Broken Contract

Jason Bordoff, The Brookings Institution

Abstract

Americans face greater economic risks and are not sharing in our nation’s economic prosperity. As the employer-based system for health and pension benefits erodes due to globalization’s competitive pressures, we need a new social contract that marries economic growth and economic security through new and sustainable roles and responsibilities for government, employers, and individuals. Government should provide basic protection through social insurance programs and use smartly designed defaults, regulations, and incentives to make it easier for individuals to act responsibly by supplementing that basic level of protection. Employers also should facilitate and help fund the provision of benefits.