American Dreams (4 page)

For conservatives, talking about family structure inevitably leads to charges of racism, sexism or somehow trying to force our religious beliefs on others. Political experts ceaselessly lecture us that this is no way to win elections. Liberals seem to think questioning such issues is judgmental and unjust. On issues of family and values, the Democratic Party, the party of big government, becomes curiously libertarian.

This is no coincidence. Proponents are careful never to state it outright, but at the heart of the big-government approach are two central messages. The first is that government is our national family now. The role that husbands, wives and parents have traditionally played in the American family, this approach asserts, can now be safely assumed by government. When it comes to managing your health care, government—not the consumer—knows best. The same logic applies to the schools your children attend, how you save for your retirement and even how you choose the light bulbs for your home.

The second unspoken message of the government-centered approach is the same message that those who believe income inequality is the central challenge of our time believe: that growing the economic pie to benefit the poor and middle class is no longer possible. The only just course is to use government to adjust the size of the slices.

The minimum wage debate is a good example of this. Not surprisingly, raising the federal minimum wage from $7.25 an hour to $10.10, as the president has proposed, polls well—people like the idea of more money. But there's no getting around the law of demand: When you make something—even labor—more expensive, people buy less of it. The Congressional Budget Office predicts that an increase of the minimum wage to $10.10 could cost as many as five hundred thousand jobs.

My family and I saw this firsthand last spring when we stopped for lunch at a Chili's in Broward County, Florida. We were surprised to find what looked like an iPad on the table. The hostess who seated us explained that this mobile device would be our server. On it, we could tap items we wanted to order and pay the bill by swiping our credit card. It reminded me that a machine had just replaced at least one server in Florida. If we raise the minimum wage, companies like Chili's will be driven to replace workers with machines sooner than planned.

In fairness, the same CBO report said that nine hundred thousand Americans would benefit from the wage hike. But who are those Americans? Rather than mothers and fathers struggling to support families, the data show that over 74 percent are childless adults or teenagers. Just 16 percent are married parents with kids.
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So it's true that an increase in the minimum wage polls quite well, but in practice it would cost half a million American jobs. Some will benefit, but most won't be the hardworking parents who need help the most. If the goal is to help those struggling the most in the current economy, there are better ways to go about it than raising the minimum wage.

What are those ways? In response to calls to raise the minimum wage, conservatives typically double down on policies to grow the economy and create jobs. This approach is correct in the long term, of course. Economic growth is ultimately the answer. But in the meantime, people are hurting, the minimum wage is something people understand and they hear only that conservatives are against it.

Stagnant wages are a real concern to millions of Americans. We can't just tell people what we are against. We also have to outline what we are for. We can find creative answers that help struggling families while staying true to our small-government principles. For instance, one way to help low-wage workers—both single moms struggling to support kids and single men in need of a foothold in the world of work—is to provide wage subsidies to targeted workers. I have proposed a targeted wage subsidy plan that I discuss in detail in Chapter Three. For now, suffice it to say that it would effectively boost the wages of workers without forcing the cost on employers.

Yes, it is government help for struggling families. But it would not have the job-killing effects of mandating that employers pay employees more than the market will bear. Yes, it involves government spending, but primarily by reallocating money we are already spending. Most important, it is the right thing to do, not just for struggling American families, but for the good of the country as a whole.

The American economy has changed, but our government has not only failed to change with it, it has made the challenges of the new economy worse. Jose and his family are living examples of this. Big government's complicated rules are keeping him from going back into business for himself. Its tax and regulatory policies are crushing innovation and investment. Its commitment to protecting the educational status quo does nothing to help Jose acquire the skills he needs for a better job. And its stale ideas, like increasing the minimum wage, don't help Jose realize the American Dream. They just define the dream down.

 

O
n Monday mornings I teach a class on political science—Florida politics, to be exact—at Florida International University in Miami. It makes my mornings at home a little more hectic, getting the kids out the door to school and getting myself to campus by eight a.m., but it's worth it. Teaching is rewarding and it gives me a sense of what young Americans are thinking these days. More often than not, my students surprise me.

In one class last year I overheard my students talking about how easy it is for their friends in Washington D.C. to get a ride home after a night out on the town. They use a service called Uber, they said. Uber was pretty new to Americans at the time—and nonexistent in Miami. Like most young people, my students are excited by the possibilities of technology to make their lives better. (And when you add partying to the mix, their level of interest multiplies exponentially.) What they didn't know then was that Uber wasn't just in Washington but in cities all over America, and even in Europe. It's an app that you download to your phone, set up an account and enter your credit card information. When you're ready to go home, the app locates the nearest car and sends it to your location. It's quick and easy, and no cash changes hands.

The students in my class were genuinely intrigued by this innovative service and wondered why they didn't have it in Miami. I explained to them that it was because of regulations created by government. Politicians, I said, had passed rules to stifle competition that might threaten their constituents and supporters in the existing taxi and sedan service industry. In Miami, for example, there was a government-created cap on the number of sedan medallions allowed in the city. That regulation effectively shut out any competition to the existing car service companies—competition like Uber.

As my progressive young students listened to me explain why government was preventing them from using their cell phones to get home from the bars on Saturday night, I could see their minds change. They went from fervently believing that big government is necessary to protect the little guy to realizing that big government is often used to stick it to the little guy. Before I knew it, I was talking to a bunch of twenty- and twenty-one-year-old antiregulatory activists.

It was another one of those times when my students surprised me. The entire identity of liberalism as a political movement is built on the idea that liberals stand for the less powerful, that big government is necessary to fight big business. But as my students learned, the truth is often the opposite. More often than not, big business co-opts big government—and vice versa—and they work together. After all, big corporations can afford to influence government, and the little guys can't. And the more power government has over the economy, the more those with the power to influence government win. Big business uses its influence to create regulations—typically under the guise of public safety or some other seemingly unassailable good—that it can afford to comply with but smaller companies can't. Aided by the indispensable help of the coercive power of the state, big business gains a competitive advantage. Those of us without lobbyists on retainer have less opportunity, higher prices and less choice as a result.

Some call this “crony capitalism.” Both parties are guilty of it, but for liberals it presents a serious ideological challenge. After all, if the effect of liberal big-government policies is to put the powerful ahead of the powerless, what exactly do liberal progressives stand for? My Senate colleague and liberal populist hero Elizabeth Warren had a point when she told a MoveOn.org audience last year that “the game right now in America is rigged. It is rigged so that those at the top keep doing better and better, and everyone else is under increasing pressure, is under increasing economic strain. The rules don't get better for America's middle class. The rules are getting better for those who are a thin slice at the top.” As I said, Senator Warren had a point—it just wasn't the point she thought she was making. It is
government
that is increasingly rigging the game against the working and middle classes.

A good example is a guy named Brad Soden and his marvelous invention, the Tankchair. Brad has been described as a “robotics savant.” But he's really just a regular guy—he didn't even go to college—with a talent for engineering and a wife, Liz, whom he loves. In 1999, Liz was in a car accident that left her paralyzed from the waist down. To make it possible for her to continue to go on family hikes, Brad began designing and building a wheelchair that could go off-road. He worked mostly in his garage at first, using whatever he had on hand—a lawn mower engine, an old air-conditioning unit. By borrowing some ideas from the army's Bradley Fighting Vehicle and remote-controlled fighting robots, Brad eventually came up with the Tankchair. One writer described the Tankchair as “a wheelchair in the same sense that an aircraft carrier is a boat.”
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Instead of wheels, it has tracks. It can climb hillsides, traverse beaches and go up to thirty miles per hour.

Brad Soden's gift of independent movement to his wife has since become Tankchair LLC, a family company that employs Brad, Liz and Brad's parents. They custom build about two hundred chairs a year. Brad is a veteran and a lot of his customers are wounded warriors. He'd like to expand his business and employ disabled vets to build more chairs. What's standing in his way is crony capitalism. Government is by far the single largest purchaser of power wheelchairs, through Medicare. If a company can't get Medicare reimbursement for its power wheelchairs, that company can't be competitive. But getting certified in order to be reimbursed by Medicare can cost a manufacturer up to $1 million in meeting government safety and other regulations. This government-created barrier to entry into the power wheelchair market has allowed the big manufacturers who can afford to get into the market to hugely inflate their costs without fear of being undercut by competition. One report found that Medicare pays these manufacturers four times what it costs to make power wheelchairs. The bill for this overpayment, of course, is ultimately paid by all of us. Meanwhile, Brad Soden, an innovator, entrepreneur and humanitarian—everything we should be encouraging in our economy—is frozen out of the market.

We're all familiar with government picking winners and losers in the “green” energy market—mostly losers, it turns out, like the failed solar panel manufacturer Solyndra. The rampant crony capitalism in the green energy field is only the beginning of the story, however. As I will discuss in Chapter Five, the Affordable Care Act contains a provision that has been called a “slush fund” to guarantee that participating insurance companies don't lose their shirts from Obamacare. When I introduced legislation to remove this bailout provision from the law, I was flooded with calls from insurance company executives telling me they couldn't participate in Obamacare without the provision. These were the same executives, by the way, who had lobbied to get the law passed. The “slush fund” was their reward for supporting the law. With it, they won't lose money even if premium prices go through the roof. Instead, the taxpayers will pay the bill.

Crony capitalism takes what we need most for our economy today—innovation, investment and a level playing field for competition—and squelches it. When big government and big business get together, political conformity—not innovation—is rewarded. Government spending crowds out private investment and companies that aren't favored by government can't attract private investors anyway. Most blatantly of all, this competition is the opposite of fair. To “unrig the game,” as Senator Warren might put it, we need less investment in government and more investment in America. We need to reward innovation, not political access. Most of all, we need a level playing field for U.S. businesses, large and small.

Ending crony capitalism is made more difficult by the fact that these programs are always passed in the name of helping the middle class and struggling Americans. To sign the ineffectual, pork-filled 2009 stimulus bill, President Obama traveled all the way to Denver instead of walking to the Rose Garden. Why? His press secretary explained that the trip “shines a light on the issues that average Americans are facing.” It makes me think of an “average” American family I've become acquainted with, the Broyleses, and how they fared under another law that was passed to “help” them.

Daniel and Becky own a small home furnishings store in Orlando called Foreign Accents. They sell unique handcrafted items from all over the world. The recession hit their business hard. Walk-in traffic to their store vanished. Longtime clients dropped them, and their biggest contracts were terminated. To survive, they turned to putting expenses on multiple credit cards. They knew it was a desperate move, but they had no choice. Sure enough, it backfired. After a few missed payments, the banks hiked their interest rates and the debt on their shoulders began to compound.

At this point—as in every time of trial in their lives—Daniel and Becky turned to their faith to get them through it. With three boys who depended on them, they prayed every day that God would reveal the right way forward. Becky considered going back to school in order to get an outside job, just so they could have a steady income stream and hopefully some benefits. But despite all the talk and all the spending in Washington, jobs remained scarce—good jobs were practically nonexistent. Taking a flier on finding decent outside work didn't seem like a safe bet against the cost of going back to school.

Eventually, around 2012, the Broyleses' business began to turn around. A couple contracts for hotel banquet tables started trickling in. Customers started returning to the shop again. Business wasn't what it had been before the recession, but it was enough to break even and keep the debt from rising. And then, just when Daniel and Becky had convinced themselves to continue working hard to keep the doors of their business open, the government stepped in to “help” them again. The Affordable Care Act hit the Broyles family—and thus their family business—hard. Their health insurance premium had been rising by small amounts each year for a while. But when the law went into effect in 2013, it shot up from $520 to $660. Worse, their deductible doubled, from $2,500 to $5,000. They couldn't afford it, so they dropped their coverage and turned to a faith-based program called Medi-Share, which allows members to spread out the burden of health care costs and coverage.

Daniel and Becky's business is still operating—for now, anyway. They love their work and they draw great meaning from it. Their oldest son helps out while he works toward his online bachelor's degree. They're not bitter, but you sense that they feel the system is stacked against them. Any success they have seems to come despite the mandates coming from Washington.

The Broyleses' story is a graphic, real-life example of how our political leadership—from both parties—is failing families who can't afford to influence the agenda in Washington. What they really need is not another expansion of the federal government disguised as help for the middle class. What they need is a strong and growing free-enterprise economy. This has been Washington's greatest failure of all. It has failed to put in place policies that would foster such an economy in this new century.

Fostering a strong and growing free-enterprise economy in the twenty-first century means meeting four fundamental challenges: making America the best place in the world to invest and create jobs, keeping America the global leader in innovation, ensuring access to markets and consumers for American products, and winning the global competition for the most talented and innovative people. It's fair to ask how meeting these challenges would help a struggling home furnishings store in Orlando. The answer is the same way it helped my father when he was tending bar in Miami or the way it helps the hardworking Uber driver in Washington D.C.: through the wealth-generating multiplier effect of an unfettered market economy. American investment and ingenuity creates jobs and careers in building automobiles and airplanes, creating personal computers and the Internet, or discovering new biomedicines and developing apps for smartphones. Then the people who have these jobs buy houses. And when they need to decorate their houses, they come and see Daniel and Becky Broyles.