Financing Democracy: The Crisis in
Social Security, Education, and Health Finance

This course studies each of the three great social programs currently in crisis--Social Security, education, and health--with a view to understanding how the program currently works, what are the major stresses on it, and what are the major options for reform. A broad theme linking all three crises and running throughout the course is the question of balance between the three alternative systems of production and consumption in the modern world: the state system, the market system, and the family (or traditional) system.

To avoid getting lost in the myriad details of each program, we will focus particular attention on the financial details, in accordance with the view that the structure of finance not only gives insight into how the program works, but also helps to explain its most characteristic pathologies. The course is built on the premise that finance is not a mere technical detail to be left to the experts, but rather is the foundation upon which the programs are built, a foundation that determines what can and what cannot be built on top.

The course will be taught in seminar format. Intensive class participation and careful study of the assigned readings are absolutely essential to the success of the course. Grades will be based on class participation (20%), three oral presentations (30%), and a final paper (50%).

The class will make use of a diverse set of materials and sources, many available online. The books listed below are available for purchase at the Columbia Bookstore, and on reserve in Wollman Library.

BOOKS

Stuart H. Altman and David Schactman, eds. Policies for an Aging Society. Johns Hopkins Press
2002. ISBN 0801869072

Henry Aaron and Robert D. Reischauer. Countdown to Reform: The Great Social Security
Debate. Century Foundation Press 2001. ISBN 0870784625.

Dean Baker and Mark Weisbrot. Social Security, the Phony Crisis. University of Chicago Press
2001. ISBN 0226035468

Peter A. Diamond, ed. Issues in Privatizing Social Security: Report of an Expert Panel of the
National Academy of Social Insurance. MIT Press 1999. ISBN 0262041774

Joseph White, False Alarm: Why the Greatest Threat to Social Security and Medicare is the
Campaign to Save Them. Johns Hopkins Press 2001. ISBN 0801866650

Helen F. Ladd and Janet S. Hansen, eds. Making Money Matter: Financing America's Schools.
National Academy Press 1999. ISBN 0309065283

Richard Ruch. Higher Ed, Inc: The Rise of the For Profit University. Johns Hopkins Press,
2001. ISBN 0801866782

Kant Patel and Mark E. Rushefsky. Health Care Politics and Policy in America. MESharpe,
1999. ISBN 076560390X

David Dranove. The Economic Evolution of American Health Care, From Marcus Welby to
Managed Care. Princeton University Press, 2000. ISBN 0691102538

Andrew J. Rettenmeier ed. Medicare Reform, Issues and Answers. University of Chicago Press,
1999. ISBN 0226710130

Robert B. Helms, ed. Medicare in the 21st Century, Seeking Fair and Efficient Reform.
American Enterprise Institute, 1999. ISBN 0844741183

Lisa A. Potetz and Thomas H. Rice eds. Medicare Tomorrow: The Report of the Century
Foundation Task Force on Medicare Reform. Century Foundation Press 2002. ISBN
0870784633

Class Meetings.

Jan 27 Introduction.
Stuart H. Altman and David Schactman, eds. Policies for an Aging Society, 2002.

Feb 3 Social Security: How Does it Work?
Official government site: www.ssa.gov
Century foundation site: www.socsec.org
Cato Institute site: www.socialsecurity.org
Mehrling "The Social Mutual Fund"

Feb 10 Social Security: What is the Problem?
Henry Aaron and Robert D. Reischauer. Countdown to Reform, 2001.
Dean Baker and Mark Weisbrot. Social Security, the Phony Crisis, 2001.
"Social Security: Long-term budget implications" 107th Congress, June 2002.
frwebgate.access.gpo.gov/congress/senate/senate06ch107.html

Feb 17 Social Security: Is Privatization the Solution?
President's Commission site: www.csss.gov
Peter A. Diamond, ed. Issues in Privatizing Social Security, 1999
Joseph White, False Alarm: Why the Greatest Threat, 2001
*John Campbell and M. Feldstein, Risk Aspects of Investment-based, 2001

Feb 24 All Day Conference, "On the Complexity and Limits of Market Organizations"

Mar 3 Education Finance: Primary and Secondary
Helen F. Ladd and Janet S. Hansen, eds. Making Money Matter, 1999.
Campaign for Fiscal Equity vs. State of New York
187 Misc. 2d 1; 719 N.Y.S.2d 475; 2001 N.Y. Misc. LEXIS 1
295 A.D.2d 1; 744 N.Y.S.2d 130; 2002 N.Y. App. Div. LEXIS 7252
Official site: www.nces.ed.gov/edfin

Mar 10 Education Finance: College and University
Barnard College Annual Report, Budget
Columbia University Annual Report, Budget
Richard Ruch. Higher Ed, Inc: The Rise of the For Profit University, 2001.

Mar 17 Spring Break

Paper Proposals Due

Mar 24 What are Endowments For?
Gordon Winston et al. "Saving, Wealth, Performance and Revenues in US Colleges and Universities" Discussion Paper 59 www.williams.edu/wpehe/publications.html
Mehrling "Spending Policies of Foundations"

Mar 31 Health Finance: How Does it Work?
Kant Patel and Mark E. Rushefsky Health Care Politics and Policy, 1999
*Susan Giaimo. Markets and Medicine, 2002

April 7 Health Finance: What is the Problem?
David Dranove The Economic Evolution of American Health Care, 2000
"Medicare, the need for reform." (July 2001) Congressional Hearings
purl.access.gpo.gov/GPO/LPS18263
*Paul B. Ginsberg and Cara S. Lesser. Understanding health system change, 2001.
*Institute of Medicine. Fostering Rapid Advances in Health Care, 2002.
www.nap.edu/books/0309087074/html/

April 14 Health Finance: The Future of Medicare
Victor R. Fuchs. "Medicare reform: the larger picture". NBER WP 7504, 2000.
Andrew J. Rettenmeier ed. Medicare Reform, Issues and Answers, 1999.
Robert B. Helms, ed. Medicare in the 21st Century, 1999
Lisa A. Potetz, ed. Medicare Tomorrow, 2002

Apr 21 Social Security Finance: Student Papers

Apr 28 Education Finance: Student Papers

May 5 Health Finance: Student Papers