CA EVENT: California, the Crisis and the Next Social Contract

On February 9, 2009, the New America Foundation hosted a daylong conference at San Francisco's Commonwealth Club featuring state and national leaders in the areas of healthcare, economic growth and infrastructure, and higher education. Panelists discussed how the current crisis is challenging states and threatening the economic opportunity and security that is essential to an attainable American Dream. Sponsored by New America's Next Social Contract Initiative and the California Program, the conference explored how the states and the federal government can use this moment of crisis to strengthen the social contract for the future.

Amy Dominguez-Arms, Program Director at the James Irvine Foundation, welcomed the panelists and audience and opened the conference. Leif Haase, Director of the California Program at New America, delivered introductory remarks that linked California's fiscal crisis to the stimulus debate raging in Washington, and identified the steep and painful budget cuts facing states if they do not receive help.

Panel I: Why the States Matter and Why They Are Hurting (Vide0)

Mark Paul, Deputy Director, California Program, New America Foundation

"I am the bearer of many bad tidings."

David Osborne, Senior Partner, The Public Strategies Group; Author, The Price of Government
"We are never going back to the 1990s. We are in an era of permanent fiscal crisis."

Jim Brulte, Principal, California Strategies; Former Republican Leader, California State Senate
"You need two messages when you go to Sacramento-one for Republicans and one for Democrats."

Matt Salo, Director, Health and Human Services Committee, National Governors Association
"The current social contract is a Frankenstein's monster stretched across the 50 states."

F. Noel Perry, Founder, Next 10; Managing Director, Baccharis Capital
"States matter because they have the capacity to make change."

Mark Paul introduced the first panel with a sobering look at state governments in crisis. After Paul put forward much "bad news," David Osborne identified governments' most important roles, explained the costs vs. revenues equation of state budgeting, with a focus on rising health care costs, and sought to convince the audience that state budget deficits are now the norm. Next, Jim Brulte offered a history lesson in partisan realignments since the New Deal and argued that the rise of "decline-to-state" (unaligned) voters in California explains why Sacramento is often so dysfunctional. Matt Salo estimated the sum total of state budget deficits, and explained why counter-cyclical programs such as Medicaid place an even greater strain on state budgets in difficult times. Finally, Noel Perry identified some of the sources of structural dysfunction in California's governance and argued that the "green economy" offers enormous potential for recovery both in California and nationwide.

Panel II: Assuring Access to Higher Education (Video)

Michael Dannenberg, Senior Fellow and Founder, Education Policy Program, New America Foundation
"To my mind, the next social contract for higher education needs to look like a more integrated, unified, centralized system. I'm not sure if the country is ready for that yet."

Pat Callan, President, National Center for Public Policy & Higher Education
"We're not doing any worse than we were in 1990, but the rest of the world has not been complacent."

Michael Dannenberg introduced and moderated the second discussion about access to and affordability of higher education. Dannenberg noted the shift in higher education funding from public investment to private responsibility, postulated that the stimulus represents a lasting shift in state investment in higher education, offered options for how to direct the increased investment in higher education, and linked higher education to the goals of the Next Social Contract Initiative. Next, Pat Callan summarized his organization's public interest policy work, and described its biennial state-by-state report card on higher education, "Measuring Up," which grades each state on college preparation, enrollment, degree completion, affordability, and a degree's economic and civic benefits. He noted many of California's enormous successes over the past 50 years, but argued that serious changes are necessary if the United States is to remain a leader in higher education in the 21st century. The solutions to the most pressing problems of degree completion and affordability will not come at the federal level, however; the coming stimulus funds cannot delay a necessary conversation within the states.

Panel III: Building For the Future (Vide0)

Hon. Gary Locke, Governor, Washington State (1997-2005)
"The priorities of government approach is not only relevant in tough fiscal times. The problem with government is that we just don't set priorities."

Carol Galante, President & CEO, BRIDGE Housing Corporation
"We need public investment in these urban locations in order to get housing to go there in more compact densities."

Stephen Levy, Director and Senior Economist, Center for the Continuing Study of the California Economy
"To strengthen the social contract, we have got to struggle with our connections."

Lisa Margonelli: Irvine Fellow, New America Foundation; Author, Oil on the Brain
"Our concept of what 'green' is right now is really focused on buying things.Most of that is not accessible to moderate-income families."

Micah Weinberg moderated the third panel and introduced Gary Locke. Locke compared California's current budget outlook to his experiences as Governor of Washington State, outlined his "priorities of government" approach to policy decision-making, and argued that education must be the top priority of state governments that are truly looking toward the future. Carol Galante followed by discussing her firm's efforts to build housing for Americans of modest means, noting in particular its focus on urban infill development, and calling for "breaking down the silos between public investment and infrastructure." Stephen Levy made the case for public investment across a broad range of categories, and argued that renewing the social contract requires strengthening intergenerational, interethnic, and interregional connections. Finally, Lisa Margonelli outlined her strategy for democratizing green energy policies and investments and offered specific policy solutions for how to increase the number of stakeholders in energy efficiency.

Keynote Panel: Health Care (Video)

Kim Belshé, Secretary, California Health & Human Services Agency
"I have worked for state governments for more than 20 years, and I can say with confidence that I have never seen a set of challenges like we see today."

Jacob Hacker, Co-Director, Berkeley Center of Health, Economic, and Family Security; Professor of Political Science, UC-Berkeley
"There is no more important issue (than health care) for considering the next social contract and the place of the states within it."

Crystal Hayling, President & CEO, Blue Shield of California Foundation
"There are a lot of Americans feeling like the economic system that we all supported and believed in is turning out not to provide the kind of prosperity and support that we all came to expect."

Len Nichols, Director, Health Policy Program, New America Foundation
"All the people that matter really do get that we've got to do both coverage and delivery system reform."

Leif Haase moderated the final keynote panel on the case for and prospects of comprehensive health care reform, both in California and nationwide. Kim Belshé said she was not surprised that Medicaid would be a target for state budget cuts, and offered a set of near-term priorities and opportunities for health care reform in California. Next, Jacob Hacker sketched out his concept of the long-term risk shift from government and employers onto individuals, noted the rising number of medical-related bankruptcies among families with health insurance, and referenced Franklin Roosevelt's vision of a new social contract between the federal government and the states. Crystal Hayling described the experience of both wealth and poverty that is unique to working in the philanthropy sector, argued that many of the solutions to America's health care problems will be found in "scrappy organizations" such as health clinics, and sounded a hopeful note about the prospects of comprehensive reform. Finally, Len Nichols offered the Washington perspective on health care reform, noted many of the political challenges and opportunities, and framed the issue of health reform in both economic and moral terms.

Participants