete with parts of the platform itself.

As Microsoft prepares to launch Windows Vista, enhancements to its… more

Over the Hedge

Communications — Sun, 04 Jun 2006 16:14:44 -0400

Belshire Way is a street in a subdivision in Orange County. ("Close to Irvine Spectrum!" the real estate ads say. "Open floor plans!") Drive by, and the view is of 14 one- and two-story tract houses. Some have red tile roofs. Some have pools in the backyards. Some get notices from the homeowners' association about garbage-can visibility and unsanctioned tetherball pole setups. In other words, it could be any suburban street in America but for something invisible from the curbside: For years, Belshire Way has been a cul-de-sac divided—exactly divided—between Democrats and Republicans....

A growing body of social science research has found the actual views of most Americans are converging toward the middle. One of the most provocative calls in the wake of the 2000 election has come from so-called radical centrist Ted Halstead, a former environmental activist and founder of the New America Foundation, who favors a platform drawing from a variety of ideologies (a strong military, for one, and universal health insurance that would make it easier for workers to change jobs and entrepreneurs to start new businesses)....

For the complete article, please see the The Los Angeles Times Web site.

A Homestead Act for the Twenty-First Century

Cecille Isidro — Fri, 03 Feb 2006 00:00:00 -0500

The United States owes much of its status as the first mass middle-class society to enlightened social policy designed to broaden asset ownership. To this day, a quarter of all adult Americans enjoy a legacy of asset ownership traceable to the Homestead Act of 1862, which awarded 60 acres of land in the American West to families who lived on the land for five years. Likewise, the GI Bill, the Federal Housing Administration, and mortgage deduction policies paved the way for one of the highest home-ownership rates in the world.

But America's middle class has begun to atrophy. Poverty has grown over each of the last four years, and real wages are falling. Meanwhile, income inequality has reached an all-time high, and asset inequality is even more acute. Hurricane Katrina laid bare those stark realities.

The most promising way to revitalize America's middle class is to update old traditions. In the nineteenth century, the U.S. sought to broaden the ownership of land; in the twentieth, the ownership of homes. In this new century, the target should be the ownership of financial assets. The logic for such a course follows from the economic dynamics that are widening the gap between today's haves and have-nots.

The historic correlation between economic growth and wage growth has broken down, largely because returns on human and financial capital are outpacing those on labor. As growth and productivity increase while real wages decline, it is not hard to understand why those who depend solely on wages fall behind, while those who benefit from returns on financial assets get ahead. The best way to break this cycle is to help far more Americans accumulate a sizable ownership stake in the most productive sectors of society.

Imagine if every newborn in America were to receive $6,000 at birth as a down payment on a productive life. With the magic of compound interest, that sum could grow to $20,000 or more by the time the child reaches 18. This young adult could then apply his or her nest egg toward various investments, such as college tuition, a down payment on a first home, seed money for a legitimate business, or retirement savings. Given the number of children born in America each year, the annual cost of such a program would be about $24 billion -- roughly what the government squanders on farm subsidies. The benefits, however, would be immeasurable.

Endowing the next generation with resources to invest in its own human capital and financial future would create not only a much broader middle class but also a more self-sufficient, skilled, and entrepreneurial workforce. Gradually, the U.S. would witness the birth of a mass investor class, with ever more citizens deriving their income from returns on financial holdings as well as from wages. There would be less need for a generous welfare state, and the interests of workers and business would be better aligned.

A Homestead Act for the twenty-first century could also offer inner-city kids a new social contract:if they play by the rules and graduate from high school, then a pot of money will allow them to invest in their own futures. Paired with financial-literacy education in schools, such a policy could help turn a culture of poverty and dependency into one of hope and opportunity.

Those who doubt the political viability of such an idea should think again. Britain recently enacted its own version of accounts at birth and has already funded 2 million of them. In the United States, this is one of the few social policy innovations gaining bipartisan support in a deeply divided Congress. Last year, an odd-bedfellows alliance led by Senators Santorum, Corzine, Schumer, and DeMint introduced the ASPIRE Act, calling for deposits of $500 for every newborn, with an additional $500 for babies from low-income families. The policy's biggest advocate may turn out to be President Bush, who wants to make bipartisan headway on his ownership society agenda now that his Social Security plans have stalled.

Let us hope that historians looking back on twenty-first-century America will see the reemergence of a vibrant middle class. If they do, they will likely credit bold policies that enabled ever more citizens to enjoy the benefits of capital ownership.

America Needs a Tax System that Reflects its Values

Cecille Isidro — Thu, 27 Oct 2005 00:00:00 -0400

With President George W. Bush's Tax Commission about to issue its recommendations--opening up a rare opportunity for fundamental tax reform--we would do well to remember one of the iron rules of economics: whatever we tax, we will get less of and whatever we do not tax, we will get more of. In other words, we should tax what is bad, not what is good.

By this logic, America's current tax system is as wrong-headed as it is backward: it discourages savings, job creation and higher wages, while encouraging energy consumption, waste and environmental degradation. Sadly, the Tax Commission has decided to ignore many of these perverse incentives. This is unfortunate, because reversing them could not only help to solve many of our nation's most pressing problems, but also yield a tax system that better reflects American values.

If there is a tax that deserves to be eliminated, it is the payroll tax that funds Social Security and part of Medicare. This is the largest tax paid by more than 70 per cent of working American families. Yet it would be difficult to design a more socially detrimental source of revenue. Because the payroll tax falls exclusively on wages, it creates a powerful disincentive for job creation. It also depresses take-home pay, especially for low- and medium-income workers. Finally, it is the model of a regressive tax because it relies on a flat rate, kicks in from the first dollar earned and its Social Security portion is capped at Dollars 90,000 (Euros 74,500). Getting rid of it would do wonders for job creation, take-home pay and small businesses.

To make up for this lost revenue, the US should introduce two new forms of taxation: a progressive consumption tax and pollution taxes. The former is designed to promote savings, while avoiding the regressive features of most sales or value-added taxes. A progressive consumption tax should be calculated based on the difference between an individual's annual income and savings. By exempting all consumption below Dollars 15,000 from taxation and applying a progressive rate from there, this new tax would favour low-income families--the demographic that has been falling behind in recent years. It would also create a strong incentive for personal savings, thereby strengthening the US economy while helping to rebalance the world economy.

The other new source of public revenue should be pollution taxes or other market-based policies designed to decrease both America's energy consumption and its emissions of greenhouse gases. Raising revenue in this manner would strengthen our economy over the long term. There are several ways to structure market-based environmental levies: a straight carbon tax, a cap and trade system in which emissions permits are auctioned, or a counter-cyclical gasoline tax to compensate for swings in energy prices while keeping the cost of fuel to the consumer at a target price. Any would be a big step in curbing our energy consumption, boosting productivity and combating climate change.

Combined, a progressive consumption tax and pollution levies could raise enough revenue to replace the payroll tax and then some. Substituting the former for the latter would alter the incentives that guide both individual behaviour and our overall economy. Suddenly the US would have a progressive tax system that is pro-savings, pro-growth, pro-environment, pro-job creation and pro-small business.

Politically, the most intriguing aspect of this proposal may be the novel coalitions it could give rise to. The small business lobby--which lists payroll tax relief among its top legislative priorities--would be a pillar of support. How often does the small business lobby find common ground with the environmental lobby? Likewise, this plan provides a bridge between the interest of Wall Street--where our anemic savings rate is a big concern--and main street--where job flight overseas and falling wages top the concerns. Who knows, it could even forge a new alliance between evangelical Americans, who are fond of infusing moral principles into the public policy realm, and liberals, who are searching for new ways to combat poverty and climate change.

For Mr. Bush, who has made tax reform one of his top second term priorities, embracing the concept of "tax bads, not goods" could do wonders for his faltering presidency. Not only would it offer him a strategy for achieving bi-partisan success on one of his key campaign pledges but, more important, a whole new way to tackle many of the most daunting challenges facing the country.

Real State of the Union National Policy Forum

Communications — Mon, 07 Feb 2005 11:00:00 -0500

A New America Event
02/07/2005 - 12:00pm

In the wake of an election characterized by extreme partisanship and name-calling, the country is confronted by major challenges -- economic inequality, a growing divide on social issues, global instability and terrorism, among many others. What is the real state of the union and how do we build a consensus to move the country forward?

Join us for a provocative policy conference, featuring Richard Clarke, former National Coordinator for Counter-Terrorism, and James Fallows, National Correspondent, The Atlantic, along with some of… more

Early Retirement Accounts are the Way Forward

Cecille Isidro — Mon, 07 Feb 2005 00:00:00 -0500

Could a reformed public pension system give citizens more control over their retirement savings, as conservatives want, without undermining security in old age, as liberals fear? Here is a proposal that does just that in the American context, although it could apply equally well to any public pension system struggling with long-term debts and an ageing population.

The idea is to allow all US workers to divert a portion of their payroll taxes into personal "early retirement accounts", which would give individuals more control over their financial destiny and the timing of their retirement. In exchange, the age at which Social Security benefits kick in would be pushed back several years, but without any cuts in monthly benefits thereafter.

At a stroke, this proposal overcomes the most serious objections to privatisation plans. Although such a system would require some initial borrowing, it more than pays for itself over time. Say, for example, that individuals were allowed to divert one-sixth of their payroll taxes into early retirement accounts. Suppose further that the minimum age for receiving a Social Security pension rose from the current 62 to 68, and that the threshold for full benefits increased from 65 to 72. The Social Security Administration's Office of Policy estimates that the savings from this extension in the retirement age would not only cover the full cost of the early retirement accounts, but would also make the system solvent in the long term.

In his recent State of the Union address, George W. Bush, US president, outlined his vision of a new system in which all Americans now under the age of 55 would face significant cuts in their promised monthly benefits. The hope is that individuals could use their personal accounts to make up or exceed the difference.

But what happens if the market turns bearish several years into your retirement? Or if you exhaust your personal account and then have to subsist on substantially reduced Social Security benefits?

Our proposal preserves the core purpose of Social Security by protecting those in danger of outliving their savings from any cuts in monthly benefits. At the same time, it gives people a vehicle for financing early retirement.

While it leaves those aspiring to early retirement exposed to some financial risk, it allows them to bear that risk while they are still relatively young. If your early retirement account does not perform well enough for you to be able to retire at 62, then you will just have to work a few years longer before you receive full Social Security benefits. If you are physically unable to work, you would still be eligible for disability insurance.

There are other potential benefits to this plan. Most personal account plans call on individuals to purchase annuities when they retire. Annuities, however, are expensive, vulnerable to inflation, cannot be passed on to heirs and bear the risk that the company offering them will go broke. With early retirement accounts there would be no need to purchase annuities, because Social Security benefits would remain in full force in one's later years.

Best of all, early retirement accounts would encourage workers to remain in employment for longer, so as to retire in greater comfort later on. Research shows that people with 401(k) and other defined contribution plans tend to delay retirement. The longer citizens remain in the workforce, the more they will contribute to their own and the nation's economic well-being, and the likelier they are to remain healthy.

The original purpose of Social Security was to protect Americans from destitution in their final years -- a mission that remains as important today as it was 70 years ago. Since the first Social Security cheques started flowing, however, life expectancy at the age of 65 has increased by 34 per cent for men and 41 per cent for women. Today, a man retiring on Social Security at 65 can expect to collect benefits for a full 16 years, and a woman for 17.5. Given these gains in longevity, does it really make sense to maintain 65 as the standard retirement age?

Ensuring the strength and solvency of public pension systems in ageing societies need not require benefits cuts in old age nor massive new debts for our children. Rather, the best way to reform public pension systems is by encouraging all citizens to retire later and richer.

What Comes Next?

Communications — Wed, 10 Nov 2004 23:00:00 -0500

A New America Event
11/10/2004 - 12:11pm

Featuring New America Experts

Where Have All the Big Ideas Gone?

Cecille Isidro — Sun, 15 Aug 2004 00:00:00 -0400

Each era in American history is defined by a couple of big ideas: the Homestead Act, the GI Bill, Social Security, the Marshall Plan or the race to space. Such major social or economic innovations are usually advanced by our political leaders in response to national turning points. Few would disagree that the United States has reached another historical juncture. Where, then, have all the big -- and good -- ideas gone?

The paucity of innovative thinking is particularly evident in this presidential campaign. President Bush has a couple of big ideas -- remaking the Middle East and privatizing Social Security -- but they are proving to be either unworkable or unaffordable. As for Sen. John F. Kerry, he has turned timidity into an art form.

So here are seven big ideas for improving our national condition, each of which defies the conventional political spectrum and could be ripe for the picking by either party:

Every baby a trust-fund baby. Just as the nation broadened the ownership of land in the 19th century through the Homestead Act, and of houses in the 20th century through the mortgage interest tax deduction, expanding the ownership of financial assets should be the cause of the 21st century. British Prime Minister Tony Blair set the example by championing a law that endows every British newborn with financial assets from birth. We should follow suit and inaugurate a new era of universal capitalism in the United States.
Universal coverage for universal responsibility. Why not approach health insurance like car insurance by making it mandatory? Coupled with public subsidies for those who need them, mandatory insurance could cover all 43 million uninsured Americans and lower the cost of coverage for those who are insured (by broadening the risk pool to include the young and healthy, the 18- to 34-year-olds who are the most likely to be uninsured), all while costing the government less than Kerry's plan, which is said to reach 27 million uninsured.
Tax consumption, not work. You would never know it by listening to politicians, but more than 70% of American families pay more in payroll taxes than in any other tax. Yet no other tax does more to retard job creation or to reduce take-home pay, especially among low-income workers. By eliminating the payroll tax and replacing it with a progressive national consumption tax, we could create a lot more jobs and generate a lot more savings -- thereby solving our two greatest economic problems at once.
End all farm subsidies. Our farm subsidies are vestiges of the past. They harm farmers and the environment, create agricultural gluts, retard global free trade, hurt Third World countries and cost taxpayers $20 billion a year. By ending these subsidies, we could not only alleviate these various problems but free up the resources to, say, endow every child from birth with financial assets. While we're at it, let's end all forms of corporate welfare, which would free up an additional $50 billion for better uses.
Family-friendly workplaces. Although the traditional family is no longer the norm, our workplaces have yet to adapt, penalizing those who need flexibility to fulfill their caregiving responsibilities, often by depriving them of good jobs and basic benefits. This two-tier labor market should be ended by making basic benefits citizen-based instead of employer-based and by giving all workers the flexibility of today's part-time workers, along with the benefit security of full-time workers.
A race to energy independence. It is a cliche that the United States should pursue energy independence with the same vigor that once fueled its race to space. Yet we lack a viable plan to light this new fire. The answer may lie in another recent revolution -- the biotech one -- in which a competition between private industry and a public consortium greatly accelerated the mapping of the human genome. Why not apply a similar model to energy efficiency by funding a high-profile contest between public and private parties?
Building a global middle class. At a time of a ballooning trade deficit and global overcapacity, the U.S. needs other countries to consume more and to export less. The best way to accomplish both is by exporting the middle-class development model (such as 30-year mortgages) that created mass affluence in our own nation half a century ago. By recasting the globalization debate around the overarching goal of building a global middle class, we could promote prosperity and stability at home and abroad.

A presidential election offers candidates to our highest office a rare chance to step back and think big. By championing bold ideas, they could reframe the national debate, rally undecided voters and, if elected, create a mandate for genuine change.

It is not too late for Bush or Kerry to seize this opportunity.

A Tax Plan for Kerry

Cecille Isidro — Mon, 24 May 2004 02:00:00 -0400

John Kerry not only has a message problem, he seems to have conflicting economic priorities. Kerry wants to make job creation and helping the middle class the central theme of his campaign, but he has yet to offer any bold or compelling ideas to back up the rhetoric. At the same time, he has been unable to find a way to square his broader jobs agenda with his commitment to fiscal prudence. Allow us to suggest a solution to both problems: abolishing the payroll tax.

Although you'd never know it from listening to our political leaders, the largest tax now paid by over 70 percent of working American families is not the income tax but the payroll tax. No tax does more to discourage job creation or to reduce take-home pay for low- and middle-income workers. Likewise, nothing could do more to boost both than repealing it outright.

Unlike income taxes, the payroll tax kicks in from the first dollar earned and applies only to wages. It is split equally between employers and employees (except in the case of independent contractors, who bear both parts of the burden). While income taxes have been cut many times in recent decades, payroll taxes have risen steadily: from a tenth of the federal budget in the 1950s to over a third today.

A basic premise of economics is that the more you tax something, the less of it you get. By taxing labor so heavily, we are in effect choosing to have fewer jobs and to drive employment into the informal sector, where workers receive no benefits and often try to hide their wages. The payroll tax is particularly painful for small businesses, which we depend on for job creation. Not surprisingly, the National Federation of Independent Business routinely cites payroll tax relief as one of its top priorities.

As if retarding job growth weren't bad enough, the payroll tax is also highly regressive, meaning that it falls disproportionately on low-income workers. Not only is its rate structure flat, but its largest component (which funds Social Security) applies only to wages up to $87,900 a year. In other words, the fastest-growing tax just happens to fall hardest on those who can least afford to pay it.

Kerry has flirted with the idea of payroll tax relief in the past. During the economic downturn, he suggested a "payroll tax holiday" to stimulate consumer spending and help lower-wage earners. More recently he proposed a temporary income tax credit to offset the cost of payroll taxes incurred by businesses for hiring new workers. But these proposals amount to little more than tinkering at the margins of the problem. If the payroll tax hinders job creation (which it does) and is highly regressive (which it is), why stop at half-measures? Any candidate who is serious about stimulating employment and helping working-class families should propose repealing the payroll tax permanently.

Of course, the roughly $750 billion a year generated by the payroll tax would need to be replaced with a new source of revenue earmarked for Social Security and Medicare. As it is, Kerry's existing proposals are already at odds with his desire to cut the deficit in half. Thus any new funding stream will not only have to generate sufficient revenue, it will also have to avoid the numerous pitfalls of the payroll tax. Better yet, it should be structured to encourage economic growth. The ideal candidate is a national consumption tax.

Conservatives have been championing consumption taxes for decades on the grounds that they would encourage saving -- and, hence, long-term growth -- without discouraging work and enterprise. These are very important benefits. Traditional types of consumption taxes such as sales taxes or the "flat tax," however, are extremely regressive and therefore would be no improvement over the payroll tax on that front.

A better alternative would be a progressive consumption tax, levied not on individual purchases but rather on total spending. Each year, taxpayers would calculate their total income, subtract their total savings and pay taxes on the difference. The first, say, $25,000 of consumption would be tax-free, and from there the tax rates would be progressive rather than flat. The more you spent and the less you saved, the higher your tax rate would be.

Phased in gradually, a progressive national consumption tax could replace the entire revenue stream of the payroll tax. And it would be a far better funding stream for Social Security and Medicare, insofar as a consumption tax would encourage exactly what we most need as the retirement of the baby-boom generation approaches: higher rates of personal savings. Over time, higher saving rates would also boost economic growth and living standards.

By replacing payroll taxes with consumption taxes, Kerry (or his rival) could claim the ultimate policy hat trick: more jobs, higher take-home pay and more personal savings. On top of that, embracing this idea would help Kerry reconcile two strands of his own thinking that have so far been in near-constant tension: his commitment to fiscal rectitude and his penchant for populism.

One can almost hear the new campaign slogans: "balanced-budget populism," "pro-growth populism" -- or both.