Ten Big Ideas for a New America

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. We offer this collection of Big Ideas as fuel for an overdue bipartisan debate about how to update our national policies for the common good.

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Every Baby a Trust Fund Baby

An American Stakeholder Account (ASA), established for every child at birth, would build a savings and ownership culture in America, promote financial literacy, and fortify the American economy for the long haul. Every child would automatically receive a $6,000 deposit into an ASA at birth-and also be eligible for dollar-for-dollar matching funds for voluntary contributions up to $500 a year. Over time, ASAs will evolve into a broad system of saving accounts that all Americans, and especially low-income Americans, can tap to meet their asset needs throughout their lives, enabling them to invest in higher education and lifelong learning, purchase a first home, start a small business, and build a nest egg for retirement. [More on This Idea]

Mandatory, Affordable Health Insurance

We need both universal health coverage and a more efficient delivery system. These are not competing objectives; achieving each of these goals is necessary to make the other possible. The most promising and politically feasible path to universal health coverage is to make an adequate level of insurance mandatory and affordable for all individuals. The new system would be citizen-based instead of employer-based, thereby making health insurance fully portable from job to job. Once all patients are insured, providers can be expected to assist-rather than resist-the efficient redesign of our delivery system. This will entail an electronic health information superstructure, performance-based payments, and comparative technology assessment that will enable us to buy and deliver high-quality health care far more efficiently than we do today. [More on This Idea]

A Universal 401(k) Plan

For those with access, America's private pension system provides powerful saving incentives: tax breaks and employer contributions, as well as the convenience and discipline of automatic payroll deduction and professional asset management. Unfortunately, this employer-based system covers only half of all workers. Moreover, two-thirds of the tax breaks for retirement saving go to the most affluent 20 percent who would save anyway. The solution is a Universal 401(k) plan. All workers would have the option to contribute automatically to their own plan by payroll deduction-and the government would match voluntary deposits with refundable tax credits deposited directly into the worker's account. This supplemental system would make retirement saving easier, automatic, fully portable, and fair. [More on This Idea]

Tax Consumption, Not Work

For more than 70 percent of American families, the payroll tax is the largest tax they pay. Yet the tax is regressive, inefficient, and insufficient to fund the programs it finances. As a 15.3 percent wage tax levied on employers and employees, it deters job creation and depresses wages at the low end of the scale. By replacing the payroll tax with a national and progressive consumption tax, the United States could stimulate job creation, higher wages, and higher levels of personal saving at the same time, all in a revenue-neutral manner. Families would pay taxes on what they spend each year, rather than on what they earn. Higher levels of spending would be taxed at higher rates, encouraging saving, strengthening the economy, and increasing the overall progressivity of the tax code. [More on This Idea]

An Energy Efficiency Trading System

Reducing the economic and environmental risks of excessive energy use must become one of America's most important national goals. The most promising way forward is to reduce energy demand by spurring a revolution in energy efficiency. Indeed, efficiency is America's largest and most cost-effective potential energy resource. Phasing in tough new energy standards for America's biggest energy users and making energy efficiency tradable-much the way we now trade oil and natural gas-would quickly reduce total energy consumption while limiting carbon emissions. A market for standardized efficiency credits (white tags) will give utilities, builders, and vehicle manufacturers flexibility in meeting strict efficiency goals while stimulating new technologies, creating jobs, and improving the nation's overall productivity and competitiveness. [More on This Idea]

A College Access Contract

America's financial aid system imposes too much debt on college graduates, provides too much taxpayer support to banks making college loans, and demands too little of students assuming them. A new "College Access Contract" would allow low-income students to graduate with zero federal student loan debt-and middle-class students to graduate with interest-free federal student loan debt-if they: (1) work hard in high school to prepare for college-as evidenced by completing a college prep track or scoring college-ready on a placement exam; (2) work or engage in community service while in college an average ten hours a week; and (3) evidence a minimum level of competency in an academic area upon completing college. The program's cost can be paid for by reducing excess lender subsidies and embracing market mechanisms in the delivery of federal student loans. [More on This Idea]

Closing the $700 Billion Tax Loophole

While it appears the federal government will spend around $2.8 trillion this year, there is another $700 billion that is "spent" through the tax code in the form of tax expenditures. This shadow budget represents subsidies disbursed by way of taxes not collected. While politically popular, tax expenditures are an inefficient, poorly targeted, and needlessly expensive way to achieve the programmatic goals of government. Tax expenditures need to become part of the regular budget and appropriations process. They should be dramatically reduced, consolidated, and capped. The result would be a simpler, fairer, more efficient tax code. Equally important, hundreds of billions of dollars in potential savings can be freed up and redirected to meet the nation's most important needs. [More on This Idea]

Universal Risk Insurance

In recent decades there has been a massive transfer of economic risk from shared institutional arrangements, such as unemployment insurance and basic benefit coverage provided by employers, onto the fragile balance sheets of families. Yet public programs have largely failed to respond. "Universal Insurance" is a new response to this growing problem. It would provide short-term, stop-loss protection to families whose income (after taxes and public benefits) suddenly decline by a fifth or more due to job loss or catastrophic health expenses. All but the richest families would be eligible, but the program would be most generous for low-income families. This type of broad-based insurance-covering a range of risks but focused on substantial income drops or losses-would provide a flexible new platform of security in a world of rapidly changing risks. [More on This Idea]

Instant Runoff Voting

Americans want a more representative and responsive government capable of addressing the nation's challenges, yet our electoral system is founded on antiquated practices that inhibit voter choices and encourage a politics of polarization and paralysis. It's time to bring our electoral system into the 21st century by adopting instant runoff voting (IRV). IRV elects winners with majority support in a single election by allowing voters to rank a first, second, and third choice on their ballots. If no candidate wins a majority, and a voter's first choice is eliminated, the vote goes to the voter's second-ranked candidate as his or her runoff choice. IRV encourages more electoral competition, solves the "spoiler" problem, enables voters to choose the candidate they really want, and encourages candidates to win by building coalitions rather than tearing down opponents. [More on This Idea]

A Capital Budget for Public Investment

The federal budget needs to prioritize spending that will make our economy more productive in the future. Yet, over the last several decades, the portion of the federal budget going to current consumption has increased, while that devoted to public investment has declined. As a result, the federal government does not adequately fund either the physical infrastructure or knowledge capital upon which a more productive economy rests. We are underinvesting not only in traditional infrastructure, but also in high-speed broadband networks, in basic science research and development, and in training skilled workers, scientists, and engineers. Just as private businesses and most states use capital budgeting, a federal capital budget would allow us to separate our nation's public investment, which expands our capacity to grow, from our government's current consumption outlays. [More on This Idea.]