American Compass Economic Plan
In a previous Fifty Year Perspective post, I described a movement among a small group of Republican leaders who have proposed a fundamental redirection of U.S. economic policy. The group, called American Compass, is led by Oren Cass, a former aide to Mitt Romney during his run for the Republican nomination for president. He was joined by four Republican senators – J.D. Vance from Ohio, Marco Rubio from Florida, Todd Young from Indiana, and Tom Cotton from Arkansas – who presented the organization’s position document on Capitol Hill in June 2023. Their positions present an opening for bipartisan negotiation on national economic policy.
Cass wrote a book in 2018 titled “The Once and Future Worker: A Vision for the renewal of Work in America.” In it he laid out his plan for an economy that replaces an economic policy focused on GDP growth and rising consumption with one based on his hypothesis, “that a labor market in which workers can support strong families and communities is the central determinant of long-term prosperity and should be the central focus of public policy.”
Cass regards the essential challenge for economic stability to be the need for a supply of available labor that is “responsive to market signals,” at a wage rate sufficient to support a family. The goal is “to ensure that every person, no matter her starting circumstances, can find a vocation that allows her to support a family, live in a community where she can build a good life, and then give her children even greater opportunity than she had.”
Cass’s plan includes adoption of an educational system common among countries of the Organization of Economic Cooperation and Development (OECD). The OECD consists of 38 democratic countries with free market economies and includes the most developed and powerful economies in the world. Common among them is a separation of high school students into educational systems targeted to different outcomes. Some guide students toward college and others toward vocational training.
Recognizing that some jobs for which students prepare may not provide sufficient income to support a family, Cass introduces the concept of a “wage subsidy.” That is an amount added to a worker’s pay to cover the difference between what the employer will pay and what the worker demands. The difference is made up by the federal government and would replace direct payments to unemployed persons.
Cass proposes this as preferable to setting a minimum wage which employers must pay, possibly causing employers to lay off some workers. The wage subsidy is paid for through taxes, in effect taking tax money from the wealthier workers and paying it to low-wage workers. It may cost the government the same as what is paid to poor people who do not work, by instead subsidizing work, increasing jobs and employment.
A substantial share of the safety net would shift from a goal of maintaining people in poverty to a goal of moving them out. The result would be a two-tiered antipoverty policy: “for those capable of earning an income, a labor market with adequate opportunity and wages for all; [or] where self-sufficiency is not possible, a safety net.” Cass would shift implementation of this resource transfer model “to people at the local level who can tell the difference between different people’s capacity to work and make a difference in their lives.”
Cass also advocates for a rebalancing of environmental policy that “prioritizes industrial expansion over further environmental quality,” contending that current policy does not adequately consider effects on employment. While consistent with his focus on workers and families, he does not address environmental quality as a dominant issue. His proposals set a stage for bipartisan negotiation.