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America: a repair guide; sixteen steps to national sanity that won't cost a cent.

As I read the Monthly month after month," writes B. J. Luberoff of Summit, New Jersey, "I'm beginning to get the same reaction I have to '60 Minutes': All I hear is 'Ain't it awful that. . . . 'I admire your investigative reporting, which calls my attention to all sorts of terrible things happening inside my government and other big organizations. But the more I read, the more powerless I feel. How about giving some recommendations on what we can do? Otherwise, you just end up with a lot of people with ulcers and possibly canceled subscriptions."

Well, Mr. Luberoff, upon reading your words, longtime subscribers are probably already diving for cover. Since our second issue in 1969, which featured an article on "How the Pentagon Can Save $9 Billion," the Monthly has tried to break the journalistic mold by not just carping but coming up with solutions to the problems plaguing society's most important institutions-indeed, even reformulating and repeating those solutions when they go ignored. These solutions were summarized first in "A Platform for the Seventies," then in "A Platform for the Eighties," again in "A Neoliberal's Manifesto," and most recently in our Twentieth Anniversary Issue. In fact, we've always assumed this barrage of solutions was the real source of our readers' ulcers.

It has been a couple of years since we cobbled together one of these lists, less out of deference to our readers' innards than out of a sense of government's financial limits. But, Mr. Luberoff, you got us thinking: Many of the Monthly solutions wouldn't cost a dime-in fact, many of them would make money. So here we go again, because while we share your sense of frustration about these terrible times, we're alarmed by your sense of powerlessness. As Franklin Roosevelt declared, in times of crisis, "Above all, do something." This is a time of crisis. Here are some things we can do-at absolutely no cost to Uncle Sam. How to save politics

Barely one in three eligible Americans voted in the last round of national elections. It's hard to know which is more alarming: the fact in itself, or how bored we feel on hearing it. There's nothing surprising in the litany of pollsters' reasons for the low turnout-frustration with shallow, negative campaigns; a feeling that big money controls all the outcomes; a Luberoffian sense of powerlessness, that there's no way to make those bureaucrats give a damn. What is astonishing is that we're not doing anything about it. We all know that Americans, like Czechs, Poles, and Lithuanians, can be excited about democracy; we all know that dynamic young people can be drawn to government work. We at the Monthly think we know how to get from here to there. 1. Make politicians accountable to the

voters.

These days, on average, 60 percent of a Senate candidate's campaign budget goes for broadcast advertising; overall, the cost of TV advertising in congressional campaigns climbed 169 percent between 1976 and 1990. It's become a cliche to point out that those ads are doing precious little to meaningfully differentiate candidates or to draw more Americans into the political process. This isn't just the product of a few unscrupulous political consultants; it's the inevitable result of a system that combines high ambition with high technology and low accountability. So let's change the system. Mandate that, in exchange for free air time before an election, all political ads feature the candidate-and only the candidate-addressing the viewers at home. Sure, these ads might be dull: no uplifting music or girls in Laura Ashley dresses, no wind-blown flags or glowering rapists. But just imagine George Bush trying to woo voters by declaring, "Mike Dukakis let a scruffy black guy out of prison so he could rape a nice white lady . . . and you get some idea of how much good this change would promote.

Cutting down the costs of advertising will help wean politicians from the influence of the PACs and their other big funders. A further reform-forbidding politicians running for state office to raise money out of state-would force them to quit cold turkey. During the last round of congressional campaigns, more than half the senators running for reelection received most of their funds from outside their states. Can Al Gore really be considered the representative of the average Tennessean when a whopping 96.5 percent of his ticket to Washington was covered by New Yorkers, Californians, and other nonresidents? [See "The Keating 535," Andrew Bates, April 1991.] 2. Open up government.

The reformers who broke the political machines had legitimate points: When patronage drove politics, government workers were often lazy and corrupt. Today, they tend to be lazy and unhelpful. Now that we've discovered that civil service rules can be as deadly to good government as smoke-filled rooms, it's time to put our lessons together. Turn 50 percent of civil servants into political appointees-not hacks, but talented people who can pass civil service merit tests. Of course, in getting rid of half the bureaucrats, we should be careful to hold on to the good ones-which means we must eliminate bumping," the reduction-in-force practice by which a tenured employee, when his slot is cut, can simply shove out a younger, even though better, worker and swipe his job. Once these cuts are made, we'd still have enough career, nonpolitical workers to carry the institutional memory from one administration to the next. We'd also have public servants who are not merely competent but also committed to the ideas of each new administration and directly accountable to the voters for their performance. Other important benefits of this reform are less immediately apparent. Ambitious, capable young Americans, instead of rolling their eyes at the notion of serving in the bureaucracy, would see a future in signing up with an exciting candidate and sweeping into office with him. Furthermore, cycling more citizens through government jobs would boost public understanding of what makes government work and what makes it break down: Journalists would return to their newspapers knowing where bodies are buried in the bureaucracy; businessmen who had performed a public stint would stop whining vaguely about "big government" and start targeting their criticisms at specific programs that waste taxpayer dollars. And all that patronage would cut the high cost of running for office: Because candidates would be able to reward loyal volunteers with jobs, they would rely less on paid professionals to staff their campaigns-which would further drive down the cost of running for office. [See "Patron Saints," Lois Forer, p. 28.] 3. Encourage good civil servants to stick

around longer.

The so-called "unfunded pension liability"-the amount by which planned pension benefits exceed workers' contributions-in the federal civil service alone stands at $508.3 billion. Add in pensions owed to servicemen and women, and the total goes to over one trillion dollars. Mind you, that's just at the federal level. States, cities, and towns are grappling with an aggregate unfunded liability of between $160 billion and $450 billion. A major cause of this massive liability is that, in the federal system, a civil servant can retire with full benefits at age 55, after 30 years of service. That's why some 362,892 of federal civil service pensioners-nearly 25 percent-are still in their fifties. Servicemen can retire after 20 years, while they are still in their early forties. Likewise, in Washington, D.C. (as in many other cities), firefighters and policemen can retire after 20 years, which is why most of the city's almost $5 billion unfunded pension liability is earmarked for those two groups. The best solution is to extend the length of service. Hold on to those veteran servicemen, firemen, and policemen for at least 25 or 30 years-until they are no longer physically able to do the job. And keep those veteran civil servants, the ones who can show the appointees the ropes, until they are 65. Pension liability, it should be remembered, will also be radically reduced if our Step 2 is adopted. The patronage employees would serve short periods, rarely more than eight years, and would then not be eligible for government pensions. [See "A Pension for Trouble," Matthew Cooper, July/August 1989.] Getting people to dowork that counts

Aside from "Gimme your wallet and your watch," the scariest line one hears from a young person these days is, "I don't know what I want to do, so I'm going to law school." Probably the most dramatic waste of bright graduates in the eighties took place on Wall Street, but overall since World War II, the most enduring and damaging trap has been the law school bait-and-switch: Students go in with a vague hope of finding challenging, exciting, useful careers and come out settling for lucrative ones. The United States now has 3.7 times more lawyers per capita than England and 20 times more than Japan; Washington, D.C. boasts 1 lawyer for every 10 residents. The best way to shrink the supply of lawyers is to start drying up the demand. Diverting these able young people from the law would free them to use their talents in work they believe in and enjoy-from teaching ghetto children to working for the Environmental Protection Agency to starting a business that makes high-quality products that will enable us to compete with Japan and Germany. 4. Pay off student loam over 30-40 years.

The freedom to pick a college and a career shouldn't be a luxury for the rich. But exorbitant tuition can force bright young people to give up on college and graduates burdened with debt to forgo VISTA for Wall Street. Instead of the current guaranteed student loan program, under which a student can get a maximum of $2,625 for the first two years and $4,000 for the last two, how about letting students borrow the full cost of their tuition, with a federal guarantee? You could cut down the default rate by stretching repayments over 30 or 40 years, starting them out low and slowly increasing them as the graduates' earnings rise. If graduates do default, the federal government could repay the bank and then recoup its own loss by tacking a premium onto the debtors' income taxes.

Not only would students have greater freedom to make choices about their lives, but since they would be entering-into a decades-long financial commitment, they would make damn sure to get their money's worth out of college. And society wouldn't benefit only from an influx of new graduates free to do productive work: This reform would also cut off the most common legitimate excuse used by people who abandon useful jobs for lucrative ones: "I'd like to stay, but Sam and Sally are headed for college in few years ...... With college payments no longer a worry, these people would keep on doing good-or else admit that the real reason they're selling out is that they've always wanted a BMW. [See "Highbrow Robbery," Timothy Noah, July/August 1983.] 5. In all civil suits, make the loser pay.

A major factor in the overlawyering of America is the frivolous lawsuit, filed in the hope of extorting a payoff-refeffed to as a settlement in the law's genteel parlance-from a defendant worried about the legal costs of lengthy proceedings, even though he knows he is in the right and would ultimately win. Conversely, rich defendants often use the threat of protracted proceedings to discourage legitimate claims. If the loser had to pay the legal fees of the winning party, both just claimants and just defendants would be represented, but unjust claims and unjust defenses would be discouraged. There would be a lot less work for lawyers, meaning we'd have many fewer lawyers. Certainly, that has proven to be the case in England, which has "loser pays" as the rule-and only one-third the number of lawyers per capita that we do. [See "The Screwing of the Average Man: How Your Lawyer Does It," Charles Peters, February 1974.] 6. Switch to no-fault in malpractice

cases and auto wrecks.

Provided that the medical review boards grow teeth so that patients can feel confident that drunks and incompetents won't be slicing them open [see "The Case for Smart Regulation," below], a no-fault system would help ease a legitimate pressure on doctors to jack up their fees: ever-rising malpractice insurance premiums. The trade-off for consumers would be that they would no longer be compensated for "pain and suffering"; on the other hand, they would be compensated for the costs of their care immediately, rather than after a long and ugly legal battle, and, in general, they would pay less for medical services. Similarly, no-fault auto insurance would eliminate not just pain and suffering compensation but also the fraud that accompanies many of these suits, and it would reduce the cost of auto insurance for everyone. If we instituted no-fault, who would be the biggest losers? The lawyers-which is yet another reason the rest of us would gain. [On medical malpractice, see "Tilting at Windmills," May 1991. On auto insurance, see "Whose No-Fault Is It, Anyway?" Peter Spiro and Daniel Mirvish, October 1989.] How to save democracy

Four out of five young adults can't write a letter asking for a job in a supermarket; on the other hand, if your father or mother went to Harvard, you are three times more likely to get in. One in four Americans goes without basic medical care; on the other hand, if you can afford it, you can get everything from fresh kidneys to a new face. The poorer three out of five American families pay more in taxes than they did in 1980; on the other hand, the richer two pay less. Add it all up, and what have you got? A two-tier education system, a two-tier health care system, a two-tier tax code. Inequality in America isn't solely the result of these three things. But why use all three of them to make the problem worse, not better? 7. Evaluate performance, not

credentials.

"Value of Money is Questioned in National Debate Over Improving Schools," ran the headline of a recent New York Times story. For years, along with the correct assumption that to keep the United States economically strong and socially just we have to save its public schools, reformers have held the incorrect assumption that more money is the only answer. That second assumption is starting to crumble as people realize that money meant to educate kids is being wasted on salary increases for teachers who can't teach and for administrators who are either unnecessary or incompetent or both. One way to deal with this problem is to get rid of the inept and give raises solely on the basis of merit. Another is to change the way teachers are certified.

Suppose you earn a master's degree in English from Emory University and, having tutored and served as a graduate teaching assistant, decide you want to start teaching in Georgia's public schools. Not so fast. So you know The Great Gatsby inside and out. So you can hold a class rapt for hours at a time. So what? Before you can even be considered for a teaching job, Georgia insists you take courses like "Behavior Modification" and "Reading Techniques." Given the parlous state of public education, it's criminal to erect obstacles to new teachers that at worst turn away the talented and ambitious and at best work to smother their creativity. A smarter system would certify teachers based on their knowledge of their subject and their ability to get up before a class of kids and teach. [See "Yes, But Where Are Your Credits in Recess Management 101?" Susan Ohanian, April 1984.] 8. Control the doctors.

Let's say your house is on fire. You call the fire department. Imagine a conversation that goes something like this:
 You: Help! My house is on fire!
 Receptionist: Hold, please.
 [Muzak]
 Receptionist: Can I help you?
 You: Yes, dammit, my house is on fire! Send help!


Receptionist: Fine. Would Tuesday at 3 o'clock fit your schedule? The charge will be approximately $10,000 per room, depending on how many are inflamed.

Never happen, right? Of course not-we wouldn't let it. But ask yourself: Why is it that the market for health care has produced such terrible distortions-that the growing number of doctors leads to fees that, year after year, outstrip inflation? That where there is the greatest need for good health care-in Appalachia, for example-there is so little supply? Because, out of all the life-protecting professionals, only doctors are permitted to hold their power over consumers' heads. It's time to switch that relationship around. After all, we don't let all soldiers and sailors serve in San Francisco-or all policemen patrol just Park Avenue. And when a cop spots burglars about to break into your home, he doesn't radio Allstate to be sure you can afford his services before jumping out of his car and chasing the bad guys down.

Another approach to controlling medical costs would be to take away what we suspect is the main motivating force behind physicians' greed-the unnecessary ordeals that accompany their training. "You know, I didn't get into this for the money," says one exhausted intern after 36 hours spent at a D.C. hospital. "But after the shit they put me through, I feel like I deserve it." Making all experienced doctors work at hospitals a few nights each year would put an end to the brutalizing ritual that's required when only interns and residents carry the whole nighttime load. It's simply insane for our medical schools to take idealistic young people-you know them, the ones who play with colorful plastic stethoscopes when they're six-and fill them with self-pity by grinding them down with unnecessary labor, which is then paid for by their patients for the rest of those doctors' lives. [See "A Platform for the Eighties," Charles Peters, February 1979.] 9. Switch to a sane Social Security

system.

Because of increases in the Social Security tax, poor workers saw their tax burdens rise by as much as 28 percent over the course of the eighties. Meanwhile, at the other end of the system, we continue to fund the retirements of Rockefellers well in excess of the amounts they contributed while they were working. But the unfairness of this system isn't a function of benefits just for the rich. Because Social Security benefits are largely insulated from taxation, income taxes paid by a middle-class elderly family amount to less than half those paid by a working family with the same income. To make this system fairer, we should provide generous tax breaks to lower- and middle-income families and offset the loss to the treasury by treating Social Security benefits as ordinary income and taxing them accordingly (with a provision to avoid double-taxing workers' original contributions). Remember, elderly families would also benefit from the breaks, so the elderly poor would have some protection from the new taxes. [See "The W-2 Step," James Bennet, June 1991.] 10. Tax the churches.

No one knows how much wealth our churches have accumulated, though conservative estimates place it at $700 billion. As of 1987, for example, the Catholic Church was New York City's largest landowner. Numbers on church wealth are elusive because religious organizations are the only nonprofits in the country that do not have to report financial information to the Internal Revenue Service. Considering the earthly indulgences the religious tax exemption has supported in the past few years-everything from payoffs for prostitutes to air-conditioned doghouses-closing that loophole would be a good first step. Churches should then have to pay taxes on all property used primarily for religious, as opposed to charitable, purposes. Sound crazy? Think about it: The Constitution's establishment clause forbids government to single out one religion (or religion generally) for help or harm. Singling churches out for an exemption violates that rule; taxing them just like other property does not. [See "Pennies from Heaven," Elizabeth Lesly, April 199 1.] 11. Raise the estate tax.

Right now, the federal government collects only about 5 percent of the $200 billion Americans bequeath each year. It does not make much sense to tax someone far less on what he has been given than on what he earns by the sweat of his brow. The reason the tax is so small is that the exemption on inheritance is so large: Today, individuals can bequeath $600,000 tax-free, and couples $1.2 million. That's why only 3 percent of estates are now subject to taxation. Cutting the exemption in half, to $300,000, would extend that tax to the wealthiest 10 percent.

We don't just allow enormous estates to go untaxed, however. The way the entitlements system works, the average receptionist can wind up subsidizing the estate of a wealthy retired lawyer. Rather than spend his family wealth to pay for his health care, that elderly lawyer can rely on Medicare, funded by the receptionist's taxes, to foot his bills. It is simply grotesque for the state to provide an incentive for families not to take care of their own. Here's how to put an end to this anti-family con: When the lawyer dies, in addition to other taxes due, the government should take from his estate the amount of the benefits he received in excess of what he contributed, plus interest. 12. Close the angel-of-death loophole.

This loophole protects inherited capital gains from taxation. When Murry Chastleton Wentworth inherits stock in Company X that her father Tripp has held for 30 years and then turns around and sells it, she pays taxes on the capital gain only since the day she inherited. These two steps-eliminating the loophole and lowering the estate tax exemption-would raise $80 billion by the year 2000 and make the economy more efficient to boot. [On both the estate tax and the angel-of-death loophole, see "The Secret Solution to the Deficit," Paul Glastiis, January/Februwy 1991.] The case for smart regulation

Conservatives are afraid that regulation will cripple legitimate business. Liberals should share that fear instead of automatically advocating more government rules as the answer to every problem. But conservatives do need reminding that we all want clean air and water, safe cars and planes, prices that are determined by fair competition instead of monopoly power, and food and drugs that do not endanger our health. All that means that we must have government regulation and that, to protect us, it will have to be tough and incorruptible-and to protect the legitimate interests of business, it will have to be smart as well. Here are some regulatory proposals that we do not feel have received enough attention and that meet our no-cost test. 13. Mandate that in five years all fleet

vehicles run on natural gas or

electricity.

"We are doing everything we can to guarantee ... that there will be an adequate supply of hydrocarbons," announced George Bush in the early days of preparations for the Gulf war. His guarantee, it turned out, carried a pretty high premium. And despite the war, Americans simply stayed in the same rut, swallowing 18 million barrels of oil each day, burning some 12 million of those in vehicles. You might not hear about alternative fuels from this administration, but they do exist. Electricity, for example, costs about half as much as gasoline and contributes less to smog. Likewise, natural gas, which is in plentiful supply in the U.S., is cheaper and contributes 80 percent less than oil to smog.

The most efficient way to switch to alternative fuels is to begin with vehicles that travel local routes and are refueled at a central location-fleet vehicles like dump trucks, delivery vans, taxicabs, rental cars, and city and school buses. The deadline for conversion should be flexible, giving more time to those fleets that take more than five years to turn over (in D.C., for example, the buses take 10). Switching these vehicles to natural gas or electricity would not only drastically reduce smog in our big cities (the reason Los Angeles has already started converting its municipal fleets); it would cut American oil consumption by 10 percent-about as much as we import from the Persian Gulf. [See "Kicking the Oil Habit," Peter Gray, March 1991.] 14. Put an end to the self-regulation of

professions.

Talk about contradictions in terms. Too often, professions wind up being regulated in their own interest, rather than in the consumers'. In Virginia, an alcoholic surgeon operated drunk for years, even though his peers and a representative of the local medical board knew about his problem. Perhaps the scariest part is that the behavior of his colleagues, and even of the review board representative, was perfectly understandable. It was the natural result of a regulatory system in which judges have more incentive to be sympathetic to the accused than to the victim-incentives like friendship and shared self-interest. This is a problem seen over and over again with police review boards, a problem that could be eliminated by replacing those police judges and investigators with civilians. Besides medicine, another profession in which self-regulation has become a painful joke is the law. For these two fields, there is a nicely symmetrical solution: Put lawyers on doctors' boards and doctors on lawyers'. [See "Tilting at Windmills," May 1991.] 15. Create an independent accounting

system.

Letting a company pick its own auditor is like letting an author pick his own reviewer-but that's how the American auditing system works. No stronger evidence for the need to reform this incestuous system could exist than the collapse of the S&Ls. To take one celebrated instance: The Big Eight accounting firm of Arthur Young gave Charles Keating's Lincoln Savings & Loan an "unqualified" audit-the accounting industry's big thumbs-up-at the same time federal regulators, a group not known for delivering early or strong warnings, concluded that Lincoln was a "ticking time bomb."

Auditors have an awfully big incentive to play nice with the auditees: The corporations are their bosses, and if they deliver a skeptical report about, say, an exaggerated earnings statement, they might lose the account. On the other hand, the Arthur Young executive who oversaw the Lincoln account got hired away by Lincoln's parent company for just under $1 million per year.

Here's a cheap way to split up this cozy relationship: Rather than let corporations pick their own auditors, have an independent authority like the Securities and Exchange Commission do it. In addition, auditing firms should be permitted to stay with their corporations for no more than three years, so that they don't get too comfortable with each other and so the auditors know that someone else will be coming along to check their work. [See "Accountants: Those Wonderful People Who Brought You Maurice Stans," Thomas Redburn, February 1975.] Encourage economic growth

Paul Tsongas is right when he says Democrats have not cared enough about how to promote economic growth. 16. Give capital-gains breaks to long-term

investment.

It isn't easy for liberals to admit, but those who favor a capital gains tax cut do have a legitimate concern: Productive long-term investment in capital stock has been shrinking since the sixties. What conservatives downplay, however, is that during the same period Americans have been pumping more money than ever into the stock market. In other words, capital is available, but for some reason not enough of it is being turned into better products. The capital gains enthusiasts' usual proposals would only exacerbate this problem, since they would give the same break to everyone who invests in the market. But if a trader chums stocks just to make his income, without regard for the long-term prospects of the companies he's investing in, shouldn't he pay full tax on that income, just like the rest of us pay income tax? The people who deserve encouragement are those who are making the economy grow. The way to give it to them is to institute a tax that's tough on short-term trading but benign to long-term investment, starting at 100 percent of the capital gain for stock held less than one year, say, and then dropping 1 percent a month until it reaches zero. The focus on short-term investment has been the bane of American capitalism. As long as the stock market analysts are emphasizing quarterly results, few CEOs will have the courage to look up from next quarter's statement to sink $100 million into the revolutionary new gizmo that won't come off the line for 10 years but will then dominate the world market. [See "Tilting at Windmills," July/August 1989.]

These are a few of the reforms the Monthly advocates. Got a better idea? Don't just nurse your ulcer-let us know. Charles Peters is editor-in-chief and James Bennet is an editor of The Washington Monthly.
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Author:Bennet, James
Publication:Washington Monthly
Date:Jul 1, 1991
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