Mark Warner’s Centrist Democratic Solutions for What Ails Us

Sen. Mark R. Warner. Photo credit: Virginia Business

The Thinker: Sen. Mark R. Warner. Photo credit: Virginia Business

by James A. Bacon

As governor of Virginia between 2002 and 2006, Sen. Mark R. Warner thought deeply and seriously about economic development in an era of globalization and knowledge-intensive industry. Although he is far less visible to Virginians since his election to the U.S. Senate in 2008, he continues ask what it takes for the United States — and Virginia — to adapt and thrive in a competitive global economy. In a lengthy spread in Virginia Business magazine, he expounds upon his thinking about what he calls Capitalism 2.0.

A primary focus is the changing nature of work, and the rise of the “gig” economy, in which people increasingly work on demand, as epitomized by drivers for the ride-hailing company Uber. The super-flexible work model suits the needs of many employers and employees but it creates challenges because current laws and regulations governing the labor market don’t fit the new jobs very well.

“What is the social contract going to be in the 21st century?” he asks.

Our current system basically says there are two classifications of work: You’re an independent contractor, or you’re an employee, and there are certain freedoms or responsibilities that come with each of those classifications. I think there probably is going to need to be either a third or fourth-level classification, and there may be a whole ability to create a set of benefits that will be more portable with you.

As one of those who fall into a nontraditional classification, I couldn’t agree more. Warner is asking important questions, and it’s encouraging to know that someone in Congress is thinking about them.

As a political centrist, Warner does not gravitate toward populist, Bernie Sanders-like solutions (free college for all, to be paid for with taxes on millionaires and billionaires). He worries about the $19 trillion national debt and the budget deficit that is growing again — “we are sitting on a ticking bomb” — and he embraces centrist solutions that entails both tax reform that yields higher revenues and entitlement reform that cuts long-term spending.

Warner also is clear-eyed enough to recognize that some of the legislation he supported like the Affordable Care Act and the Dodd-Frank Act still need work. Obamacare, he says, creates a “huge cliff” between part-time work at 29 hours and full-time work at 30 hours, at which point companies must provide health insurance. The result: Companies don’t want to “tip the scales” to full-time hours, thus dampening the creation of full-time jobs. Likewise, the Dodd-Frank Act imposes tremendous regulatory costs on community banks even though they do not contribute to the systemic financial problems that Congress wanted to guard against. The result: fewer community banks.

But Warner remains a Democrat, and he looks to government to solve society’s ills. A classic case is his take on the burgeoning student loan crisis. Like everyone else, he views the increasing debt load of college students — averaging $26,000 per student in Virginia among those who borrow to pay their college bills — as a drag on the economy and a hardship on the students themselves. What solutions does he propose? Use the power of government to make it easier to borrow money!

Thus, Warner introduced one bill that would allow companies to offer as an employee benefit the ability to pay down student debt with pretax dollars. In other words, share the burden of debt repayment with the taxpayer! Alas, history has shown that making it easier for students to borrow just allows colleges and universities to raise tuition, fees and expenses more aggressively than before. (To be fair: Warner had Republican partners backing the bill, which indicates that Democrats are not the only ones who instinctively turn to government solutions.)

Another bill would streamline the process for students to enroll in income-based repayment programs for federal loans. Warner also believes that federal Pell grants for low-income students should be offered to high school students taking dual-enrollment classes. More free stuff. Call it Bernie Sanders Lite!

The underlying problem in higher education is out-of-control costs, as Warner is well aware:

[When I went to school the] cost of a year of higher education was about the cost of a starter car, a basic Ford, both about $5,000. Now cars are maybe $15,000. You go to a private school today, it’s $50,000. This has kind of gotten out of whack.

Warner has proposed creating more user-friendly websites that would allow would-be college students to compare costs, the average length of time it takes to graduate, how much graduates earn, and the like. Putting more information in the hands of consumers is always a good idea, but the reason that costs are out of control is not insufficient consumer information — there is plenty data available on the Internet — but the availability of easy, subsidized credit.

The Senator also takes it as an article of faith that the U.S. should be investing more in human capital. “In capitalism today,” he says, “if you invest in a piece of equipment, it’s an asset. If you invest in a human being in terms of pay or training, that’s a cost. Is there a way to rebalance that a little bit?

What he doesn’t do (at least not in this interview) is justify the sentiment that the U.S. needs to be investing more in human capital, as opposed to, say, making better use of the massive sums we already invest, often ineffectually, in K-12 education, higher ed, and job training. As with health care, I would argue, the U.S. invests more and gets less for our human-capital “investments” than most other economically advanced nations. Among the most disastrous conceits is that everyone who wants to go to college should be enabled to do so, regardless of how well or how ill prepared they are, and regardless of how many middle-class jobs might go begging because people are unwilling or unable to get the necessary technical training.

While I disagree with Warner on these important points, I applaud him for a thoughtful take on topics in a nation that seems determinedly un-serious about public policy. At least Warner asks good questions, seems open to empirical evidence on what works and what doesn’t, and refrains from demonizing those who disagree with him. In an increasingly polarized country, he looks for win-win approaches to problems. And that’s saying something.