American Dreams (15 page)

In addition to changing the tax treatment of health insurance, the Ryan-Rubio plan would increase access to low-cost health care options like HSAs, increase the bargaining power of small business, reform medical liability to decrease the practice of defensive medicine and allow people to purchase health insurance across state lines. To provide a better option than Obamacare to protect the most vulnerable, our plan would support the creation of state-based high-risk pools for those with preexisting conditions who can't get coverage in the private market.

The high cost of making ends meet today hits one group particularly hard: single parents, particularly our more than ten million single mothers. Many of these women have been abandoned by the father of their children. All, like Kristeen, face the struggles of parenthood alone. In the last chapter of this book, I will have more to say about how difficult it is for single parents to achieve the American Dream, and what we as a society can do about it. But for now we have to face the fact that we have a lot of Americans like Kristeen, most of whom want a better life for themselves and especially for their children.

Kristeen knows that the only chance she has of realizing her dream for her daughters is to get a better job. Not just a job that pays more, but also one with some flexibility in its work hours so she can make it to parent-teacher conferences or stay home from work when one of the girls is sick. And she knows that the only chance she has of getting a better job is by earning a degree.

So Kristeen enrolled in online classes in early childhood education, which she hoped would lead to a job that not only paid more but also allowed her to be with her daughters after school. But it cost around $1,200 per class—much more than the cost of physically attending the local community college. With all her other expenses, she couldn't afford it, so she dropped out.

For parents who are working, the government provides a $1,000 per child tax credit, called the Child and Dependent Care Tax Credit, to help offset the cost of child care. The problem is, under today's outdated system, a single mom like Kristeen loses her eligibility for the credit if she quits working and returns to school full-time.

In today's job market, this is a self-defeating rule that keeps people like Kristeen trapped in dead-end jobs. Kristeen would like to become a teacher so she can be at home more with her daughters. Our policies should support, not hinder, her ambition. That's why I have proposed allowing parents who are pursuing their education to be eligible for the child care credit too.

Kristeen will tell you that as important as her own education is to her, the education of her children is her greatest priority. Yet, unless something changes dramatically in Kristeen's life, her daughters will be headed to an underperforming school. She desperately wants them to have a better education than she received, but she feels completely helpless to do anything about it. We should empower all parents to have a choice of schools for their children. To do this, I've proposed a federal tax credit that encourages contributions to scholarship organizations, which would distribute private school scholarships to children like Jada and Lexi.

Louisiana Governor Bobby Jindal likes to say that the American Dream begins with education. He should know. Against the active opposition of the Obama Department of Justice, Jindal has fought for good schools for the poorest kids in Louisiana through school choice. When Hurricane Katrina ripped through New Orleans in 2005, it literally washed away the corrupt, underperforming public school system there. What has been built in the aftermath is a demonstration project for the transformative power of empowered parents and motivated teachers. When school began last fall, the New Orleans Recovery School District became the first in the country to consist of all charter schools. Graduation rates are up by over 20 percent since before Katrina. The number of children performing at grade level in reading and math has more than doubled since 2007.
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There is no reason that poor parents like Kristeen should have to send their children to a failing school just because it happens to be down the street. Rich people exercise their school choice, either by sending their kids to private schools or by moving to neighborhoods with good public schools. Our leaders can no longer be allowed to get away with telling us they care about the poor while they stand in the way of empowering parents to choose the best school for their children. A quality education is more important than ever, because the jobs of tomorrow will require more education and skills than ever before. Any so-called leader who stands between parents and the school of their choice is consigning another generation of American children to poverty, plain and simple.

In earlier chapters, I discussed other reforms to our outdated, big-government institutions that will help Americans like Kristeen with the daily struggle to make ends meet. For instance, she had the right idea when she sought an online education. Yet she discovered a perplexing truth: All the resources of the Web still haven't managed to bring down the cost of a degree. The online classes she wanted to take actually cost more than going to school in person. The reason higher education institutions have been able to get away with this is that they are effectively a cartel that can squash competition by lower-cost providers.

I have proposed that Congress break up this cartel by creating a new, independent entity to encourage the development of affordable and accessible online options for folks like Kristeen. I've proposed ways to empower her to acquire employable training from the resources all around her—including free online tools, apprenticeships, mentorships and personal training.

I've also proposed a transformation of how we fight poverty in America. We've seen time and again that effective antipoverty programs—the kind that incentivize work, bolster training and education, and open up transformative opportunities—come from the states, which know the specific needs of their people far better than Washington. We need to transfer our federal antipoverty spending to the states. And to further encourage work, we should create the Wage Enhancement Credit, which would raise Kristeen's wage at the pet kennel. Much more effectively than a minimum wage, such a wage credit would make work pay for Kristeen without killing jobs for other workers.

The paradox of the American Dream is that it evokes such grand, stirring passion, but it is in reality the sum of the mundane details of life. It's a car payment you can make, the mortgage you can afford, the college acceptance letter your daughter receives in the mail. Whether the American Dream is achievable has a real impact on real people's lives.

Our success as a nation isn't measured simply by the size of our economy or the performance of our stock market. Instead, it depends on whether Americans like Kristeen are able to go back to school, get a better job and give their children a better life. These are small things in the sweep of history, but big things in the course of people's lives. How we choose to address them will define our legacy. And it will define Kristeen's future.

 

M
y mother turned eighty the day I was elected to the United States Senate. I remember looking at her on election night in the courtyard of the Biltmore Hotel, standing on the stage with me, confetti filling the air around us. I choked up with emotion at just the sight of her. She had dreamed of being an actress, but had spent her life in hard work—mostly as a maid—to give my brother and sisters and me the opportunities she never had. That night, she had been a widow less than two months. Before we lost my father, he had spent a lifetime sacrificing along with her for me to be up there on that stage.

My parents never earned enough to save much for retirement or to earn a pension. They both worked well past retirement age, and when they couldn't work anymore, it was Social Security and Medicare that allowed them to retire in comfort and security. They are two of the hardest-working people I have ever known, but when the time came, they counted themselves blessed to have come to a country where a life of hard work could be rewarded with a dignified retirement.

Mom is still with me, living with my sister and her husband in the house she and my father purchased in 1985. At eighty-four, her health is declining, but, thanks to Social Security, Medicare and the love of a caring daughter, her life is about as good as it can be.

Spending time with her and my sister Barbara and her husband, Orlando, never fails to remind me how lucky we are. My mother has her benefits, and my siblings and I have the time and the resources to care for her. But lately, more and more Americans aren't so lucky. For millions of us, financial security has faded—and with it, any hope of a stable and secure retirement. Americans at or near retirement increasingly live in fear for what the future holds. Like my parents, they have reached the sunset of their lives in the United States of America. But unlike my parents, they are nearing retirement uncertain and insecure about what the future holds.

Joyce is one of those Americans. She's almost sixty-four and her husband, Scott, is seventy-five. All their lives, they've played by the rules. “We've always worked, paid our bills and tried to do things the right way—like we were taught was the right way,” she says. When Scott retired over a decade ago, he invested about $80,000 of his pension in the stock market and lost it. Then Joyce got downsized—“displaced” was the euphemism her employer used, as if she were a set of car keys—from her job at a newspaper. She got another job at another newspaper and was downsized again. After running through their savings, Joyce's COBRA ran out and she found herself without health insurance. When she had what she calls “some health problems”—her fourth heart attack and rheumatoid arthritis, to be exact—the bills had to go on credit cards. Then they had to sell the house they had lived in for fourteen years. They didn't make a penny on the sale. They just felt lucky to have gotten out from under the mortgage.

“So here we sit, with virtually nothing,” Joyce says. Less than nothing, actually. She calculates they owe over $20,000 in credit card bills. She has reached the point where she has contacted one of those companies that is supposed to negotiate with the credit card companies to reduce your monthly payment. She's not optimistic, but what can she do? The credit cards were her only form of payment when she was unemployed.

“You need gas in your car and you gotta do something or pretty soon you're not going to have a job again,” she says. “It's like a circle.”

The most work Joyce can find is part-time administrative duty at the chamber of commerce. Scott picks up a few hours now and then with an auto dealership. When asked if she had hoped to be retired by now, Joyce erupts in bitter laughter. They had wanted to buy a mobile home and travel the country. “I don't see that happening now,” she says. She's still uninsured—she refused to buy insurance under the Affordable Care Act—so she is holding her breath until she qualifies for Medicare. In the meantime, health problems be damned, she has no choice but to work.

It's those words—“no choice”—that seem to define Joyce and Scott these days. They've been left at the end of long working lives with no good options. They have no choice but to keep working. They had no choice but to sell their house. No choice but to run up their credit card debt. And the future doesn't look like it will be offering any more freedom.

“I don't know what's down the road. We just live from day to day. We do what we gotta do. Sometimes it's not easy,” Joyce says, “but I have no choice.”

Americans like Joyce, Scott and my mom were on my mind last spring when I spent a fine May afternoon outlining a plan to reform our retirement system to an audience at the National Press Club in Washington D.C. Washington has a long and dishonorable tradition of attacking anyone who dares say what everyone knows is true: that Americans are more insecure about their retirement than at any time in the past eighty years. Personal savings were decimated by the financial collapse and recession. Economic stagnation has endangered pensions. And most threatening of all to Washington politicians: Americans' retirement savings of last resort—Social Security and Medicare—are nearing bankruptcy.

Financial analysts like to use the analogy of a three-legged stool when they talk about saving for retirement. Today, each of the three legs of our traditional retirement stool—personal savings, pensions and Social Security—is wobbling. And if we do nothing, each of the three will likely cease to exist as we know them well before my generation enters retirement.

The instability of each of the three traditional sources of retirement savings is caused by a variety of factors, yet they all share one common cause of decay: the lack of sustained economic growth. Economic stagnation prevents wages from keeping pace with costs, affecting the ability of the middle class to save. It also affects the ability of states and companies to fulfill their pension promises. And as earnings stall and unemployment and underemployment spread, it contributes to the erosion of the tax revenue needed to finance Social Security and Medicare.

These are facts—not theories or partisan talking points. Yet there appears to be no urgency in Washington about doing something about the looming retirement crisis. On the contrary, too many politicians lie in wait for their opponents to dare to raise these truths so they can pounce. When Wisconsin Representative Paul Ryan suggested a plan to shore up Medicare a few years ago, his opponents put out an ad featuring a Paul Ryan look-alike actually pushing an elderly lady in a wheelchair off a cliff. That's the kind of subtlety and reason that has attended this debate.

That day last spring, I had no doubt that my suggestions would be used against me to try to convince seniors that I was trying to take away the benefits they had worked so hard for. Politics is politics. But I went ahead despite the likely partisan onslaught for two reasons. The first, I admit, is pretty selfish:
My mother depends on Medicare and Social Security.
I love my mother. Simply put, I would never support anything that would hurt her or retirees like her.

The second reason is less close to home but, at least for me, equally undeniable. Social Security is our largest domestic program and the largest source of income for most retirees. Medicare is the indispensable health care lifeline for the nation's seniors. But an aging population, the sluggish economy and chronic fiscal irresponsibility in Washington have combined to doom these programs if nothing changes. The most recent Medicare Trustees Report predicts that the Social Security disability trust fund will be bankrupt in late 2016—
late next year
—and the retirement fund will be insolvent in 2034. Medicare will be bankrupt by 2030. These facts lead to one inescapable conclusion:
Anyone who is in favor of doing nothing about Social Security and Medicare is in favor of bankrupting Social Security and Medicare.
The politicians who so fiercely defend the status quo—and attack anyone who questions it—have it exactly wrong.

As you can no doubt tell, America's retirement crisis is something I feel strongly about, and something I've been thinking about for some time. In fact, I've come to believe the single most important step we can take to relieve the retirement insecurity of Americans is to control government spending and spur economic growth. Everything I've talked about in this book so far—from making college more affordable to encouraging work to making America the best place in the world to invest and innovate—is aimed at restoring the American Dream by creating dynamic economic growth. Unless and until all Americans can earn more and save more, retirement will remain an uncertain—even unattainable—prospect for too many of us. No plan to avert a retirement crisis will work without robust and sustained economic growth in the years to come.

But while economic growth is essential to ease retirement insecurity, it's not enough. The Broyles family is a good example of why. After having several jobs, Daniel and Becky are in business for themselves today. They don't have any company pension or retirement plan. What's more, they are likely to live longer than their parents or grandparents did. They love their work selling home furnishings and have no plans to retire.

More and more workers in our modern postindustrial economy are like the Broyleses. Instead of working at one company for life the way our parents and grandparents did, most of us today will have a number of jobs over the course of our working life. Many of these jobs won't offer retirement plans. What's more, the average American worker is now living and voluntarily working longer than Franklin Delano Roosevelt ever could have imagined when he came up with Social Security. Not only do we need to have economic growth to avert a retirement crisis, our retirement programs need to be modernized and restructured to meet the needs of a new kind of American worker. So our first challenge is to make it easier for these American workers to save more and work longer.

Albert Einstein is reported to have once said that the most powerful force in the universe is compound interest. Nowhere is this truer than with saving for retirement. The best way for Americans to guarantee security in retirement is to gradually build a nest egg of savings, starting as early in life as possible. Social Security was never meant to be the sole source of retirement income. For Americans of my generation and younger, this will be especially true. As the number of workers supporting retirees in our system declines, it will become more and more necessary for people to have adequate private savings.

But retirement can seem a long way off when you can't afford to pay your mortgage or save for your children's education. A reported three quarters of Americans today are living paycheck to paycheck with little or no savings for an immediate need like a job loss or medical emergency.
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When you're cutting it this close, saving for retirement can be almost impossible. In fact, a recent survey found that over a third of Americans have less than $1,000 saved for retirement.
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This problem is particularly acute in minority households. Three out of four black families and four out of five Latino families have less than $10,000 in retirement savings. That is in contrast to one out of two white families. One reason? Only 54 percent of black and Asian workers and 38 percent of Latino workers have an employer-sponsored retirement plan.
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In addition to stagnating wages, another reason for the growing retirement savings crisis is the nature of work today. Throughout much of the last century, you could leave school and go to work at a local company or factory, stay there for the next forty or fifty years, and then retire with a pension. Today the average worker stays at each job for only about four and a half years—and that's only the
average
worker. An astounding 91 percent of the millennial generation say they expect to be in each job for only two or three years, a vocational restlessness that translates into fifteen to twenty different jobs over the course of a career.
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