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Noah Smith: Democrats should aim high with priorities

November 14, 2018

The U.S. government is divided once again. Democrats have the House of Representatives, while Republicans still hold the presidency and have deepened their control over the Senate. This means actual legislative breakthroughs are likely to be few and far between. But that doesn’t mean it’s useless to think about policy — on the contrary, now is a perfect time for lawmakers on both sides of the aisle to lay out their big ideas, as a way of inspiring the country to think about the future. Here’s a brief list of things that ought to be top priorities:

No. 1. Better universal health care

Obamacare was a compromise — government would force people to buy health insurance, and help pay for it if necessary, but the private insurance industry would stay intact. But health care costs have continued to rise: Medicare has been significantly better than private companies at controlling costs, probably because the government can use its bargaining power to hold down prices. Hence, the federal government should play a bigger role in the health-insurance system. The single-payer Medicare For All plan is popular on the left, but I favor a public option, along the lines of the Medicare X plan, meaning consumers could buy a public insurance plan if private markets come up short.

No. 2. Comprehensive

immigration reform

In a rational world, immigration wouldn’t be a pressing problem — net illegal immigration has virtually vanished, despite the breathless headlines about caravans of migrants from Central America. And the education level of immigrants has been rising steadily: But despite these developments, the immigration issue has polarized and embittered Americans in recent years, and it needs to be solved once and for all. A path to citizenship for undocumented immigrants — which is favored by a large majority of Americans — should be combined with a program to make the country’s legal system more favorable to immigrants with skills. Canada’s system, in which immigrants are evaluated for their job skills and education as well as family ties, seems like the perfect model to emulate.

No. 3. Minimum-wage increase

U.S. wages have been stagnating for a while: Minimum-wage policies could potentially help change this dynamic, not just by forcing up pay, but by creating a culture of wage hikes and worker bargaining. A whole raft of economic evidence has shown that minimum wages are not as damaging to employment as was once believed. Experiments with $15 minimum wages in cities like Seattle have generally raised incomes while inflicting minimal harm on the labor market. The nation as a whole is overdue for a higher minimum wage, which now stands at $7.25 an hour and hasn’t been raised since 2009. A comprehensive new federal minimum-wage policy should index the wage floor to inflation, to avoid the need for repeated future battles over additional increases. It should also allow states and cities some flexibility, so that rural areas with low productivity won’t be forced to match the wages of big, highly productive cities like Seattle or San Francisco.

No. 4. Climate policy

The U.S. is no longer the indispensable nation in the fight against climate change — that would be China, whose carbon emissions are now much higher. But that doesn’t mean the U.S. should sit on its hands in the fight against global warming. A carbon tax would set a positive example for other countries. The government should also be pouring much more money into research and development of alternative-energy technologies, especially batteries and other power storage, as well as technologies that pull carbon out of the atmosphere. The funding of ARPA-E, the government agency charged with doing cutting-edge energy research, should be increased to at least $3 billion a year. And the fruits of these research efforts should be shared with China, India and other developing countries, to make sure they develop along a greener path than the U.S. did.

No. 5. Housing reform

Rent is getting less affordable in the U.S.: The problem is especially acute in big cities like San Francisco, where much of the economic opportunity lies. In addition, the Great Recession wiped out the housing wealth of poor and middle-class Americans:

The solution is to push local governments to build more housing, and to help lower-income Americans buy more of that housing. My Bloomberg Opinion colleague Conor Sen and I recently called for a plan to combine density incentives with support for home purchases. Shortly after our article appeared, Senator Elizabeth Warren produced a plan along very similar lines. Democrats in Congress should take up Warren’s plan, and the housing shortage more generally.

President Donald Trump isn’t likely to let any of these ideas be written into law. But pushing concrete legislation on these five points would help inspire the country with the promise of real solutions and a better tomorrow. Congress should get the ball rolling now.

Noah Smith is a Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.

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