Remarks of Vermont Gov. Howard Dean
 Greater Portsmouth Chamber of Commerce breakfast
Portsmouth, NH
February 20, 2002
Comments & Observations: Early in 2002 Gov. Dean engaged in substantial campaign-type activity, including four visits to New Hampshire and two visits to Iowa in the first three months of the year.  He emphasized three basic themes: fiscal responsibility, health care, and early childhood development.  On health care, Dean stated that Vermont offers a model "that can work."  Dean has achieved success in providing health insurance for children, but another part of the model seemed to be still in the developmental stages.  Dean said that the Vermont Senate was considering a bill to allow small businesses to buy into government programs.  Overall, however, Dean laid out a serious, reasonable sounding set of ideas for addressing this difficult issue.  -EMA


Thank you.  It was great to taste the New Hampshire maple syrup over here.  We used to have a skiing contest between the governor of New Hampshire and the governor of Vermont and of course we used to give each other the business something awful after--the most fun was actually not the skiing, it was the apres-ski where we'd all get together and give each other the business and Judd [Gregg] really got me one time when he gave me a little jug of New Hampshire maple syrup, which of course I then likened to motor oil.  But anyway I have to be very careful here because you know it's fun to come to the neighboring state but there is this long history of rivalry.

I do also want to thank Martha Fuller Clark; we did a nice event last night and she was able to put us up, and so when she gets to Washington as of next November we'll be visiting you in the Capitol (capital?), and we thank you very much for your hospitality.

Let me talk--what I'd like to do is actually talk for not too long and then have questions, comments, and, since this is New Hampshire, rude remarks.

I'm going to talk about three items, and then we'll open it up and talk about anything you want.  And the first is the budget.

I am deeply disturbed that in this country today we appear to be returning to the borrow and spend politics of the 1980s.  The budget that the president has laid out is a budget that will cost Americans jobs; it will cost people in New Hampshire jobs.  The tax cuts simply were too deep.  We have the first deficit budget laid out in Washington that we've seen in three, in four or five years, and, as a result of that budget, the amount of money that will be coming to the people of New Hampshire for federal road shares, for your share of federal roads will decrease by 30 percent.  This is true of every state in the country.  As a result of that budget, New Hampshire hospitals will be seeing substantially less Medicaid money--the national cut is $9 billion.  And I think that the way to deal with the recession is not tax cuts--40 percent of which go to people making  more than $350,000 a year, although I think some tax cuts were a good idea.

I think the way to deal with the recession is the traditional way of priming the pump.  You're struggling as we have with state aid to education and how to allocate resources.  Imagine for every community in the state, if some portion of that $600 billion which  is going to people like Ken Lay, could be used to rebuild schools in New Hampshire and to restore the federal funding of highways to the level at which it should be.  I believe that when you look at tax cuts, you have to look at them in the same way as spending.  If you can't afford them you shouldn't do them, and we could afford the enormous tax cut that was passed at the beginning of last year.  It's very simple math. We need to balance the budget, because we need to keep the national debt down and deficit down.  That is the core of keeping interest rates down.

And when interest rates were higher, it certainly was not a help to any of us in the late 80's as a result of the tripling of the national debt from 1980 to 1992.  That was a difficult economic time and I think we can remember the recessions and certainly I know New Hampshire remembers the recession in the early 90's because of those continuing high interest rates, because in New England that recession was the worst one since the Great Depression, because New England was heavily defense dependent and because there was real estate over speculation, and I remember I believe that five out of the largest six banks in New Hampshire failed at that time.  So we do not need to return to those days of high interest rates and difficult economic times.

We can do this with moderation, but we've got to balance the budget.  We can have tax cuts, but we've got to balance the budget, which means we have to have thoughtful, affordable tax cuts in the same way that we should not go on a spending spree and have unaffordable programs.  So that's the first piece.

I do believe that social justice cannot occur without a balanced budget, and I believe that because you can build all the wonderful programs that we in the Democratic party all like to talk about, but then the first time there's an economic downturn you get faced with cutting significant safety net programs and the society in the long run is harmed by that.  I think it's much better to take an incremental approach, gradually building the programs that you can afford, balanced with economic stimulus such as tax cuts and such as construction programs.

When we had our big surpluses throughout the decade of the 90's we did several things with it.  We did cut taxes moderately, but we also set aside $100 million in an account which we haven't yet touched for times like this so that we would not have to raise taxes or cut too deeply into social programs.  We also used the money on one-time non-recurring expenditures, one-time non recurring expenditures like building a variety of projects--roads, a prison, schools--that's the kind of thing that I think excess or surplus money should be used for, a balanced, careful approach.  That approach is lacking at the federal level.  The president's budget is not a balanced, careful budget; it's a political document and it does not serve us well.

Let me talk about two other areas.

First, one that won't surprise anybody, and that is universal health care.  We are the last industrial nation on earth that does not assure that all its citizens have health care and that's foolish and it's wrong, and I believe that using the model that we've developed in Vermont that we can guarantee health care for all Americans without breaking the bank.

And let me describe a little bit about the plan.  In 1991 we tried to pass--in 1992 we tried to pass a universal health care bill and it failed for many of the same reasons that Harry & Louise successfully defeated the president, at that time President Clinton's plan.  But what we salvaged from that was essentially universal health care for children.  If you make less that $52,000 a year in a family of four in the state of Vermont, all the children in that household under the age of 18 are guaranteed health care.  Now we require people to pay something for it.  If you're at the upper end of that 52,000 a year we think you can pay a premium, pay a share of that.  And that's a good thing because I don't believe in giving services away for free.  I think for all but the very most destitute people, people ought to pay something for the services because then you have a value that you associate with that.  So in our state all children have health insurance, virtually all children.

We have  94 percent of children with health insurance.  Of the remaining 6 percent, 5 percent are eligible for the Dr. Dynasuar program as we call it.  Essentially we have universal health care for children.  It is dirt cheap .  We installed this program while I  was cutting the budget and cutting taxes, because I came into office when we had the largest deficit in the history of the state and the highest marginal income tax in the history of the states, and I had to cut taxes and cut the budget at the same time, because I knew that the long way out of the recession--in the long run the right way out of the recession was to increase jobs.  And we're never going to have  jobs in the state of Vermont if we had the highest marginal income tax in the country.  So we're cutting the budget, we're cutting jobs, and we're guaranteeing health insurance for all kids.

How's that possible?  Because kids are incredibly inexpensive to insure.  And that's one thing we ought to keep in mind.  So the first piece of the model for national health insurance is that we ought to guarantee health insurance through the federal and state government plans combined--Medicaid is a great model for that.  The states run it; the federal government contributes to  it.  Loosen up the federal rules, and all the bureaucracy associated there and be able as we have inn Vermont essentially guaranteed health care for all kids.  It's clearly not a budget breaker--doesn't require a tax increase, and in fact I'd argue you save money.

Secondly, over 65 we already have Medicare.  It's not perfect, but it's very, very good.  What you need is a prescription benefit.  I do not believe we can give the kind of generous prescription benefit that some of the advocacy groups want.  It's simply not possible; we would break the bank of the federal government.  But there are prescription benefits we could give.  First of all those prescription benefits ought to stress the use of generic drugs.  We ought to give high deductibles for people who use brand names, much lower deductibles for people who use generics.  That's one way of saving money.  There need to be co-payments, there need to be deductibles, but  with a prescription benefit Medicare is a solution to taking care of people over 65.

What do you do about the folks in between?  I do not believe that we can embark on a radical restructuring of the health care system.  I know there are many brilliant academics and many others who believe that's the only thing we can do.  I tell you as a veteran of twenty years in the health care wars, it's not possible.

The reason that the president's health care plan failed in 1993 was not simply because it was bureaucratic and all the things that the process was and had a problem with, it was because the opponents, of which there were many, managed to convince the 84 percent of those people who had health care that they would lose something that was very important to them in order to guarantee health care benefits to those 16 percent of people who didn't have it.  So I believe that the political  lesson that we've learned is we need to use the current system and simply expand it to the remaining 16 percent.  We need an employer-based health care system in the private sector for those between 18 and 65.  Now you could say that the lower age should be 21 because kids have to get through college and so forth and so on.  Fine.  But basically the workforce and the workplace ought to be the place you get your health insurance.  How do we deal with the remaining 16 percent?

I think there are two ways to do it.  First of all we have to understand who these folks are.  The people who do not have health insurance in this country are not by and large people on public assistance, they're not by and large people who don't work.  They are working people who either work for themselves or work for companies that are too small to be able to afford to provide health insurance.  That's a relatively small universe.  Sixteen percent.  In our state actually it's about 8 percent; in some other states--Texas just for the sake of argument is 24 percent--but average nationally 16 percent.  The number is growing with the population.  It grew even through the good times in the '90's for a variety of reasons, one of which is that globalization forces people to be more competitive, be more careful about their bottom lines, and in order to compete people began, employers began to shed people from their health care rolls or have such a high degree of cost sharing that it was impossible for the employees to afford their share.

Without disrupting the insurance market, I believe that small businesses ought to be able--under a certain size--we're actually looking at 25 in the bill that's before the Vermont Senate but probably nationally we ought to be at 50; small businesses under 50 ought to be able to buy into the government programs.  Those government programs cannot be the high-end Medicaid, high benefit programs.  If we want IBM, for example, or Fleet to continue to offer health care benefits to attract the best employees we can't offer a similar benefit because then why in the world would any large business simply just not say, okay, let the government do it.

We need to offer a catastrophic benefit for people who can't afford anything else.  So that small business can buy into that, splitting it between the employer and the employee so that the large companies are still in the market giving benefits will still have a competitive advantage because they're offering good packages and won't go into the government run system.  But there will be a safety net that small employers and individuals who are self-employed can buy into.  If necessary we can look at subsidizing that for small businesses but that's a very slippery slope.  And what I'd like to do at first is get our model passed in Vermont, which we're in the process of doing now, allowing those small businesses and individuals to buy in.

Doesn't disrupt the insurance market?  No, those people don't have insurance now; they're not in the insurance market.  But it is critical that we not succumb to advocacy groups who say, well everybody's entitled to the Cadillac plan, and therefore we have to offer the Cadillac plan to everybody.  That's not true.  A feature of the Clinton plan which was overlooked, it never got much press but ought to be incorporated into our health insurance for all groups, is that the employee ought to have a lot more choices.   I think we ought to have a system where the employer offers five or six or seven different plans and then lets the employee choose.  And if the employee wants to pay for first dollar coverage and all these things that are so expensive, let them pay extra for that and let there be a bare-bones plan that every employer offers their employee that is a minimal, that is of minimal cost to the employer.  Co-payments and deductibles are critical.

In 20 years of trying to educate my colleagues about cost, I have discovered that and believe now that the only way to educated physicians about cost is to have their patients do it.  To have significant co-payments, significant deductibles for medical care so that the patient turns to the doctor and says, gee doctor do I really need that $150 prescription?  Isn't there something else that you could do?  And the truth is most of the time there is something else you could do, and it probably costs about 60 percent less.  Those are the kinds of things that we need to do to change the health care system.  We don't have to completely change the system and uproot it in order to do that, and we have a model just across the Connecticut River that can work.

Finally let me talk about prevention programs, because I think this is the largest failing in government everywhere.  Most of the American government works in two and four year horizons and cycles because election terms are two and four years.   People tend not to think beyond that time period.  But the really important things which we don't spend enough time on need to be considered in a much, much longer time frame.

I actually have 5 or 3 or 4 different ways of looking at things: a five-year plan, a 20-year plan, and even a 100-year plan.  The 100-year plan is about conservation and environmental protection.  We've locked up lots and lots of acres that will never be developed in Vermont, but it will be farmed and logged and be used for hunting and fishing and the things that people in the North Country like, by buying easements and that land will be there a hundred years from now, long after the people in the legislature and the governor's office who worked so hard on those programs are forgotten.  But it's a 100-year plan to make sure that what usually happens is, which is that someone makes a decision without thinking about the long-term consequence, doesn't happen.  So that a hundred years from now Vermont will not substantially be changes.  I'm sure the population will be double or maybe even triple, but that the fundamental notion of open spaces and being close to the land will still exist.

But there's another horizon, which is a shorter one, a 20-year horizon, which I want to spend some time talking about.  When I came into office in 1991, as I said before,, I faced the largest budget deficit in the history of the state and the highest marginal income tax.  I was cutting the budget and I had a series of meetings as governors do when they try to make budgeting decisions, and the Commissioner of Corrections came in and he said, governor, I need a 14 percent increase.  And I said a lot of things that governors aren't supposed to say, but they do behind closed doors.  I said, you can't have a 14 percent increase.  This is a level funded budget, and if I increase something like corrections by 14 percent it means I've got to cut health care and education and a whole lot of other stuff in order to make up for it.  So you can't have it.  Well it turns out he got his 14 percent increase.

We were being sued for prison overcrowding.  We had built a new prison which we had kept closed deliberately and empty simply to try to reduce operating costs to try to meet our budget targets, and he got his 14 percent increase.  And I promised myself at that time that 20 years from then, when a new governor was sitting in that office and there was a budget problem because of a business cycle downturn that they would not be in the position that I was in.  Because prisons are a necessary investment, but they're probably the least successful social intervention that we do and the most expensive.  Most of the people who go to prison come out worse that they did when they went in.  Any competent, qualified kindergarten teacher can tell you who the five kids in his or her class are that are most likely to end up in prison 15 years later.

And my question is, if we have some idea who's going to go to prison 15 years from now, what is it that we're doing or not doing that enables that to happen?  With 15 years advance warning.  And so we started a program called Success by Six.  We stole the name from Minnesota, but the program we created on our own.  And what we do in Vermont is make sure that every child regardless of income who wants it, which is about 90 percent of families, gets a home visit within two weeks of their birth.

No, we don't knock on your door and say, here we are; we're here to tell you how to raise your children.  We visit folks in the hospital and say, would you like a follow-up home visit, and 90 percent of them say, yes, we think that would be great.  The people who do the visiting are not social workers from the state, although they could be.  They're people from local agencies who, if they don't know the family, then they know somebody who knows the family.  It's a friendly face in other words.  Most of the people don't need any help; they're happy to have the visit--How's it going?  Going fine.  If you need any help let us know.  End of interaction.

But for those people who do need help, particularly significant help, they get it starting when the child is two weeks old, not when the child rolls into kindergarten and the teacher goes, oh my Lord, can you imagine what must be going on at home.  Because by the time you get to kindergarten, you got a big problem trying to reverse the situations that got you to your trouble in the first place.  By the end of the fourth grade most education literature shows that the child has subconsciously decided whether the school system is for them a place that they can succeed or not.

Essentially what I'm saying is the decision to drop out has essentially been made by the end of the fourth grade.  I understand that they stay in school until their 16th and so forth, but they have signed out.  So the teacher has less time between kindergarten and fourth grade to undo what's happened between zero and five.  And that's disregarding all the research that we've had since we started Success by Six which shows that critical development in small children is between the ages of zero and three and it's very difficult to overcome what happens between zero and three.

For a $100 a year, which is what it costs for us to run this program, we are able to find those families that need help and support early and it really is not a child-raising police.  What we do is ally with the part of every single mother who has every given birth to a child, which at the time of the birth of that child they want the best for that child no matter what their circumstances are, whether they have a drug problem, whether they have an abusive boyfriend or alcoholism in the house, whatever their problem is, they want the best for that child.  And we believe with substantial support, significant support, that families can succeed in a much, much higher percentage and they do.

Now I thought that the payoff for this program was going to be 20 years later, long after I had left the governor's office, but the truth is that five years after we started this program--we do a lot of statistical stuff to see if our human services dollars are being spent well--and the statistics began to come in on child abuse and we had a 70 percent drop in child abuse between the ages of zero and three and a 50 percent drop in child abuse between the ages of zero and five.

Now that is an extraordinary statistic, which I will bet is not duplicated anywhere else in the United States, and it's simply because we support families early on and the kinds of families that get our support, that succeed, are those families that are likely to abuse their children because they have very few economic resources, maybe few emotional resources--they're really living on the edge--and we can support those folks and show them a better way and they want to have their better way.  Now we're not talking about fixing psychopathic child abusers, the kind you might read about in the newspaper, and it's usually on the front page, at least in our papers in Vermont, knocking all the political news off the page of course; we're talking about moms and dads who want to do the right thing but don't have the resources, the emotional and financial and physical resources, and we can help them to do that, and believe me it's an awful lot cheaper to do those interventions that it is to pay $27,000 a year for a jail cell.  And the outcome is much, much better.

Those are the things that I think this country needs to do.  I think we need a balanced budget, a serious balanced budget, not a political document.  I think we need at long last to deal with health care for all Americans.  And I think we need to start planning for the long term, the 20 year plan, the 100 year plan, instead of focusing on election cycles, simply to pass what makes politicians look good so they can then go to their constituents and say, I did this, I passed that bill, I voted this way in my committee.  We've got to see some results, and we've go to plan for the long term, because that in fact is what's going to assure the survival of the country.

Let me thank you for your patience...

[Questions followed]

Copyright © 2002  Eric M. Appleman/Democracy in Action.