The Great Risk Shift

America's leaders say the economy is strong and getting stronger. But ordinary Americans aren't buying it. They see what the rosy statistics hide: We are all struggling under the weight of terrifying economic instability. No matter how well educated and hard working we are, we know that the bottom can fall out at any moment. Meanwhile, the safety net that once protected us is fast unraveling. With retirement plans in growing jeopardy while health coverage erodes, more and more economic risk is shifting from government and business onto the fragile shoulders of the American family.

In The Great Risk Shift, Jacob S. Hacker lays bare this unsettling new economic climate, showing how it has come about, what it is doing to our families, and how we can fight back. Behind this shift, he contends, is the "personal responsibility" crusade, eagerly embraced by corporate leaders and Republican politicians who speak of a nirvana of economic empowerment, an "ownership society" in which Americans are free to choose. But as Hacker reveals, the result has been quite different: a harsh new world of economic insecurity, in which far too many Americans are free to lose.

The book documents how two great pillars of economic security -the family and the workplace-guarantee far less financial stability than they once did. The final leg of economic support-the public and private benefits that workers and families get when economic disaster strikes-has dangerously eroded as political leaders and corporations increasingly cut back protection of our health care, our income security, and our retirement pensions.

Hacker concludes by advocating an "insurance and opportunity society" that would safeguard economic security and expand economic opportunity, ensuring that all Americans have the basic financial security they need to reach for and achieve the American Dream. Jacob Hacker brings into focus as never before the pressures that the Great Risk Shift exerts on our pocketbooks and on our lives. Blending powerful human stories, big-picture analysis, and compelling ideas for reform, this remarkable volume will hit a nerve, serving as a rallying point in the vital struggle for economic security in an increasingly uncertain world.

A devastating critique of the "ownership society," revealing how this conservative crusade puts all of us at greater economic risk than at any time in recent history

The currently favored response to rising insecurity is to throw more tax breaks and individual accounts at Americans to encourage them to save and invest on their own. This may help the privileged, but it won't provide strong guarantees of economic security to ordinary Americans, who are just barely staying afloat. Nor will it stop the huge shift of risk onto these hardworking families as jobs, health care, and retirement all become less secure. Quite the opposite: "The Ownership Society" is akin to throwing a lead weight to a drowning man, on the assumption that now he will really have an incentive to swim.

We need solutions that make Americans less at risk, not more. And to achieve these solutions, we need to do three things: Get Mad, Get Wise, and Get Even.

Get Mad. The Great Risk Shift isn't a natural occurrence, a financial hurricane beyond human control. There are powerful forces propelling it, yes, but our leaders could have responded to those forces by building up the floodgates that protect us from the rising tide of economic risk. Instead, in the name of personal responsibility, many of them are busy tearing the floodwalls down. When it comes to economic insecurity, fatalism is fatal. We can halt the Great Risk Shift, but only if we start fighting back now.

Get Wise. The personal responsibility mantra is right about one thing: We stand on the front lines of economic insecurity. Too often, Americans don't realize how at risk they and their families are. Ultimately, there is no way that our finances can be made secure if we don't wise up to the reality of growing risk. But there is also no way that we can achieve security completely on our own. There should be tools to build and patch our own safety nets, including improved private insurance and better public information. This means, for example, new indicators that help people know exactly how risky it is to buy a particular home and new resources that allow people to hedge against that risk when they get a mortgage. It means new indicators that help people know how risky it is to go into a particular line of work and new resources that allow people to borrow to train or retrain for a job-without the fear that if the training is for naught. they will be forced into bankruptcy. And it means savings accounts that are universally available and generous even for people of modest means. It means, in short, that everyday Americans should have the same tools at their disposal in hedging against risk as high-flying investors do.

Get Even. American politics and policy is badly tilted against working families. We have limited liability for corporations, but increasingly we have full liability for American families. This must change, and the change should begin with health care, the epicenter of economic insecurity for millions of hardworking Americans. Health reform doesn't have to be complicated, just effective. Let every employer and worker have a choice: Buy insurance through the private sector, or buy it through Medicare. Americans should also have access to an all-purpose catastrophic insurance policy to protect themselves and their families against huge drops in income or budget-breaking expenses. These and other innovative reforms outlined in The Great Risk Shift are designed to catch people when they plummet from the ladder of economic advancement. But they're not just about security, but also about opportunity. By providing workers and their families with the financial security they need to look with hope and optimism toward the future, they will help millions of now-anxious Americans reach for and achieve the American Dream.