The big fix.(Book Review)

The 2% Solution: Fixing America's Problems in Ways Liberals and Conservatives Can Love By Matthew Miller Public Affairs, 320 pages, $26

Imagine if one of the Democratic Presidential hopefuls claimed he could return the federal budget to pre-Reagan levels if elected, while cleaning up inner-city schools, enacting a universal health care plan, and creating tens of thousands of jobs for poor Americans. That's precisely what former Clinton administration budget adviser Matthew Miller contends the next American President can do. In The 2% Solution, he claims his plan will "help us make dramatic inroads on some of the nation's biggest domestic problems in ways that are broadly acceptable, pragmatic, and just"--and at a reasonable cost.

How does he hope to accomplish all of this? With an agenda only liberals can love: It cancels the remaining Bush tax cuts, hikes the gas tax, limits health tax exclusions, and curbs defense spending. Indeed, the book's tantalizing promise to limit government spending while solving social ills turns out to be something of a statistical ruse. With a cost of $220 billion--a full 2 percent of GDP--Miller's platform is far more ambitious than anything on offer from the Democratic candidates.

For Miller, spending measures "[aren't] meaningful without being compared to the size of the economy." It's all relative, he says: Economic growth frees up GDP for greater public sector spending. Thus, Bill Clinton's government was "smaller" than Ronald Reagan's, because it only spent 18.5 percent of GDP, while Reagan, presiding over a military buildup and a stagnant economy, spent 22 percent. (In absolute terms, Clinton's government was nearly twice the size of Reagan's.) Miller thus argues that a modest spending boost commensurate with economic growth would keep government "smaller" than Reagan's was. So much for fiscal moderation.

At least some of this book's policy proposals are innovative. Take Miller's "millionaire teachers" idea, which would tackle the talent flight from the public schools by raising teacher salaries in the worst schools by 50 percent. "People who can't get jobs elsewhere come here," says the former president of the Los Angeles teachers' union. Miller would fix this by making millionaires out of teachers of poor children over the course of a career.

"The troubling part is a 50 percent boost for just showing up for work, without any reference to whether anybody you teach learns a damned thing," says school reform advocate Chester Finn. Fine, says Miller; let's introduce performance-based compensation and real accountability for underperformers.

Miller proposes choosing three or four metropolitan school districts for a school voucher trial. To assuage liberals who see in vouchers a conservative ...