The following was given as a speech to the National Academy of Social Insurance in January 1992 and was published in Paul N. Van de Water and Lisbeth B. Schorr, eds, Security for America's Children: Proceedings of the Fourth Conference of the National Academy of Social Insurance (Dubuque, IA: Kendall/Hunt Publishing Company 1993).

A New Deal for the Young

By Paul Starr

Not since the Progressive Era have we seen such concentrated attention in social policy and public rhetoric to the plight of America's children. Countless official and private reports, books, television documentaries, and political speeches have described and deplored the conditions affecting America's children and urged a new national commitment to improve children's lives. Everyone says we need to "invest" in children and that such investments not only are morally right, but make economic sense--and they do.

Indeed, we have so great a consensus on behalf of children's interests--so broad, so emphatic, so well reasoned, so amply documented--that what is really astonishing is that, at least as yet, we have so little to show for it. Of course, we all know children don't vote (unfortunately, a lot of their parents don't either). But perhaps we have little to show because much of the consensus is illusory, and we have yet to synthesize the diverse ideas for reform into a single compelling message and program. I want to suggest one way to do that.

Why Children?

Whenever a consensus like this emerges, there are several possibilities. One is that people are creatively misunderstanding each other--that the consensus is simply a superficial agreement, obscuring deeper political differences that prevent an apparent concert of opinion from becoming powerfully concerted action.

A second possibility is that the problems affecting children are being used by different currents in our public life to symbolize moral and political worries only tenuously related to children--that just as adults project their fears and hopes on their children, so we as a nation are doing the same.

And yet a third possibility is that we are in the midst of a veritable children's movement, on the verge of a genuine redirection of public policy and ultimately, one hopes, a reversal the adverse trends affecting children's lives.

These possibilities are not mutually exclusive. In the consensus about children, we may have all three--a misunderstanding, a metaphor, and a movement.

The misunderstanding--the deceptive consensus--is evident in the discussion of America's schools. It is striking how eagerly both the right and the left have embraced evidence about school failure. For different reasons, both conservatives and liberals have found it useful to locate responsibility in the public schools for problems of motivation, discipline, and performance that do not begin in school and that schools may not, with any consistency, be able to remedy. Conservatives want to make public schools private; liberals want to make public schools equal. Neither side yet has the political capacity to get its way, and it seems unlikely they can agree on making schools both more private and more equal--or, indeed, whether that would really remedy the problems that trouble us in the first place. The last decade of school criticism and reform, therefore, may turn out to be no more than a negative convergence--a consensus of convenience--that fails to bring any breakthrough in policy.

Children are also clearly a metaphor for the nation's uneasiness about its future. I do not think we would be hearing nearly as much about children today if it were not for the worries about national decline. As the Soviet Union's launch of Sputnik prompted a spurt of interest in education in the 1950s, so today we are reexamining educational and children's policies out of anxiety about our capacity to stand up to international competition. Much of the concern about children also reflects cultural anxiety about family decline.

And yet, out of cross purposes and a mixture of economic and cultural anxieties, some real support--an authentic movement--has developed for new policies affecting families and children. While highlighting the political and subjective elements in the new consensus, I do not mean to suggest that it lacks an objective foundation. That there certainly is. We are all now familiar with the growth of child poverty. We know about the shifts in family structure, the growing rates of illegitimacy, divorce, and single parenthood. We know, too, about the changes in income distribution, particularly the declining earnings of young workers that affect their ability to raise families and probably their willingness to form families. We know, too, about the pattern of shifting public expenditures that over the past several decades have produced among the aged a significant reduction in poverty and improved access to health care, yet have left children and young families in distress.

Some of the trends in single parenthood and child poverty have also been evident, although at a lower level, in Europe. The problems of income security and health care, however, tend to be more accentuated in the U.S., because of the historic weakness of family policy here, the lack of universal health insurance, and the distinctive character of American conservativism, with its more strict devotion to free-market ideology. So while there is a new post-industrial era in social policy in many countries, as Senator Daniel P. Moynihan suggests(1), there is a distinctive American post-industrial social pattern that has evolved under the shaping influence of the institutions we have inherited from the past.

Institutions that No Longer Fit

Those institutions were not conceived with a view to the world that we face today.

At the heart of the problem is the design of public and private social security systems that no longer fit emerging family structures and gender relations. Michael Young, now Lord Young, who worked on the original Beveridge plan half a century ago, said in a talk in London not long ago that those designing the postwar welfare state did not concern themselves with the problems of children and families because they presumed that traditional family structures would remain intact. The same can be said of our New Deal--specifically, for example, of the provisions for women under the old-age insurance program, even of the expectations and presumptions behind Aid to Families with Dependent Children (AFDC). It is true as well of the design of the workplace and employer-sponsored benefit plans: None of these anticipated emerging patterns of family life in America today.

The old-age insurance program envisioned a single-earner family where the woman's pension entitlement would depend upon her husband's contributions. The system does not deal appropriately or fairly today with married working women, whose Social Security contributions often do not affect their benefit entitlement.(2) AFDC assumed that women would become single parents primarily through widowhood; it did not envision the enormous growth in single-parent families from higher rates of divorce and illegitimacy. The design of the workplace assumed that mothers would be home taking care of children and that no special arrangements for youngsters needed to be made. As women increasingly work outside the home, the design of all these work and benefit institutions has to be rethought.

Consider the case of our employer-sponsored health insurance system, which makes children and women outside the labor force only incidental, indirect, and insecure beneficiaries. This sytem has deteriorated sharply in recent years. According to a recent Children's Defense Fund report based on Current Population Survey data, the proportion of children covered by employer-based coverage dropped from 72.8 percent to 62.9 percent between 1977 and 1987. As of the summer of 1990, more than 25 million children--about 40 percent of all children--lacked employer-based coverage; and even of the 46 million children who had coverage that summer, 43 percent are predicted to go without any insurance for some period by November 1992.(3)

The shrinkage of employment-based health benefits has been partly offset by the expansion of Medicaid eligibility for poor children, one of the few significant health coverage expansions of the past decade. But for many low-income working families, who are ineligible for Medicaid, the decline of employment-based coverage is an ominous development for which Medicaid does not compensate.

The basic framework for financing health care for the majority of children in America simply does not guarantee them security of coverage. Employers are not required to offer insurance for dependents, employees are not required to buy it when offered, and neither employers nor employees are able to control the spiral of costs that is undermining the insurance system and producing an erosion of benefits. With rising health costs, the interests of children have been especially easy to sacrifice--even though, among all age groups, children are the least expensive to care for.

I do not even think that "insurance" is the appropriate conceptual framework for financing health care for children. The objective should not be to insure against the risks of unexpected costs (which is the premise of the insurance model), but to provide for routine, preventive care as well as the treatment of sickness. Our health insurance system and the forms of medical service that have grown up in response to its incentives do not perform those preventive functions well at all, or they perform them at unreasonable cost. That is why, in thinking about national health insurance, it should not be enough simply to expand insurance coverage for children; we need to revamp the financing and provision of children's health services.

One alternative, under a universal insurance system, would be to create a mechanism for capitation payment of comprehensive child health services, which would be separate from the menu of options provided to adults. In other words, when signing up for a health plan, families would make not one but two choices--for adults and children. (Today, when employees or Medicaid beneficiaries are offered a choice of health plan, they are asked to make a single choice for the entire family.) By separating the choice for children, this approach would encourage health plans to compete for children and thereby promote attention to children's services. Moreover, it would permit the development of capitation plans--perhaps with clinics based in schools--focused on children's health. And by separating children's enrollment from that of the adults, it would allow parents who personally prefer a conventional indemnity arrangement to sign their children up a health maintenance organization or school-based children's health service that had a greater capacity to address preventive, educational, and behavioral needs. Such an approach would be far more beneficial to children--and, ultimately, to the adults they become--than merely providing more money for high-tech medical intervention. But, unfortunately, in the debate on health care, many think only of extending the employment-based insurance system, not revising it, and the special concerns of children's health rarely come up at all.

Symbolic politics or social reform?

As difficult as it now seems, children's health care is probably an easy problem by comparison with the bigger, worsening problem of children's poverty. The underlying economic trends eroding the earnings of young families with children seem to be extremely powerful, and the uncomprehending response of a large part of the public is to attribute the cause to the poor themselves--not to children, of course, but to their parents. Conservatives claim that poverty today is more behavioral than structural--that it results chiefly from the indulgence and permissiveness of the welfare system and from moral decay that causes family decline, drug use, and violence. As Vice President Quayle put it in the wake of the Los Angeles riots, the poor suffer from a "poverty of values."

This is symbolic politics, where the object is not to provide any solution but to use the poor as a vehicle to evoke and direct widely felt anxieties. No doubt the right-wing "family values" agenda, with its attacks on homosexuality, pornography, and promiscuity and its defense of the traditional family, has a powerful resonance among many people in America. But, at its best, it is an expression of indignation and anger, with very little rational relation of ends and means. (At its worst, it is an expression of cynicism with a very clear relation of ends and means.) Even if we were to make the restoration of traditional family forms our leading objective, would the means advocated by the right accomplish that goal? The reality is that no one has any idea of how to reverse the trends toward family breakup and illegitimacy. Ironically, if anyone has illusions about the power of public policy, it is those conservatives who think that the traditional family will recover its strength as a result of bans on pornography, discrimination against gays, and rules pushing welfare recipients to marry. In the history of social engineering, this must surely go down as one of the more hopeless crusades.

But if the hopes are illusory, the consequences of cultural conservatism are real enough, evident in the recent surge of punitive welfare policy. To some extent, this is recession-related, inspired simply by budget-cutting. But it also responds to and exploits a very real anger in the middle class about programs that seem not to require of the poor the kinds of obligations and responsibilities that others have to bear.

And here, I think, we must address the public holding these views, recognizing that the demand for responsibility has a reasonable basis. We have no choice but to fit social reform to public values, to accept that in public programs, as in other arenas, there should prevail what the sociologist Alvin Gouldner called "the norm of reciprocity."(4) If citizenship imposes obligations as well as creating rights, so, too, does social citizenship. It is not a mistake, therefore, to make some benefits contingent on the performance of obligations, including work and participation in training programs, although we need to be careful to prevent the sins of parents from being visited on children. This is the premise of Governor Clinton's "New Covenant," with its emphasis on providing more opportunity in line with greater responsibility.

Fitting social reform to public values means, as David Ellwood has emphasized, shifting the emphasis of income security programs to making work pay, rather than calling, as so many did in the 1960s, for welfare rights or a negative income tax.(5) The earned income tax credit exemplifies that idea (as do several other reforms I shall come to in a moment). "Making work pay" involves creating, if you will, a symbolic politics in the service of reform as against a symbolic politics that is a substitute for social reform. And, if I can sum up the substantive ideas that the symbols should support, I would call it "a New Deal for the young."

A New Deal for the Young

With the phrase "a New Deal for the young," I want to call attention to both the continuities and discontinuities with the original New Deal. The continuity is that the next New Deal should emphasize universal, nonracial social remedies, as against the more race-conscious policies and poverty-related programs that became important in the 1960s and after. The difference, of course, is that the next New Deal should be conceived with a view toward the new structure of families and changed relations of men and women, and that it should do for young families and children what the social insurance programs of the New Deal have done so successfully for the aged.

Increased income support for young families is clearly a primary part of such a strategy. Tax policy is one element; a tax credit for children, in place of the current exemption, as proposed by Senator Al Gore and Congressman Tom Downey, would be the right approach. Since the late 1940s, the value of the tax exemption for children has sharply eroded; in a sense, by steeply increasing the exemption or, even better, through a tax credit, we would be restoring family interests in the tax code. Making the child care tax credit refundable would also help, and stepping up the earned income tax credit for children should be acceptable, even when stepping up welfare benefits for extra children is under attack.

Family leave, increased support for child care, and I might add, postsecondary educational financing through the income tax system--as proposed by Senator Bill Bradley and by Barry Bluestone and his colleagues in The American Prospect--are other pieces in the package of reforms that belong in the next New Deal.

Child support assurance, as a partial replacement for welfare, also illustrates the potential for establishing a new foundation for social benefits that corresponds better both to current family patterns and to the moral demand for greater paternal responsibility.(7)

Likewise, national service responds to the demands for responsibility and obligation and would help, I believe, to strengthen the sense of a common social citizenship.

And, finally, I mention once again universal health insurance--important not just for health care, but perhaps even more as a means of releasing resources for other social programs. In recent decades, the growth of health spending has crowded out other kinds of social expenditure. In 1965 we spent just about 6 percent of GNP on each of three sectors: defense, education, and health. As of 1992, defense is below 6 percent and falling, education is still about 6 percent, and health care is projected this year to absorb 14 percent of GNP. Since 1981 we have transfered 5 percent of GNP to health care--almost the equivalent of the entire defense budget. In this same period, the share of national income spent on health care in Western Europe and Canada, under national health insurance, has been flat or increased slightly (the average for industrialized countries is 7.5 percent of GNP). Unless we adopt a national health insurance program built on hard budget constraints and capable of fundamentally altering the incentives down below in the belly of the health system, all other social programs are threatened.

These are, in a capsule, ingredients of what some have called a "neo-New Dealism." It is an outlook conscious of our historical achievements in social insurance, but also of their limitations and the need to push beyond them. Several years ago, there was an effort by some to undermine the principles of social security under the banner of generational equity. We need to fulfill the aspirations of social security under the banner--and in the interests--of generational equity and, instead of creating generational conflict, build new generational alliances.


1. Daniel P. Moynihan, "Toward a Post-industrial Social Policy" The Public Interest Summer 1989.

2. Michael J. Boskin, Too Many Promises: The Uncertain Future of Social Security (Homewood, Ill.: Dow-Jones Irwin, 1986).

3. Sara Rosenbaum et al., "Children and Health Insurance" (Washington, D.C.: Children's Defense Fund, January 1992).

4. Alvin W. Gouldner, "The Norm of Reciprocity," American Sociological Review (April 1960), reprinted in Alvin W. Gouldner, For Sociology (New York: Basic Books, 1973), 226-59.

5. David Ellwood, Poor Support: Poverty in the American Family (New York: Basic Books, 1988).

6. Barry Bluestone et al., "Generational Alliance: Social Security as a Bank for Education and Training," The American Prospect No. 2 (Summer 1990), 15-29.

7. Irving Garfinkel, "Bringing Fathers Back In," The American Prospect No. 9 (Spring 1992), 74-83.