Next Social Contract Initiative
 

Crafting a New Framework for the 21st Century

Click here for this reportThe New America Foundation has launched the Next Social Contract Initiative (NSC) to design and advance the framework for a 21st-century social contract, along with a detailed policy agenda to support it. The fundamental premise of this initiative is that, given the unimaginable changes of the last half-century, we should think from scratch about the appropriate roles of each sector of society—government, employers, individuals, and civil society.

The programs and policies of a new social contract should be designed to support entrepreneurship and risk-taking, encourage long-term growth and broadly shared prosperity, and support individuals and families not as employees, but as citizens. Perhaps most importantly, NSC operates on the belief that economic security and opportunity are not mutually exclusive alternatives.

NSC draws on the strength of existing domestic policy programs at New America including the Asset Building, Economic Growth, Education, Fiscal Policy, Health Policy and Workforce and Family programs—as well as its own staff  to fulfill this mission. In the tradition of New America, NSC strives to develop innovative, principles-based solutions for a 21st Century economy and society. If individuals are to take advantage of the opportunities inherent in a dynamic economy, they will need the security provided by social insurance, individual assets, and portable benefits.  In doing so, they will fulfill their own goals and bolster our collective faith in the continued vitality of the American Dream.

Background 

 

The theory of a social contract in which individuals trade unchecked freedom for the benefits of an ordered society can be traced to ancient Greece.  In more modern times, the themes of philosophers like Locke and Rousseau echo throughout the Declaration of Independence and the U.S. Constitution.  

Most see FDR’s New Deal as the foundation of America's current social contract--the complex, largely unwritten deal between workers, employers, and government that gives individuals the security they need to navigate a dynamic economy.  As with even a well-built house, 75 years have taken their toll on this version of the social contract.  Its foundation remains strong, but fundamental repairs are needed.  And the neighborhood has changed around it in ways that none of its framers could have imagined.

These changes include an explosion in information technology, unprecedented job mobility, full-scale globalization of the trade in goods and services, major medical advances spurring increased life-expectancy, a large decrease in the number of traditional families, and a widespread recalculation of government’s role in providing social goods.  None of these developments is on its face negative—in fact several are abundantly positive.  But each has had ramifications that affect the balance of rights and responsibilities undergirding the social contract, and the negative consequences of this imbalance abound.

Despite nearly a decade of economic expansion, the belief that hard work and the right choices will allow for a sustainable, middle-class lifestyle is under attack.   Reliable pension plans are the exception, the number of Americans without health coverage is quickly approaching 50 million, and average real wages are stagnant.  Meanwhile, the cost of a college education has more than doubled in the last thirty years, while the percent of disposable income spent on meeting our housing needs has increased by more than 25% since 1980.  In recognition of these challenges, debate has now begun about piecemeal changes to individual government programs. But profound transformations in the U.S. and world economies require more than incremental reforms; the situation calls for a fundamental rethinking of the principles as well as the policies underlying our inherited social contract.   

Two documents produced early on in the Initiative provide a strong foundation for our work.  Mark Schmitt's The American Social Contract: From Drift to Mastery narrates the evolution of the social contract and offers principles for its renewal.  A Citizen-Based Social Contract, by Michael Lind, makes the case for direct, individual access to the social goods necessary to achieve economic security and economic opportunity--the twin goals of the social contract.

Of course, the practical application of these theories is an important component of the Next Social Contract Initaitive.  In this regard, we have worked closely with New America's Health Policy Program as they have taken a leading role in advancing healthcare reform legislation at the state and federal level.  On July 20, 2007, at an event co-sponsored by the Initiative, Dr Len Nichols released a proposal for sustainable, systemwide reform, which embraced many of the principles of the Next Social Contract Initative.  This combination of a strong policy idea supported by sound analysis and a well-grounded vision for change will continue to be a model for New America and the Next Social Contract Initiative. 

To learn more about the Initiative, see below.

 

Recent, NSC-Related Commentary by New America Staff

  • New America Health Policy Program Director Len Nichols is featured in this LA Times article on his just-released study on employer healthcare costs and their effect on American competitiveness.  The bottom line, rising health care costs threaten the ability of American busineeses to compete in an increasingly globalized world and threaten the stability of middle-class jobs.
  • In Newsweek's May 5 issue, NAF Whitehead Senior Fellow Michael Lind argues that the choice between political parties for white, working-class voters is not as clear cut as some have suggested.  Click here to read Winning Over the Values Voters.
  • NAF Senior Fellow Mark Schmitt examines Senator John McCain's reformer credentials in  Maverick or Maneuverer? on The American Prospect's web site.
  • NAF Fellow and Next Social Contract contributor Reihan Salam suggests that Senator Hillary Clinton's tactics in the recent Pennsylvania primary may offer insight for the McCain campaign and their effort to win blue collar voters in November.  Go For the Bitter Vote appears in the May 5 edition of The Weekly Standard.
  • NAF Senior Fellow Mark Schmitt sees Barack Obama's comments in San Francisco,  and the subsequent responses they generated, as a prism for viewing economic policy over the last 16 years.  He also offers thoughts on what must be done to give real hope to economically-depressed regions in What's the Matter with Bitterness on the American Prospect's web site.
  • Whitehead Senior Fellow Michael Lind takes on Barack Obama's recent comments in The Rubes and the Elites on Salon.com.
  • In Don't Spend Your Tax Rebate!, Reid Cramer, Research Director of New America's Asset Building Program highlights a proposal by Senator Robert Menendez (D-NJ) to reward lower-income individuals for putting their tax rebates toward savings.

A New Narrative

Through a program of research and analysis, the Next Social Contract Initiative will construct a meta-narrative to help us understand how the American social contract has evolved, why it fails to meet our needs today, and how we can reinvent it for the conditions of a largely postindustrial and increasingly diverse society. Without an understanding of the evolution of our social contract, major institutional reform will be difficult at best and impossible at worst.

The meta-narrative will have two main dimensions. The first will show how new institutional arrangements are better suited to today's social and economic realities than the patchwork policies left over from our recent past. The second will explain why such new arrangements reflect shared American values while making the American public more secure and our society both stronger and healthier.

Core Principles

With this narrative as a point of departure, the initiative will identify principles on which a new social contract should be based. These guiding principles will reflect the values and aspirations of the great majority of the American people.

They will define the respective responsibilities of the main parties to any social contract. And they will define the risks against which individuals need to be insured, the benefits we should expect government to provide, and how the costs for these social protections should be shared among the primary sectors of society. If the next social contract is to offer a new approach to providing both basic economic security and economic opportunity for all Americans, it will have to be:

  • Citizen-Based
  • Lifelong
  • Responsibility-Based
  • Family-Based
  • Asset-Based
  • Pro-Growth
Click here for a comprehensive listing of all related content. RSS feed for this program

Recent Events

 

July 17, 2008

On Thursday, July 17, the New America Foundation’s Next Social Contract Initiative hosted a panel discussion for Grand New Party: How Republican’s Can Win the Working Class and Save the American Dream by Ross Douthat, Senior Editor of The Atlantic and Reihan Salam, a Fellow at New America and Associate Editor of The Atlantic. On the panel, along with the authors, were Frank Micciche from New America; Ramesh Ponnuru, Senior Editor of the National Review; and Noam Scheiber, Senior Editor of The New Republic. Matthew Continetti, Associate Editor of The Weekly Standard, moderated the event.


Salam opened the discussion with a terse and pointed introduction, which set the pace for the rest of the discussion. He questioned the salience of the traditional issues of the Republican Party. The Cold War is over, democracy is spreading without government intervention, and marginal tax rates are already at their lowest level in years. The Regan era was largely successful. Now there is a new, young cadre of conservative thinkers who subscribe to the traditional ideological cannon – according to Salam this is Thatcher, Regan, and Hayek – but who think that in the present moment, policy needs to be innovative and bold.

The only self-described liberal in the conversation, Scheiber largely agreed with the policies laid out in Grand New Party. However, he suggested the policy prescriptions would be more apt for the Democratic Party. While a 21st century “silent majority” might exist, he questioned whether the GOP could feasibly adjust to this new base. The GOP, he said, always favors the affluent when its interests conflict with the middle class, as would likely be the case for implementing the Grand New Party agenda. Under President Bush and the GOP Congress, he noted, dividend taxes were eliminated and capital gains rates cut, but an increase in the child tax credit was jettisoned to reduce the package’s overall cost. Scheiber says Democrats have already established institutional mechanisms for promoting working class interests.

Salam said that the party needs to find themes that resonate more directly with voters. McCain’s focus on campaign finance reform and cap and trade does not stir people’s hearts. Family values, the panelists agreed, should be the backbone of Republican policy. Douthat claimed that the Republican base has always been open to the idea that there is good spending and bad spending, and spending on family values could have long term payoffs. Ponnuru agreed that Republicans are open to spending that will save in the end, noting that social conservatism is a rational response to economic stress. Douthat said that people want guns when they feel crime threatens their security, are prolife because their ethical values are threatened, and that while gay marriage has primarily a symbolic impact, again people are against it because they feel family values are threatened. Salam agreed that gay marriage is really about values surrounding child rearing. This new policy angle could bridge the gap between Republican economic and social philosophy, which have at times seemed ideologically disparate.

June 24, 2008 

On Tuesday, June 24, 2008 the New America Foundation's Next Social Contract Initiative hosted a panel discussion entitled, Change We Can Afford: Paying for a 21st Century Social Contract.  The event featured Yale Law School professor Michael Graetz; Maya MacGuineas, President of the Committee for a Responsible Federal Budget and Director of the Fiscal Policy Program at New America; and Michael Lind, Whitehead Senior Fellow at New America.  Professor Graetz spoke on his new book 100 Million Unnecessary Returns: A Simple, Fair, and Competitive Tax Plan for the United States. The panelists offered responses to the book followed by Q&A with the audience.  Howard Gleckman, Senior Research Associate at the Urban Institute's Tax Policy Center moderated the discussion.

As in his book, Graetz proposed a value added tax (VAT) on consumption spending as the primary vehicle for reform. He would eliminate the income tax for households earning under $100,000, lower it to 25% for other households, and provide a payroll tax credit to low income earners. He also recommends lowering the corporate tax rate to 15%. The overall package of reforms would, according to Graetz, make US corporations more competitive while maintaining a progressive tax system and provide the political climate for the government to take responsibility for its budget.

MacGuineas praised Graetz's proposal and agreed with his recommendations on most fronts. She stated that such a dramatic change was necessary in order to restore stability to the tax code-observing that special interests oppose any suggestion of incremental reform, curtailing of tax expenditures or raising tax rates.  MacGuineas went even further, proposing the creation of a progressive consumption tax and the elimination of the income tax for all but the wealthiest individuals.

Lind addressed the political feasibility of a consumption tax. He spoke of the Regan and Bush tax cuts as popular "revolts" against tax policy that occurred because people felt sticker shock at the magnitude of their tax burdens. Lind favors a less transparent system that would be more politically sustainable. The consumption tax, as proposed by Graetz, would charge people only in small increments at the time of consumption making it less likely to trigger sustained opposition.

June 18, 2008

The Next Social Contract Initiative held a book launch for Professor Gil Troy’s latest work, Leading from the Center: Why Moderates Make the Best Presidents. Professor Troy is a history professor at McGill University and a Visiting Scholar at the Bipartisan Policy Center in Washington. Frank Micciche, Deputy Director of the Next Social Contract, moderated the event.

Professor Troy spoke on the difficulties of pushing a moderate agenda in the current media climate. “Partisanship gets attention,” he said. Bloggers, networks and candidates who take a strong and decisive position get airtime. “It’s easy to get whipped into a partisan frenzy, much harder to take a breath,” Troy said.

But both prospective presidential nominees have offered at least a rhetoric of centrism. According to Troy, this is more important than people realize. Throughout history effective presidents have voiced a “lyrical centrism” which inspires people to get behind a candidate’s vision for the nation, even if they don’t agree with the candidate on all policy. Troy discussed some of the most effective presidents in our nation’s history--arguing that they were in fact “muscular moderates.”

George Washington, Abraham Lincoln, Theodore and Franklin Roosevelt and Ronald Reagan were presidents who took action, but did so by navigating between factions. While many of these figures may seem radical in retrospect, given the climate of their time they were rational men who treaded carefully but steadily in line with their core convictions.

Bill Clinton seemed perfectly cast to be a successful moderate president. However, Troy cites his “spineless centrism” and poll-driven agenda as the reason for an unmemorable administration, at least as far as public policy is concerned. And George W. Bush, who had so ably rallied the country after 9/11, was a man of great conviction and little moderation in Troy’s view. He quotes one of Bush’s top campaign aides as saying that, in seeking reelection, they would not try to find new voters from among the political middle but would “rally the base”—successfully as it happened.

June 5, 2008 

The Next Social Contract Initiative and the McKinsey Global Institute (MGI) co-hosted, Averting a Bust for the Boomers: The State of Retirement Preparedness and How to Improve It  at the US Capitol Building.  The event featured the official release of MGI's exhaustive study "Talkin' 'Bout My Generation: The Economic Impact of Aging US Baby Boomers." 

Chairman Herb Kohl of the Senate Special Committee on Aging welcomed attendees with opening remarks that commended the report and its findings and highlighted legislation that he and a bipartisan coalition of Special Committee members have sponsored to remove existing barriers to the continued employment of older workers.  

MGI Director Diana Farrell then provided a detailed Power Point summary of the report's methodology and findings.  Chief among them is the fact that 69% of older Boomers expected top retire in the next few years are unprepared to maintain their current lifestyle (defined as an inability to spend at 80% of current levels throughout the course of their retirement). The summary also provided an insightful analysis of how the Boomers got to this point and principles for addressing the problem.

Pulitzer Prize-winning business columnist Steven Pearlstein of the Washington Post then moderated a panel discussion on the report.  Isabel Sawhill of the Brookings Institution, John Rother of AARP and Next Social Contract Research Director, and NAF Senior Fellow, Phil Longman participated in the discussion.  In commenting on the report, all cited the need to address healthcare costs, which will represent a growing portion of expenses for retired Boomers.  In addition, there was general agreement that increasing household savings rates, voluntarily or via mandatory measures, was essential to preventing the trends detailed in the report from becoming an insurmountable reality for the Boomers and future generations of retirees. 

May 12, 2008

NSC Director Ray Boshara and the Assets Building Program at New America joined with several other groups to address the issues behind the increasing levels of personal indebtedness in the country. Confronting the Debt Culture featured opening remarks by Congressional Savings & Ownership Caucus Co-Chair Rep. Jim Cooper (D-TN) and the release of a new report by the Commission on Thrift  entitled, For a New Thrift. The report recommends several bold steps, including:

  • A public education campaign for thrift modeled on the campaigns to reduce smoking and drunk driving
  • Increased support for existing thrift institutions, such as credit unions
  • Programs to provide low-interest consumer loans as alternatives to payday lenders
  • Adding a "savings ticket" to state lottery programs
  • Usury rate caps on small loans
  • Matched Savings Accounts for Children
  • Expanded school savings programs

Panels of domestic and international experts in the field discussed possibilities for increasing savings, curtailing payday lending abuses and learning from similar intiaitives abroad.

May 9, 2008 

Dr Len Nichols and the Health Policy Program at New America continue to keep the focus on the cost of healthcare in the US, to individuals, business and government.  At their May 9 event on Capitol Hill, the program released its latest report entitled, "Employer Health Costs in a Global Economy: A Competitive Disadvantage for US Firms."   Senator Deborah Stabenow (D-MI), the Wall Street Journal’s Laurie McGinley, and representatives from the business, labor, and economic communities  convened to discuss the impact of rising health care costs on U.S. competitiveness and American jobs.  

April 18, 2008

NSC Research Director Phillip Longman hosted a discussion on the serious domestic and foreign policy reprecussions of the aging of societies, with the authors of The Graying of the Great Powers: Demographics and Geopolitics in the 21st Century.  Longman has written extensively on the issue, most recently in his book The Empty Cradle: How Falling Birthrates Threaten World Prosperity And What to Do About It.  It examines how the rapid yet uneven fall in birth rates around the globe is affecting the balance of power between nations and influencing the global economy and culture.

April 2, 2008 

The Next Social Contract Initiaitive was proud to co-host Illusions and Delusions About the US Economy, an event put together by Steve Clemons, Director of NAF's American Strategy Program.  The event focused on the need for a long-term economic strategy that will allow the American middle class to compete and thrive in the 21st century. Addressing the issue were Leo Hindrey, Managing Director of InterMedia Partners and a top economic advisor to John Edwards' presidential campaign, National Journal economic columnist Bruce Stokes and  Sherle Schwenninger, Director of NAF's Economic Growth Program.

February 29, 2008

Next Social Contract brought together experts from within and outside New America to disucss The Next Era of American Politics.  With the prospect of a coming political sea change, the role of institutions, the boundaries of evolving coalitions, and the expanding frontiers for policy innovation remain uncertain. Mark Schmitt, David Frum, Jonathan Chait, and many other participants offered their perspectives on these difficult questions.

The event also marked the release of two new new papers. "The American Public and the Next Social Contract: Public Opinion and Political Culture in 2007," by Professor Cliff Zukin of Rutgers University, explores the state of public opinion in America. Zukin examines enduring American values and current attitudes on pressing policy challenges. In "What Does 'Post-Partisan' Mean?", Phil Longman makes the case that that post-partisanship isn't about transcending left-right partisan loyalty. Instead, in both its original, and its evolving new meaning, it's substantially about generational change and generational equity.

Next Social Contract Initiative Experts and Staff

Ray Boshara, Director

Frank Micciche, Deputy Director

Phil Longman, Research Director

Michael Lind, Senior Fellow

Mark Schmitt, Senior Fellow

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