Grand Bargain Project Framework Agreement

The Grand Bargain Project is designed to develop and win wide public support for a concrete plan to advance six policy objectives that over 90 percent of Americans see as critical to their family's future:¹

● Boosting economic mobility, productivity, and growth
● Reforming education so students, K-12 and beyond, reach their potential
● Making healthcare more effective and less costly
● Curbing the national debt
● Transitioning the economy to cleaner energy
● Making the tax code fairer and simpler
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Progress toward these goals has been minimal in recent decades, largely for two reasons:Our political system rewards leaders from each party for attacking each other instead of working together on practical solutions; and each law is enacted to satisfy some voters, interest groups and politicians. Current policies thereby contradict one another; waste trillions of dollars; and have let our chronic problems grow worse.
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The Center for Collaborative Democracy (CCD) is building a national movement to support a different approach: a "Grand Bargain" on all six issues. We have gathered evidence that common sense solutions for all six issues, if combined, would yield enough benefits to each sector of society that Americans from all walks of life would support the result.
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To start, CCD commissioned an expert team of 13 prominent former policymakers and think tank leaders across the political spectrum to work out a preliminary set of recommendations on all six issues. We then incorporated feedback from diverse stakeholders and citizens to produce a Framework Agreement in June. Each person who has seen it has found parts they disliked. Yet over 90 percent have said that the total package would be better for their organization and the country than the status quo.
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CCD has continued testing the preliminary recommendations with a cross section of leaders of major sectoral membership organizations, former elected leaders, and citizens. Based on the feedback, we are issuing this second iteration of the Framework.
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In the project's next phase, we will be convening deliberative workshops online and across the country, offering citizens an opportunity to give input. We will also continue dialogue with interest group leaders.

At every step, our goal will be to unite the widest possible a coalition of Americans around a common-sense roadmap for the future. To that end, we will ask each person for feedback on the evolving proposals below, including four questions:

1. Do you see the overall package as better for your family and the country than our current direction?
2. Which proposals do you most strongly support and why?
3. Which proposals do you most strongly oppose and why?
4. What changes would you most like to see?

Based on the feedback, we will modify the proposals below so as to significantly increase the level of support from the maximum number of participants.

We expect each reader to object to some of the above ideas. But we ask that you consider which outcome would be better for your family, the people you care about, and the country as a whole:

a) Continuing on our current path of political instability, with 77 percent of Americans believing the economy is rigged against them, and 33 percent seeing violence as justified to advance their views.²,³

b) Using the proposals below as a starting point for deliberation and dialogue among the various sectors of our society, striving for a more detailed grand bargain that generates real progress for all.

The current proposals and rationales are:

Economic Growth and Mobility

Americans' dissatisfaction with the economy and their role in it is near record highs. And growth has been trending down for decades. Underlying these trends is a set of key unmet needs. Lower income workers need incentives and support to advance. Workers and employers need better skills training that is targeted to current and emerging industries. The economy needs more basic research to be translated into business innovation. Rural and lower income urban communities need investments in housing, human capital and digital infrastructure to prosper. The proposals to meet these needs are:

1. Expand the earned income tax credit and other earning subsidies to low wage workers
2. Increase child-care subsidies to low-income families to enable parents to choose whether to work or to stay at home with very young children
3. Incentivize community colleges, other skills training programs, employers and unions to work together to produce workers with the skills to obtain higher paying jobs, particularly in fast-growing industries
4. Allow adequate numbers of skilled immigrants in sectors where skilled domestic workers are not available in sufficient numbers to fill critical gaps.
5. Enforce union organizing rights while respecting workers’ right to choose whether or not to join or contribute to unions.
6. Double federal spending on basic research to $200 billion a year, and improve the pipeline from publicly funded research to commercialization
7. Eliminate obstacles to construction of new affordable housing and infrastructure
8. Support rural communities and low income urban areas with education, training, broadband access, and investment incentives to promote entrepreneurship and job creation.

K-12 Education

Skills and education are key drivers of economic growth and individual incomes. Yet educational attainment in the US was declining before the Covid pandemic. They have fallen significantly since then, and are now among the worst in the developed world.
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The educational system's main problems are: low overall skills; dramatic differences in achievement across states; an over reliance on standardized testing, unequal access to the internet and unequal student performance by class, race and gender.
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This is not due to declining funding. Public school revenue per student in 2019 was four times that in 1960 adjusted for inflation. But there is a very large variation by region.

The initial proposals are to:

1. Revise educational goals and measures to include both core academic skills and cross-cutting skills and traits such as critical thinking, teamwork, and resilience
2. Revise teaching and learning indicators and accountability systems to measure the full set of skills and traits students need to develop
3. Ensure that teacher training and professional development produce high performing teachers
4. Significantly increase pay for more effective teachers
5. Increase teacher and school accountability for students' performance
6. Develop programs to increase lower income parents' engagement in and support for their children's learning
7. Expand family choice among public schools, including charter schools
8. Reduce class, gender, and racial disparities in learning outcomes, such as:● Stronger recruitment efforts to bring people of color into the teaching profession● Increased per-student support for under-resourced schools, and increased funding to support lower-income students and their families through the Child Tax Credit (see also economic mobility supports in the previous section)● Providing adequate capital funding for school facilities and broadband internet
9. Build up the evaluation and research capacities of state and local education agencies
10. Ensure universal high speed internet access for schools and students

Healthcare

The US spends 50 percent more on health care per capita than any other nation – 17 percent of GDP versus an average of 10 percent in other developed countries. Yet health outcomes in the US are measurably worse than in other developed countries. Life expectancy is trending downward. Competition among hospitals and insurance companies is shrinking, driving up prices for consumers. Drug companies continue to be at odds with insurance companies, and consumers, over equitable pricing and delivery systems.
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The healthcare system is designed to manage illness, not to improve health. The system — consisting of for-profit, non-profit, religious, municipal, tribal, state, civilian, military, federal and other providers — is also uniquely fragmented, overly complex, costly, inefficient, and confusing for patients and providers alike.
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Fixing these problems with a complete system overhaul — or by dictating an entirely new business model — seems politically unfeasible and would entail major unintended consequences. Instead, current federal programs — food and nutrition assistance, Medicare, Medicaid, the Affordable Care Act, etc. — can be used as levers for change.
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The following healthcare policy proposals aim to shift the incentives and practices of the health care system from managing illness toward keeping people healthy and productive:

1. Promote integrated approaches to public health, especially in distressed areas, and social and economic support for lower-income populations to reduce health risks (see also economic policies for lower income workers above).
2. Coordinate public education efforts for healthier lifestyles and preventive care, especially concerning obesity and nutrition, and increase funding for good nutrition through existing Federal programs.
3. Expand free meals to low-income schools, including in the summer, to ensure that low-income children have access to nutritious foods.
4. Use Federal and state regulatory authority to prevent excessive concentration of ownership of health care providers at local or regional level.
5. Expand Federal and state support for health care provision in rural areas, where private health providers do not have adequate incentives to provide services.
6. Continue to refine Medicare Advantage regulations, so that Medicare Advantage produces consistent cost savings over traditional Medicare for the government and participating seniors, while meeting standards of care.
7. Continue to develop and support Accountable Care Organizations.
8. Expand the use of Medicare drug price negotiations to manage the cost of pharmaceuticals.
9. Significantly improve measurement of the quality of care from each Medicare plan, so those failing to provide high-quality, cost-effective care are replaced by those that meet higher standards.

Energy and Climate Policy

Climate change could irreparably harm millions of people, the economy and the environment. To limit that harm, the US has enacted major subsidies and mandates to reduce greenhouse gas emissions, which are approximately five million tons a year in the U.S.
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Current policies are inefficient, costly and economically unsustainable. A major transition in how we power our homes, businesses and vehicles. While renewable resources continue to grow, low carbon fuels still have an important role to play for the next decade or more. One of the most impactful tools towards accelerating a systemwide energy sector transition is adoption of carbon prices and carbon tariffs. Both would give individuals, businesses and countries strong incentives to reduce emissions efficiently and invest in new technologies for generating clean energy, on a level playing field with foreign competitors. In addition, the US needs to make it easier to build energy infrastructure, especially transmission lines, in order to create efficient and reliable clean energy markets, as well as facilitate traditional fuels to reach consumers.

The following proposals aim to advance these climate and clean energy goals at lowest cost to consumers and in ways that boost economic growth:

1. Create a carbon price of $51/ton (the federal government's estimate of each ton's social cost), phased in over three years, yielding almost $2 trillion in the next decade. To offset the impact on low-income families and rural communities, adjust income taxes accordingly (including fully refundable tax credits).
2. Create an equivalent carbon border tariff, to be imposed on imports from countries that do not price carbon.
3. Hold current and former owners of abandoned fossil fuel wells liable for capping those wells to reduce methane emissions, similar to requirements for cleanup of hazardous waste sites.
4. To ensure efficient transmission of energy from renewable sources to areas that need it, give Federal government agencies increased authority to plan, site and permit transmission lines and other clean energy infrastructure that crosses state lines.
5. Repeal demonstrably ineffective or inefficient energy subsidies and regulations, such as the renewable fuel standard for ethanol.
6. Support methane capture and reuse technologies.

Federal Spending and Debt

The federal debt exceeds 120 percent of GDP and is clearly headed higher. The debt burden is limiting our ability to meet the country's needs and invest in its future.

Furthermore, the US government spends six times as much per senior as it does per child under 18, and favors benefits for well-off groups over long-term growth for the entire nation and over investments in lower income citizens that could make them more productive contributors to the economy.
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The prime drivers of debt are interest, Social Security and healthcare. Medicare, whose unfunded liabilities now exceed $75 trillion, is on track to become insolvent in 12 years; Social Security in nine.

To control the debt in ways that, on balance, will improve nearly every family's quality of life, current proposals are:

1. Increase spending that will spark growth by focusing more on younger generations, education and research, reducing poverty, and increasing upward mobility (see economic mobility and education proposals above).
2. Increase taxes, primarily on those who can most afford it (see tax proposals below).
3. Slow the real growth of Social Security benefits scheduled for medium and high earners retiring in the future, while increasing benefits to low earners, so those who worked all their lives receive retirement income above the poverty line.
4. Index the retirement age to life expectancy for those who can work, but not for those who cannot.
5. Contain the cost of Medicare (see the section on health care above).
6. Require new Federal spending be offset with new revenue or cuts elsewhere, except in emergencies.

Taxes

The tax code has been heavily politicized in ways that reduce the tax base, distort investment incentives, favor the well-off, and produce too little revenue to contain the debt.

To make the tax system more equitable, cover increased investment in education and mobility, and prevent the debt from rising to crisis levels, the proposals for individual taxes are:

1. Sharply reduce deductions, exclusions and credits that mostly benefit high-income families
2. Lower income taxes on low-income families.
3. Introduce a Federal value added tax (VAT) and transition state sales taxes to state VATs, offsetting their costs to low income consumers through cash refunds.
4. Increase intergenerational mobility by:a. Shifting from an estate tax to an inheritance tax based on income of the beneficiary not of the deceasedb. Taxing the value of inheritance at the time it was transferredc. Lowering the size of estate that is exempt from tax (currently $27 million per couple)d. Eliminating the stepped-up basis transfer of inherited wealth, so that descendants would pay capital gains at the time of sale based on original purchase price rather than the value at the time of inheritance

To increase productivity and economic growth, the proposals for business taxes are:

5. Allow businesses to deduct all expenses in the year made
6. Eliminate deductions for interest
7. Eliminate taxation distinctions between corporate and non-corporate businesses.

In conclusion

As stated at the start, we expect citizens and interest group representatives to object to some of these ideas. But we ask that you consider which outcome would be better for your family, your constituency, and the country as a whole:
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a) Continuing on our current path of political instability, with 77 percent of Americans believing the economy is rigged against them, and 33 percent seeing violence as justified to advance their views.

b) Using the proposals above as a starting point for negotiations with counterparts in other sectors of society, striving for a more detailed Grand Bargain that generates real progress for all.

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