America Ascendant

by Stanley B Greenberg

  The bloated, inefficient U.S. health care system doubled as a proportion of the total economy over the past three decades without producing better health or raising life expectancy, yet few of these reforms squeezed costs out of the health care industrial complex.

  Something revolutionary may be happening with health care costs though—and that has big implications for America’s projected debt, public health programs, real incomes, labor costs, and American competitiveness. What could be going on in health care could be as revolutionary as what is happening with energy, immigration, in metropolitan areas, and the Millennials.

  The expected deficit reduction from the Affordable Care Act for its first decade between 2013 and 2022 will reach $109 billion, and the deficit savings will increase over time. Since the Affordable Care Act was enacted, the Congressional Budget Office reduced its projections for Medicare spending in the law’s second decade by $1.6 trillion. The Trustees of the Medicare program note the amazing fact that it is spending less money for each beneficiary than a year ago because health costs fell. They projected that in 2015 it will be spending less on hospital care than it spent in 2008, which prompted Human Services secretary Sylvia Mathews Burwell to repeat, “that is a growth rate of zero percent.”82

  “Society at a Glance 2014: OECD Social Indicators,” Organization for Economic Co-operation and Development, Figure 6.3, March 18, 2014, p. 123.

  The cut in Medicare spending is comparable in scale to eliminating the tax deduction for charitable giving, converting Medicaid into a block grant, or cutting military spending by 15 percent—the kind of bold proposals the bipartisan commissions entertained.83

  In 2011 and 2012, health care spending as a portion of the economy fell for the first time since the managed care squeeze in the late 1990s. In the 1970s health care spending increased 10.6 percent a year and rose to 13.1 percent in the 1980s. In the past decade, during the years before the financial crisis, the annual increase in health care spending fluctuated between 6.3 and 9.7 percent a year. In the years since the enactment of the Affordable Care Act, however, health care costs rose by less than 4 percent a year.84

  In 2013, the White House Council of Economic Advisers reported that between 2010 and 2013, per capita health expenditures rose only 1.3 percent, the slowest rate ever recorded. That is the fifth straight year of surprisingly cooled health care inflation. Per capita, there was no change in Medicare expenditures; Medicaid expenditures decreased by 0.5 percent despite increasing enrollment, and private insurance costs increased only 1.6 percent. In addition, health care price inflation rose only 1 percent during that period, the lowest rate in thirty years.85

  And with the cost of private insurance notably moderating, the federal budget for purchasing private insurance over the coming decade has been cut by another $419 billion.86

  As one considers America’s ability to address its long-term deficits, it is worth staring at the growing gap between the Congressional Budget Office’s 2009 projection of federal health care spending and what its revised picture looks like today. It tells you, first, to be cautious about some of the most alarmist projections, and second, that health care spending can be restrained fairly dramatically.

  “The Long-Term Budget Outlook,” Congressional Budget Office, Supplement Tables, Figure 1-1, June 2009; “The Long-Term Budget Outlook,” Congressional Budget Office, Supplement Tables, Figure B-3, July 2014; Louise Sheiner and Brendan M. Mochoruk, “Health Spending 25 Years Out,” Brookings Institution, July 15, 2014.

  The debate is ongoing about whether these are one-time reductions from the recession and whether changes in health care and costs will begin to grow again, as was the case with the managed-care programs of the 1990s, or whether there are new dynamics, transparency, competition, and accountability that are shifting the cost curve. It is possible that the Affordable Care Act has created a public debate on health care outcomes and a possibly grim electoral accountability if you do not shift the curve. In his new book, Zeke Emanuel argues that big structural changes are producing long-term reductions in health spending and could produce more.87

  We also know that the accelerating immigration of diverse young people is also stabilizing our aging population, keeping our seniors at about 20 percent of the population up to 2050. If something like comprehensive immigration reform passes, the deficit will be reduced further by $300 billion in the second decade after enactment and is almost certain to be further reduced in later ones. If the Congressional Budget Office is right, large-scale immigration reform and “Obamacare”—hated by conservatives—will work to reduce the deficit and our supposed dependency on the Chinese. They will contribute to America’s economic ascent.

  * * *

  All of these things may free us from the obsession with the deficit as the principal national challenge before the country. That produces a constricted national debate, and almost certainly a continued pessimism about the country’s future. What should be apparent by now is that America is a dynamic and diverse country that is uniquely positioned to take advantage of new developments in energy, innovation, immigration, and the new urbanism. As we know from reading Thomas Piketty’s Capital in the Twenty-first Century, an economy that grows appreciably over a sustained period gives a country a lot more pleasant and interesting choices.

  3 AMERICA’S CULTURAL EXCEPTIONALISM

  Most of those betting on America focus on its economic dynamism and how many times the United States has proved the doomsayers wrong, though one should not underestimate its cultural dynamism, too. America is racially blended, immigrant, multinational, multilingual, and religiously pluralistic, and that is becoming more and more central to our national identity. The country’s diversity and multiculturalism are not just demographic facts or history but things heralded and honored and integral to our ascendant values. America is forging a unified identity out of its vast differences.

  Through the centuries, writers described America as a “melting pot” or as “one universal nation,” though those claims were always incomplete or aspirational until recently. Today, institutions in civil society, major companies, and the most prominent national leaders are embracing the country’s multiculturalism. And those who identify with America’s growing diversity are politically ascendant, while those struggling against it are being marginalized.

  Unfortunately, America’s route to multiculturalism is not a particularly helpful guide for other countries now. It took two centuries of racial, religious, and ethnic conflict, an entrenched system of slavery, a civil war that killed more than half a million, waves of unrestricted immigration that produced a racist, anti-Catholic, and anti-Semitic reaction, and a great dialectical struggle to forge a new American unity out of that history. But that identity and culture are very tangible now and part of why America may be newly exceptional.

  Racial “minorities” are now 37 percent of the population, 43 percent of the Millennials, and will form more than 50 percent of the country in 2042. A majority of births are nonwhite now. You get a fuller sense of the demographic and cultural changes when you consider that one in ten marriages and 15 percent of all new marriages in the United States are interracial.1

  America has an extraordinary immigrant history. Immigration was largely unregulated during our first century as a republic, creating our diverse ethnic communities. That was matched by the transformations of the post–civil rights period, when America opened up to Latin Americans and Asians and welcomed skilled professionals, engineers, and scientists from all over the world. Today the people in our most populous and dynamic cities are almost 40 percent foreign-born.2

  Religion is a continuing part of America’s diversity, multiculturalism, and dynamism. The prohibition against an established state religion was affirmed in the Constitution, allowing a vast number of denominations to flourish in America, and they multiplied by fissures, new sects, and new immigration from scores of countries. With congregations the dominant way people of faith organized themselves in co
mmunities, America sustained an unprecedented level of religious identification and practice compared to the rest of the developed world. That is eroding, to be sure, but more than three-quarters of Americans still identify with a denomination and nearly 40 percent still participate in a congregation weekly.3

  America’s national leaders increasingly recognize and embrace this inexorable diversity, and that makes America exceptional. Growing demographic and cultural diversity is contested in virtually every other country on earth, except perhaps Brazil and Canada.

  When Bill Clinton became president, he was determined to produce a government that “looked like America” and strived for unity, despite unfinished racially charged political debates over welfare and affirmative action. He kept his eye on the goal, declaring in his inaugural address at the outset of his second term: “For any one of us to succeed, we must succeed as one America.” In the final years of his second term, he opposed the anti-immigration initiatives that were then red-hot in the country, and he reaffirmed the need “to build one America at home.” President Clinton self-consciously spoke to America’s emerging character and challenged us “to make strength of our diversity so that the other nations can be inspired to overcome their own ethnic and religious tensions.” Clinton called on America to find unity in diversity, and America did, electing Barack Obama twice.4

  Just think how exceptional is that call.

  Canada has a unique immigrant story of its own to tell. It has a long tradition of recruiting and welcoming immigrants as part of “nation building” and a long tradition of accepting refugees. More than one-fifth of its population is foreign-born and one-fifth identifies as a member of a visible minority population. In the most recent period of large-scale global migration, it has accepted more than a quarter of a million new immigrants every year since 2006. They use a merit point system at the national level, and provinces can directly recruit immigrants as well. Canada codified a national multiculturalism policy in 1988 that celebrates multiculturalism as fundamental to the national heritage, guarantees equal treatment, and recognizes the rights and cultures of minorities. It should not be surprising, then, that two-thirds of Canadians say immigration is a positive feature of their country and that political parties actively appeal to immigrant voters. While voters disapprove of the undocumented living there illegally, there are no anti-immigrant parties competing in their elections.5

  Brazil has a story to tell, too. It is home to the largest population in the Americas of those descendant from Africa, a legacy of a brutal slave trade system that brought one-fifth of the whole slave trade through the market in Rio de Janeiro. They worked on Brazil’s plantations until 1888, when Brazil became the last country in the Americas to outlaw slavery. In the late nineteenth and early twentieth centuries, a diverse European migration from Portugal, Italy, Spain, Germany, and Ukraine and later from Japan, Syria, and Russia took up work in agriculture and in the industrializing cities. Ultimately, Brazil would promote racial integration, and it stands out as the country with the highest rate of interracial marriage in the world. That has produced an extraordinary racial blending so that 43 percent of the population is parda, a mixture of Europeans, blacks, and indigenous peoples. When Brazil adopted a new constitution in 1980, it declared all men and women equal and made acts of racism a crime, without the right to bail.6

  By contrast, the major and rising powers in Asia—Japan, China, and South Korea—will not allow foreign immigrants, full stop, except as contract laborers with no citizenship rights. With low birthrates and aging populations, these countries are willing to pay a high economic price to avoid the challenges of diversity. To maintain national homogeneity, they are now trying to push more women to enter the labor force, as Japanese prime minister Shinzo Abe told world leaders at Davos in 2014: “Enhancing opportunities for women to work and to be active in society is no longer a matter of choice for Japan. It is instead a matter of the greatest urgency.”7

  Across the Arab states, civil wars rage among Sunnis and Shi’ites and Islamists, and the more secular and autocratic regimes are no longer able to keep order or demand legitimacy in this pluralistic region. The Alawite, Shi’ite-allied regime in Syria has held on to power by leading the slaughter of nearly 200,000 mostly Sunni civilians and forcing millions to leave their homes by the summer of 2014. That pales before ISIS’s attempt to spread a bloody war between Sunnis and Shi’ites and spread the bloody battlefield from Syria and Iraq to Tunisia, Kuwait, and the Gulf countries, while targeting Britons, French, and Americans where they can.8

  The Christian-Muslim fault line is no less violent and bloody across Nigeria to Sudan and to Eritrea beyond that. Choose a country at any given moment. In the Central African Republic, Christian vigilantes armed with machetes have killed scores of the Muslim minorities, and tens of thousands have fled to neighboring countries. In 2002, Eritrea banned practicing “unregistered” religions (anything other than Sunni Islam, Eritrean Orthodoxy, Roman Catholicism, and Evangelical Lutheranism). Thousands of Christians have been imprisoned indefinitely and hundreds of thousands have fled the brutal persecution and sought refuge in other countries. The Christian communities in northern Iraq have fled the country as the Islamic State of Iraq and the Levant (ISIL) took control and demanded they convert to Islam. ISIS fighters obliterated ancient religious sites because of the evident idolatry that offended Allah, and they may have slaughtered thousands of mostly Shi’ite Iraqi soldiers.9

  And the Islamic extremist group Boko Haram got the world’s attention when it kidnapped more than two hundred Muslim schoolgirls, but its determined battle to achieve an Islamic government starts with a war on Christians, as well as Muslims who do not share its vision, and it had killed more than eight thousand people by 2014.10

  Israel is one of the few countries in the world to formally embrace a diaspora that is racially, nationally, and culturally diverse. Yet today, half of its primary school students are Israeli Arabs or come from ultra-Orthodox families, and the political battles playing out around these groups bring home the implications for a multicultural and diverse Israel where civic equality is also supposed to rule. The ultra-Orthodox consider religious study a greater calling than the Israeli Defense Forces, and they vigorously protest a “sharing of the burden bill” that passed the Knesset and a High Court of Justice injunction that cuts off government funding for draft-dodging yeshiva students. The ultra-Orthodox chief rabbis profusely attack the new law and the High Court as secular, antireligious, and illegitimate. Israel is “the only country in the world,” according to one Orthodox elected leader, where “a person who studies the Torah is accused of committing a crime.”11

  With respect to the Israeli Arab students, the government endorsed a bill requiring schools to “educate toward strengthening the value of the State of Israel as the Jewish nation-state.” These changes align the school curriculum with what the right-wing parties demand as a precondition in negotiations with the Palestinians and their proposed changes to Israel’s basic law, its constitution. With Arabic potentially diminished as an official language and Jewish citizens given a higher legal status, Israeli Arabs joined the widespread protests and political turmoil that followed.12

  Prime Minister Benjamin Netanyahu was able to win election when he rallied and mobilized the Jewish nationalist and religious voting blocs. He promised them no Palestinian state and expanded Jewish settlements in the Palestinian territories, and he warned that Israeli Arabs were voting in large numbers to elect a left-wing government. With those incendiary remarks still reverberating, Israel’s president called for considered gestures to bring Jewish-Arab understanding, though he warned ominously that Israel was forming into “tribes” and needed to find a new national identity.

  In Europe, the growing racial and religious diversity and number of foreign-born have hardly moved countries to develop an accommodative framework. And the January 2015 terrorist attack by French Muslims linked to Islamist groups in Yemen and Syria only confirme
d people’s starting presumption against multiculturalism.13

  The only way the old Yugoslavia could survive without religious war and ethnic slaughter, nearly all parties agreed, was by separating the country along ethnic and historical lines into Bosnia and Herzegovina, Croatia, Kosovo, Macedonia, Montenegro, Serbia, and Slovenia. Despite the “Velvet Revolution” that liberated Czechoslovakia from Soviet rule, linguistic differences quickly proved irresistible, and the Czech Republic and Slovakia took different paths. President Vladimir Putin is resistant to such a solution in the Russian Federation and is battling to suppress Islamist resistance in Chechnya and Dagestan. In neighboring Ukraine, Russian-backed paramilitary forces have fought to keep the Russian-speaking eastern part of the country on a separate trajectory from the European-oriented center of the country. In the Crimea region, Russia backed the ethnic Russian majority’s desire to be severed from Ukraine, and people voted in a referendum to join the Russian Federation, which stations its Black Sea fleet at Sevastopol.14

  The Scottish National Party (SNP) shocked everyone when their “yes” campaign nearly won the referendum to separate from the United Kingdom, and then proceeded to sweep nearly all of Scotland’s parliamentary seats the next year. And when Scotland won increased autonomy and powers, major parties began advocating an English parliament for English laws, too. The Spanish government blocked a similar referendum in Catalonia that likely would have prevailed, frustrating the proindependence plurality in the Catalan parliament.15

  Immigration is now the big disruptive issue in virtually every European country.16

  In Britain, where the foreign-born population has almost doubled in the past decade, to 11.4 percent, a majority say immigration is “bad for Britain, because immigrants take jobs and push down wages”; just a third think it is good on balance for the country. The proportion of the public in Britain saying religious and ethnic hatred is the greatest threat to the country (39 percent) rivals the level of concern expressed in the Palestinian territories and Nigeria.17