Commentary Magazine

The Two Percent Solution by Matthew Miller

The Two Percent Solution: Fixing America’s Problems in Ways Liberals and Conservatives Can Love
by Matthew Miller
Public Affairs. 304 pp. $26.00

I have long cherished an op-ed piece served up by Thomas Sowell in 1985 and headed “The Wonderful World of Solutions.” Its title whimsically echoed the Wonderful World of Disney, a longtime children’s television favorite, and made the point that in the thorny real world of public policy, we almost never encounter problems just needing to be “solved.” What we endlessly confront instead are hard choices among competing alternatives, all guaranteed to leave us with plenty of lingering trouble. The real-world menu offers trade-offs, not solutions.

Matthew Miller has an alternative perspective. He worries about our country’s “solutions gap,” and proposes to abolish it by definitively solving several of our largest social problems. The heart of his message is that we can, and must, address three of them by (1) providing universal health insurance, (2) decisively elevating the educational achievement of poor and minority children, and (3) dramatically raising the earnings of low-wage workers. Along the way, he would also really reform campaign finance—because, absent reform, there is no way even to gain attention for his tripartite agenda.

If only we put our minds to it, Miller says, we can solve these problems at a price that is reasonable. That price is “two cents on the dollar,” i.e., 2 percent of gross domestic product, a figure that currently works out to around $220 billion a year. But the “two-percent solution” of his title would not be a net addition to current government spending. Miller claims that we could easily find $220 billion or more via spending cuts and socially desirable tax increases, e.g., a 60-percent increase in gasoline taxes. So the net effect would be to restructure—but not to augment—federal spending. Or so he says.



There are always good reasons for suspecting that people with Big Solutions are utopians and/or crackpots, but Miller seems to be neither. At forty, he has already had quite a career as a wide-ranging journalist (the Atlantic, the New Republic, National Public Radio), a management consultant (McKinsey & Co.), and senior adviser to the director of the Office of Management and Budget during the early Clinton years. He is an engaging writer and out-of-the-box thinker, and it rapidly emerges that his proposals are far more interesting than the Marshall-Plan-for-the-Poor manifestos ground out by think tanks for several decades.

The main point of the early portion of Miller’s book and a major theme throughout is that “We’re Not Serious”—the title of his first chapter. By “we” he means mainly the politicians in our nation’s capital, whom he rates incapable of getting beyond incremental fixes and unable to stop pretending that these fixes are a big deal. (“The illusion of action is Washington’s oldest con.”) In these early chapters, Miller also quickly establishes that he is not your standard-model left-wing thinker, and makes a point of differentiating himself from the ritualistic liberals traditionally identified with anti-poverty programs.

Miller is committed, he tells us, to free markets as the ultimate source of America’s wealth. He derides the Teddy Kennedy-style, Old Democrat politicians who still twitch suspiciously in the presence of market-friendly policy proposals. And among the authority figures on whom he draws for his ideas—particularly for his ideas about luck—one finds not only the liberal philosopher John Rawls but conservative eminences like William J. Bennett and Milton Friedman.

Luck is pivotal to Miller’s argument—or at least to the part seeking to persuade readers that we need to get serious about the problems of the poor. The poor, he argues, are synonymous with the unlucky. Implicitly brushing aside the classic distinction between “deserving” and “undeserving” poor, he defines luck so that it embraces such matters as the genes one is born with, assuming (with good reason) that those genes affect not only raw ability but success-orienting traits like drive, conscientiousness, and character.

In reckoning with this inequality, Miller leans heavily on Rawls’s widely celebrated A Theory of Justice (1971). Rawls confronts his readers with a now-famous thought experiment in which individuals not yet born, and knowing nothing about their future circumstances on the planet, decide upon basic principles of social organization. Behind their “veil of ignorance,” they would, Rawls argues, defensively opt for egalitarian principles, seeking to do the most possible for the worst-off—among whom, after all, they might find themselves.

Miller’s remaining chapters deal mainly with the politics and economics of his three big proposals. He makes a far better case for liberal solutions than any liberal I have read in recent years. His solutions uniquely combine a powerful moral dimension with economic sophistication and a lot of original thinking. But they also contain a fair amount of wishful thinking.



Indeed, some wishful thinking is built into his emphasis on Rawlsian egalitarianism. Having brought The Theory of Justice onstage in a big way, Miller seems unclear about how its abstract principles might be made to work in a political setting. How, after all, is one going to break the bad news to Congress that a leading political philosopher has assessed its achievements—all the laws of the United States—and found them fundamentally inegalitarian and in need of a complete overhaul?

Miller’s three big proposals get quite varied marks on my scorecard. He does best in pleading for his universal health-insurance plan. The plan would be financed by tax credits, with the uninsured (now numbering around 42 million) using these credits to buy coverage in the private market. The system he envisages would gradually shift responsibility from employers (who would be delighted to get rid of the problem) to the individual buyer. The tax credits would cost the federal government perhaps $80 billion a year, but alternative versions, including one recently promoted by the Heritage Foundation, could be had for maybe $55 billion. Unfortunately for Miller’s “solution,” a lot of Americans do not want health insurance in the first place—or, more precisely, they would prefer to spend their incremental income on better living, and take their chances in the local hospital’s emergency room.

Much less impressive—and heavily dependent on wishful thinking—is Miller’s plan for solving the problems of poor and minority children in dysfunctional schools. His solution relies partly on a huge expansion of voucher programs but mainly on sizable federal investments in teacher salaries. Getting serious about these children, he argues, means raising the salaries of their teachers by 50 percent. Costing perhaps $30 billion a year, his plan would enable the best teachers in those schools to earn as much as $150,000 a year.

The point, of course, is to attract some serious talent to the teaching profession. Miller refers to “research showing that half the achievement gap facing poor and minority students is due not to poverty or family conditions but to systematic differences in teacher quality.” But he does not cite any particular research. This is an astounding omission. There is an avalanche of data, going back to the famous Coleman report of 1966 and extending into the 1990’s, telling us that school spending has little discernible effect on student achievement and that family background remains all-important.

Perhaps strangest of all is Miller’s proposal to raise the wages of low-income workers. He says that some 15 million Americans live in households headed by full-time workers but remain below or near the official poverty threshold, now $18,400 for a family of four. His proposed raise would come not through another increase in the minimum wage—which would tend to reduce employment—but by a direct federal subsidy to employers. For workers at or near the minimum wage, now $5.15 an hour, the subsidy would add something like $3 an hour, with lesser payments to those earning more and a complete phase-out at, say, $14 an hour.

This plan would be enormously expensive, apparently costing over $100 billion a year. It seems strange, if only because nobody has identified the problem that is being “solved”—workers’ desire for higher pay—as anything like a crisis in American life. Stranger still is the notion that American taxpayers would willingly reach into their pockets and add as much as 50 percent to the pay of the country’s least productive workers.

Finally needing to be mentioned in any discussion of a book subtitled “Fixing America’s Problems in Ways Liberals and Conservatives Can Love” is Miller’s fierce disdain for defense spending. At a time when the world is more dangerous than ever, when the Iraq occupation is costing $1 billion a week, and when our armed forces are universally acknowledged to be stretched thin, his only discernible thought is that we need major cuts in the military budget.

It leaves one wondering whether Miller is in any position to upbraid our political establishment as “unserious.”


About the Author

Dan Seligman is a contributing editor of Forbes.

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