Updating the New Deal

Mark Thoma asks how you would change the New Deal to update it for the 21st century.

Suppose you had the power to alter the New Deal however you want. Some of you would abolish it all together, and shame on you, but for those who would choose to keep it around, how would you change it? What issues should an updated New Deal address? Perhaps:

• We need to provide health and dental insurance that doesn't end when a worker changes or is between jobs.
• We should recognize that it is normal for both parents to work outside the home. Child care that is affordable, reliable, and that helps children to get off to the best possible start needs to be available to all parents. For many parents, this is a big problem.
• We are much more geographically mobile than we were in the 1930s. If we expect a flexible workforce, we need to do more to support geographic movement of workers and their families.
• I would redefine poverty as a relative rather than an absolute standard and ensure that everyone has what they need to fully participate in society. And if my powers do not extend that far, I would at least raise - substantially - the absolute poverty threshold and then make sure nobody falls below it. Right now, it's too low. Along these lines, an expansion of the EITC is needed as well.
• The existence of large speculative bubbles - first in the stock market then in the housing market - threatens to undermine the stability of the economy and put an end to "The Great Moderation." We need to reexamine the regulatory structure of the financial sector to be sure we are doing all we can to prevent destabilizing bubbles from emerging. If the consequences were confined to participants in these markets this wouldn't be necessary, but they are not. Problems in financial markets spread through the economy more generally and impose costs on people who had nothing to do with the creation of the problem.

The most important thing on that list, in my opinion, is providing health insurance that doesn't end when a worker changes or is between jobs. We must have health insurance that is from birth to death. Right now insurance companies are providing coverage from job to job and have no incentive to encourage prevention and wellness. Who provides that coverage or how it is accomplished is up for discussion, as long as the coverage is from birth to death.