Government Is Broken. These Guys Can Fix It.


We pulled together 20 prominent Americans to nominate elegant policy fixes—from education tweaks to job-killing rules—rooted in common sense and designed to attract support from all political stripes. America needs to hold its representatives accountable to a simple philosophy: if it's broken, fix it.

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Neutralize frivolous patent claims

America's patent system des-perately needs reform. Sadly, it's become a tool for people who produce nothing but patents of dubious validity, and frivolous lawsuits targeting the profits of true invention. Companies often settle rather than risk losing millions of dollars in front of a jury, and consumers, innovation, and the economy all suffer for it. Since patent law's original purpose was promoting innovation, infringement-claim damages should be tied to the actual value added by a patented feature—not the entire product, which might have thousands of parts. Also, there should be a more effective reevaluation process after patents are issued, thus reducing expensive, time-wasting litigation. The history of America is one of amazing innovation. Let's give our best companies and minds the protection to keep dreaming big, and moving us forward.

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Introduce health courts

The medical-malpractice justice system has a 25 percent error rate, according to a Harvard study. Anyone who has spent time in hospitals has witnessed the resulting "defensive medicine"—tests and procedures ordered by doctors mainly to show they did all they could. All this unnecessary medicine adds up—an estimated $100 billion annually. One obvious change is to replace the current system with health courts: special judges, advised by neutral experts, who would make written rulings on accepted standards of care. These courts would affirmatively defend wrongly accused doctors, and prove much better for patients injured by mistakes, with payments made within a year, not the five years typical today. I was thrilled to see President Obama's budget include $250 million to help states pay for new systems of justice for health care. Let's get it through Congress.

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Merit-based civil service

Like many states, Indiana rewrote its civil-service statute in 1941. It's been frozen in time ever since. By 2005 this geriatric law had us in a straitjacket. Employee complaints about the most trivial of matters ("I don't like my uniform style") subjected management, administrative-law judges, and indirectly the taxpayers to a five-step, year-long grievance process. Promotions and layoffs were dictated by seniority. Disciplining or dismissing poor performers? Forget it. This year, we are replacing this system with one that highly rewards the best workers and deals with the worst. Employee rights will still be carefully protected, but in a streamlined, three-step process less vulnerable to abuse. Fairness for taxpayers and that large majority of diligent, deserving state employees will result.

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Healthier kids' lunches

For decades the federal school-lunch program has contributed to the obesity pandemic by serving cheap, fat-laden foods that met U.S. guidelines. A new law offers schools an extra six cents per meal if they meet healthier criteria. While a start, six cents isn't enough to cover endless reimbursement paperwork—or the cost of real food. The economics are simple: it's far cheaper to feed our children well now than to pay their hospitalization in the future (obesity drives $150 billion in health-care costs). The solution: a free, wholesome school lunch for every child in America.

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Streamline entrepreneurial paperwork

To earn enough money for basketball shoes, I started my career selling garbage bags door to door. My father's friend sold me the bags for $3, I sold them for $6. It was frictionless. When I started my first "big" company, MicroSolutions, I had no office. I got a sales-tax license and incorporated. Again, frictionless, and it turned into a $30 million (sales) business. Today, it's impossible to start a business without professional help. Between local, county, state, and federal filings, it can easily cost as much time and capital to deal with administrivia as the business itself. Paperwork strangles small businesses before they start—this country's greatest inhibitor to job growth. That could be fixed with a simplified startup legal structure (understandable in a pamphlet) that would reduce the friction involved in starting a business.

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Eliminate seniority hierarchy in education

The U.S. is the world's greatest meritocracy. Hard work is rewarded. Talent is recognized. Achievement is celebrated. But in 14 states, including New York, a law known as "last in, first out" forbids school districts from taking performance into consideration when conducting layoffs. Instead, only one factor matters: years on the job. In New York City, we are facing 4,600 teacher layoffs. But rather than lay off those rated unsatisfactory, convicted of crimes, or lacking certification, we would have to let go of nearly every teacher hired over the past few years. We've made huge progress—graduation rates are up 27 percent over the past five years. "Last in, first out" would jeopardize that progress—and harm our kids. They—and their hard-working teachers—deserve better.

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Modernize shipping requirements

The requirements for U.S. shipping vessels are out-dated. The Jones Act of 1920 requires all shipping between American ports to occur on U.S.-flagged, built, owned, and manned ships, unlike other forms of transportation. As a result, it raises shipping costs, effectively operating as a tax on all of us. As economist Joseph Stiglitz pointed out, even a quarter-century ago, this rule cost America more than $250,000 for each job it saved. It's basically a form protectionism: if the U.S.-made and manned ships were the lowest-cost option, the law would be unnecessary. The solution: rescind the law to get an efficient and cost-effective mode of shipping.

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Increase visa cap for highly skilled workers

Our restrictive visa policy hampers our ability to hire the most highly skilled workers. Only 65,000 engineers, scientists, doctors, and other exemplary professionals are permitted to work domestically, and the 2009 stimulus bill requires companies to give preference to American workers. Meanwhile half the U.S. science and engineering doctorates go to foreigners. A simple, necessary reform: increase the H-1B visa total. If we want to foster innovation, we need to attract and retain the world's top talent—not educate the rest of the world—without archaic limitations.

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Give preference to wireless technologies

The new broadband economy depends on spectrum—the airwaves over which wireless signals travel. It is also a finite, dwindling resource, which the federal government allocates in a grossly out-of-date manner. A huge percentage remains reserved for legacy media—broadcast TV and radio—despite massive consumer demand for bandwidth-intensive wireless applications for smartphones and tablets. Inefficient allocation stifles competition and impedes the development of wireless technologies and applications—the key to overall economic efficiency and growth. This massive waste of valuable resources demands a new approach: phasing in a market-based allocation concept where spectrum will be, in effect, rented for the highest and best use.

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Consolidate regulators

The need for regulatory oversight of financial institutions has never been greater. But rather than clear lines of responsibility, the recent reforms have entrenched numerous, overlapping agencies, and created a 10-agency "Financial Stability Oversight Council." The confusion will allow market abuses to slip between the cracks, and the central committee is a formula for paralysis. The solution: consolidate agencies along clear lines of responsibility. There should be one bank regulator, not four. There should one regulator of public markets, not two. As markets become more complex, and the different finance and securities techniques converge, it's imperative to avoid regulatory turf battles and to clarify responsibility.

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Real pension accounting

Controversial accounting standards have allowed state pension funds to appear more solvent than they are. The effect: delaying the day of reckoning, making state fiscal crises much worse than needed. The blame should not be put on public workers: we should not treat the product of a lifetime of work as partisan jujitsu. Congress can solve this problem by prohibiting states from estimating pension growth beyond the last three years of actual pension growth or state revenue growth. Overestimating returns, which has landed 48 states in huge deficits, would then cease.

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Flexible teacher hiring

We need great teachers, but the "highly qualified teacher" provision in No Child Left Behind, imposed with the best intentions, isn't productive. School districts must engage in two distinct activities: jumping through hoops to check the box indicating their teachers meet the 'highly qualified' designation—while actually improving teacher effectiveness by recruiting top talent and investing in their development. We will transform our educational system only when we empower local leadership; micromanaging by central mandate produces incremental change, at best.

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More tourist-visa waivers

Over the past decade, America lost 78 million visitors, 467,000 jobs, and $600 billion in spending, due in large part to our discouraging visa process. A new bill helps fix this by updating the framework for admission into the Visa Waiver Program. Countries currently in the program comprise two thirds of inbound travel to the U.S., and support 512,000 jobs. Let's boost that number by making it easier for our allies (and customers) to get here.

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Startup ombudsman

When you start a business, it's nearly impossible to know all the legal requirements until mistakes are made. When I started Carol's Daughter, I paid sales tax at the end of every month, but once missed the deadline giving birth to my son. The penalty was huge: 10 percent of the month's sales. A government ombudsman should help entrepreneurs negotiate the maze of rules, and reverse injustices.

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Ease import-export documentation

The nation's import-export laws have become red-tape nightmares. One tiny example I'm familiar with: A well-meaning law to save rare woods basically makes it illegal to travel with an old guitar. Any wooden instrument must have documentation of the genus and weight of every type of component wood—impossible given that antique fretted instruments are constructed from several types (my oldest dates to 1868 —good luck finding documentation on that). A solution: make antiques exempt. Other import-export quirks surely have similar fixes.

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End mortgage deductions

The tax code's home-mortgage deduction favors the rich (who use taxpayer dollars to subsidize mansions), encourages people to buy homes they can't afford, and contributed to the housing bubble, causing the current recession. It also costs taxpayers $130 billion annually. We should end it, or sharply limit it to mortgages of no more than $250,000.

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Let U.S. firms compete

The Foreign Corrupt Practices Act serves the important goal of discouraging bribery by U.S. companies overseas. But by making firms criminally responsible for even the most uncontrollable acts of low-level employees and agents—and ignoring any efforts to create a culture of ethics and compliance—many U.S. companies withdraw rather than face limitless exposure. As a result, less-scrupulous foreign competitors often step in, harming America's economic vitality and, ironically, fueling the very misconduct the act was intended to reduce. The solution: make the act apply only to material misconduct and allow companies to assert a "best efforts" defense if they have effective compliance and ethics programs.

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360-degree education accountability

No Child Left Behind, despite admirable goals, has resulted in a misplaced focus on test prep, a narrow curriculum, and a rigid accountability that doesn't serve the kids' interests. The law correctly shines a light on the needs of all our children, but the current atmosphere is toxic, focusing schools on compliance rather than achievement. I suggest a 360-degree accountability system in which multiple parties—from principals to teachers to parents—are held responsible. Testing should be one of many evaluation factors, along with a culture of order and respect, attendance, and individual improvement. Under these redefined objectives, all stakeholders would answer to each other.

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Break up big banks

Our banking system remains a dangerous mix of leverage, bad assets, and speculation, which the ineffective Dodd-Frank financial reform did nothing to cure. The top six banks are 30 percent bigger than before the crisis ($9.2 trillion of assets)—yet they are wards of the state, utterly dependent upon deposit insurance and the Fed's cheap money. Strip these crutches and the problem will be largely solved. Banks that are "too big to fail" are too big to exist, and should be broken up, not coddled by a 2,000-page enabling act for lobbyists, lawyers, and Beltway fixers.

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Ban foreign IP pirates

The digital theft of intellectual property damages a wide swath of U.S. industries, from entertainment and software to fashion and biotech. And the problem's getting worse as pirates build offshore websites to sell stolen IP goods. Senators Pat Leahy and Orrin Hatch are crafting legislation giving law enforcement the power to require Internet service providers to block international websites that traffic in bootleg products. It's a whack-a-mole task, but a bigger hammer will whack more counterfeit moles out of business. Great news for America's creative economy, businesses, and workers.