22 conservative reforms to help America’s middle class

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Do conservatives have smart, practical ideas to help average American workers and families? You can judge for yourself by checking out the free, downloadable ebook, “Room to grow: Conservative reforms for a limited government and a thriving middle class” just released by the YG Network. The reforms, many of which come from AEI scholars, outlined in the book deal with a wide range of issues including jobs, regulation, health care, and education. Here is an overview:

Jobs

1.) Lower barriers that now keep workers from potential jobs. One example is to roll back oppressive licensing requirements.

2.) Allow workers interested in moving in search of employment to receive relocation assistance in place of continued unemployment benefits.

3.) Lower the risk associated with hiring long-term unemployed workers by temporarily lowering the minimum wage that firms must pay them and couple that with a temporary subsidy through an enhanced Earned Income Tax Credit or a wage subsidy.

4.) Exempt the long-term unemployed from the payroll tax (both the employer and employee side) for the first several months after they are hired as a targeted incentive to get them back to work.

K-12 education

5.) Beyond school choice, conservatives should also broaden the implications of their intuition in favor of choice and encourage more choices within school curricula.

6.) Federal reporting requirements should require schools and districts to report per-pupil spending, enabling parents and voters to compare cost-adjusted performance and enabling observers to calculate various ‘return on investment’ metrics.

7.) A further vital role for Washington, and one that no other actor in our federal system can play, is backing basic research in education.

8.) Decades of federal education statutes have spawned a paralyzing tangle of rules, regulations, and mandates. Congress should embrace an “opt-in” strategy for states that want to use federal dollars to expand educational choice. Washington also ought to scour federal regulations, state education agency interpretations of federal rules, and related minutiae that impede state and local leaders.

Higher-education

9.) Policymakers could provide colleges with a direct stake in the success of their students by requiring them to pay back a percentage of any defaulted dollars. Such a policy would encourage colleges to guide students to programs that are likely to provide a positive return.

10.) Policymakers should create space for market-based financing instruments like Income Share Agreements (ISAs).

11.) Online delivery, competency-based education, and short-term career training could dramatically reduce the cost of a postsecondary education. Yet regulatory barriers like accreditation and federal rules keep promising innovations out of the higher education market.

12.) Evidence suggests that many short-term sub-baccalaureate programs—like occupational certificates and associate’s degrees—can provide a significant wage premium.

13.) Promote data and transparency: better data on postsecondary outcomes can lay the groundwork for other reforms. Information on the wage premium attached to various occupational programs could show families that the path to the middle class does not always require a BA.

Regulatory and financial reforms

14.) Trust rules rather than regulatory discretion by gradually but substantially raising the capital requirements for TBTF banks and applying them to all assets.

15.) Disassemble the regulatory and legal barriers more directly eroding America’s startup culture. There should be as few government hurdles as possible between a person with a good idea and the transformation of that idea into a small business with the potential to become a high-growth “gazelle.”

Pro-family policies

16.) Public policies should target the range of economic, legal, and cultural forces now eroding marriage and family life. End the marriage penalty often associated with means-tested public benefits.

17.) The EITC could be changed to become a wage subsidy for individual low earners instead of depending on household size and household earnings. For other means-tested tax and transfer policies targeting low- and moderate-income families, couples could receive a refundable tax credit for the amount of money that they lose by marrying, and to reduce its public cost, this credit could be limited to the first five years of marriage.

18.) The marriage penalty associated with Medicaid should be eliminated.

19.) Lift the unique economic burdens placed on parents by some tax and spending policies. For example, the existing child tax credit, dependent exemption, and childcare deduction should be consolidated and expanded, and be applied to both income and payroll taxes.

20.) Consider making the child credit bigger for low-income families in the year that a child is born, in order to cover lost wages during time spent out of the workforce.

Safety-net reforms

21.) Eligibility for welfare programs is often based on disparate requirements and benefits phase out at different rates. Consider consolidating them, thoughtfully modifying phase-out rates to transparently encourage people move to work, and offering work supports outside the confines of specific programs. One approach would package means-tested programs into a “flex fund” that would then be sent to the states. The states would have broad discretion to redesign their anti-poverty policies. Another option is to follow the UK’s universal credit: various means-tested programs would again be consolidated, and benefits would be distributed to families as a single amount. This credit may be designed with a single phase-out schedule as beneficiaries move into work, calibrated to encourage greater and greater work, with the “stick” of time limits, work requirements, or both.

Health-care reform

22.)  A conservative alternative to Obamacare needs to provide coverage for persons with pre-existing health conditions, to ensure all Americans have access to stable insurance, and to slow the pace of rising costs. This must be done without increasing the deficit and without handing over too much power to the federal government.

Two politically viable and credible blueprints for replacing Obamacare were released this year–the first by Republican Senators Richard Burr, Tom Coburn, and Orrin Hatch, and the second by the 2017 Project. They share a structure that will likely define any plausible conservative replacement and has four key parts: (a) decentralized, market-oriented approach to the health-care system; (b) tax credits for people outside the employer system achieved with minimal disruption of employer coverage; (c) continuous coverage protection for all Americans; (d) while any solution to the problems in American health care will necessarily entail some uniform national policies, it must also have significant state flexibility.

These reform suggestions come from Mike Strain (jobs), Frederick Hess (K-12), Andrew Kelly (higher-ed), James Pethokoukis (regulation),  Brad Wilcox (pro-family policies), Carrie Lukas (labor, tax, and fiscal reforms), Scott Winship (safety-net), Robert Stein (tax), and James Capretta (health care).

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