# Matthew Miller's The Two Percent Solution explained: radical centrism's grand-bargain book

> In The Two Percent Solution (PublicAffairs, 2003), Matthew Miller argues that about 2% of US national income, then some $220 billion a year, could pay for universal health cover, a living wage for full-time workers, better teachers for poor children and public campaign finance. The method is a series of grand bargains: liberals accept market-friendly tools such as tax subsidies and vouchers, and conservatives agree to spend money on the scale of the problems. For Europe the lesson is that a deal across camps needs both the money and the mechanism agreed together.

- URL: https://www.radicalcentre.eu/en/articles/matthew-miller-two-percent-solution-explained
- Language: en
- Publisher: radical centre / centro radical
- Published: 2026-10-08
- Topic: Ideas & history
- Author: radical centre
- Licence: CC BY 4.0

## Key points

- Matthew Miller's The Two Percent Solution was published by PublicAffairs in 2003.
- The core claim: 2% of US GDP, then about $220 billion a year, could fund universal health cover, a living wage, better teachers for poor children and public campaign finance.
- The method is the grand bargain: liberals accept market-friendly means, conservatives provide money equal to the size of the problem.
- Critics on the left, led by Robert Kuttner, argued the bargain misread the right and leaned too far toward its tools.
- For Europe, the book's lasting point is to agree the money and the mechanism in one package.

Matthew Miller's *The Two Percent Solution: Fixing America's Problems in Ways Liberals and Conservatives Can Love* came out from PublicAffairs in 2003. It is the most practical book in the radical-centrist shelf, and the easiest to summarise, because the whole argument sits in its title. For about two cents on the national dollar, Miller says, a rich country can solve problems that both parties claim to care about and neither actually tackles.

Miller wrote from an unusual position. In the prologue, which he publishes on his own site, he describes himself as a Democrat who worked as a business executive and management consultant, spent a year helping the Republican chairman of the Federal Communications Commission modernise old regulations, and then served in Bill Clinton's budget office from 1993 to 1995 working on the deficit. After that he was a journalist at *The New Republic*, *Time* and *U.S. News and World Report*. He calls the agenda he built from all this "ideologically androgynous".

## The numbers

The book starts from arithmetic. In 2003 US national income was about $11 trillion, so 2% meant roughly $220 billion a year. With that money Miller wants four things: health insurance for everyone, a living wage for every full-time worker, a great teacher in a repaired school for every poor child, and a political system where candidates no longer depend on wealthy donors.

The problems he lists are specific. He counts 42 million Americans without health insurance, 15 million people in poverty in families headed by full-time workers, and 10 million poor children in schools that fail them.

Then comes the move that gives the book its edge. Under Ronald Reagan and the first George Bush, federal spending averaged 22% of GDP. Under Clinton it fell to 20%. Miller's point is that running government at the size the first Bush routinely proposed would free more than $200 billion a year, so his whole package fits inside a government smaller than Reagan's. The money exists. What is missing is a deal on how to spend it.

## The grand bargain

That deal is the heart of the book. On health, schools, wages and campaign finance, Miller proposes a series of grand bargains built on one formula. Liberals have to be open to market-friendly approaches in place of simply expanding traditional government programmes. Conservatives, in exchange, have to put up money equal to the size of each problem instead of token sums that let them claim to have a plan.

Reviewers filled in what that meant in practice. Robert Kuttner's review in *The American Prospect* describes the health plan as a mandated, subsidised basic policy that Miller calls a "Chevrolet", with existing private insurers staying in the market. Wages would be topped up by subsidising low-wage employment, roughly $35 billion a year beyond the existing Earned Income Tax Credit. Teachers in poor schools would get a large pay rise, tied to experiments with vouchers and incentive pay. Elections would get Bruce Ackerman's *Patriot Dollars*, public vouchers citizens can give to candidates. *Publishers Weekly* adds that Miller would slow the growth of spending on Social Security and Medicare. R. Stephen Warner, reviewing the book in *The Christian Century*, notes the financing: rolling back corporate subsidies and part of the Bush tax cuts, taxing generous employer health benefits and adding a petrol tax.

Miller tested these ideas widely. The prologue says he discussed them with senior figures in both parties, business and union leaders, editors and school superintendents, and commissioned two focus groups and a national poll for the book. Warner mentions conversations with William Bennett and Milton Friedman.

## The moral ground under the deal

Miller gives his bargain a philosophical floor. Part Two opens with what he calls the pre-birth lottery: the large role of luck in where and to whom each of us is born. Warner links this to John Rawls's veil of ignorance. If you take seriously that nobody chose their starting point, Miller argues, people of both camps can agree on two old ideals, equal opportunity and a minimally decent life in a wealthy nation, before they argue about tools.

He also gives the deal a deadline. The baby boomers' retirement, he warned in 2003, would soon absorb the cash and political energy for everything else. Getting serious about the uninsured and the working poor was a matter of self-interest too, since an ageing country needs everyone schooled, paid and healthy enough to work.

## What critics said

The sharpest critique came from the left. Kuttner argued that Miller blamed both parties equally for gridlock when conservatives had in fact been winning, and that accommodating the right's tools would keep pulling politics rightward. He doubted the voucher evidence, said subsidising employers was a weak substitute for unions and minimum wages, and warned that the health plan ignored insurers picking healthy customers. He still credited Miller for demanding more public spending, and backed Patriot Dollars and the repeal of tax preferences. *Publishers Weekly* thought the bargain would be a hard sell to Republicans committed to tax cuts, and found Miller's own polling the most convincing evidence it could work.

Two decades on, both sides of that argument look right in places. Kuttner was right that every market tool needs strong rules. Miller was right that the money question and the mechanism question are easier to settle together than apart.

## What Europe should take from it

European welfare states are far larger than the American one Miller was writing about, so the 2% figure itself travels badly. The method travels well. A grand bargain in Miller's sense agrees the scale of the money and the choice of mechanism in one package, so that each side gets something it values and pays something it dislikes. That is the shape of Spain's Toledo Pact on pensions and of many European social pacts, and it is the shape a radical-centre programme should use whenever a problem is big and blocked.

Miller's legacy is a double demand. The left has to stop seeing betrayal in the right's tools, and the right has to stop seeing extravagance in adequate money. Put the two together, with good rules, and you get policy that can survive a change of government.

## FAQ

### What is The Two Percent Solution about?

It is a 2003 book by American journalist and former Clinton budget official Matthew Miller. He argues that about 2% of national income would be enough to give everyone health insurance, ensure full-time workers earn a living wage, put strong teachers in poor schools and reduce the influence of big donors, using tools both parties could accept.

### Is Matthew Miller a radical centrist?

Yes. Reviewers at the time placed him in the radical-centrist current, and Robert Kuttner's review in The American Prospect noted that Miller describes his own approach as radical centrism. He calls his agenda ideologically androgynous.

### What is a grand bargain according to Miller?

A deal on one problem in which liberals accept market-friendly approaches in place of a bigger traditional programme, and conservatives agree to put up money equal to the size of the problem instead of token sums.

## Sources

- [The Two Percent Solution: Prologue, Here's the Deal](https://mattmilleronline.com/pdfs/twopercent_prologue.pdf), Matthew Miller (2003)
- [The Two Percent Solution](https://www.hbglibrary.com/titles/matthew-miller/the-two-percent-solution/9780786739714), Hachette Book Group / PublicAffairs (2005)
- [The Two Percent Solution (review)](https://www.publishersweekly.com/9781586481582), Publishers Weekly (2003)
- [The 2% Solution (review by Robert Kuttner)](https://prospect.org/2003/11/20/2-percent-illusion/), The American Prospect (2003)
- [Radical Middle (review by R. Stephen Warner)](https://www.religion-online.org/?p=8582), The Christian Century / Religion Online (2003)