WASHINGTON — In urgent need of some fresh ideas for a second term to present at the Republican Convention, President Bush is framing an economic message called “the ownership society.”
That sounds swell. Who doesn’t want to own the personally important things that make life comfortable?
But what exactly does the slogan mean? How do we get to this ideal society? The major policy incentives that advisers are saying the president should tout aren’t really new. Unless some secret surprise is pending, it’s old wine in a new bottle.
Despite a shaky economy and towering federal deficits, Bush hasn’t yet had his fill of tax cuts to drain the federal treasury. Nor has he abandoned his theme of shrinking the size of federal government programs and services, even though such spending has vastly escalated during his watch.
A proposal to overhaul the tax code to achieve lower rates is also reportedly in the works. The shadow of Steve Forbes and his demand to kill the Internal Revenue Service still hovers. Bush isn’t yet finished pandering to the rich.
Bush might propose a raft of tax credits to reward people for buying property, investing in stocks and bonds and putting their money in private health insurance or job retraining. The trouble with this, however, is that you have to have the money to do those things. If you don’t, then you don’t get a tax credit.
The pressure to spend now on current needs is compounded by the fact that the costs of most purchases are steadily going up but bank-account interest is bogged down at little more than 1 percent.
Bush is pushing for individually funded, tax-sheltered savings accounts that would compete with 401(k) plans and other employee accounts to which employers now contribute.
The centerpiece of this patchwork tax catchall, astonishingly, seems to be a revival of his 2000 campaign proposal to partially privatize Social Security. When the stock market went into a swoon, Bush stopped talking about the idea. But he raised the subject again in this year’s State of the Union address and in his economic report to Congress in February.
Now he calls the concept “personal retirement accounts.” He claims this Social Security “reform” would give individuals “control” over their own future — as in control to blow it as well as protect one’s retirement.
The plan would encourage workers to set up their own retirement accounts as vehicles to siphon off some of their payroll taxes that would normally go to support Social Security. Bush says that in the long run it could reduce the growth of Social Security and cut the benefits it provides.
He thinks that is a good idea. He’s wrong. Reducing benefits is a terrible idea. Social Security is the bedrock of stability on which millions of retirees rely. And future retirees should have that security.
It is not irrelevant that these private accounts would also benefit the banks and financial institutions that contribute generously to Republicans.
Cast out of the federally guaranteed system, workers would pay fees to those industries for their investment advice and fund maintenance. And their investments would be subject to the ups and downs of the private marketplace, which has never promised the accountability that Social Security offers.
The Bushies claim that undermining Social Security would actually strengthen it and would neither change benefits for those “now in or near retirement” nor raise payroll taxes.
But the president’s own handpicked 2001 Social Security commission couldn’t agree on how to achieve those mutually contradictory goals. That’s because it’s impossible except through what Bush once called “fuzzy math.”
Former GOP vice-presidential nominee Jack Kemp contends that Sen. John Kerry has an “economic vision deficit” — apparently meaning he doesn’t like Kerry’s plan to eliminate much of the president’s tax breaks for the very rich.
Kemp’s solution, and that of other conservatives, is to urge Bush toward both bigger tax cuts and personal retirement accounts as a substitute for reliance on the Social Security system.
The devotion to tax cuts as the all-purpose answer to everything is as dangerous as it is shortsighted. A recent Congressional Budget Office study concluded that Bush’s cuts had shifted more of the tax burden from the nation’s rich to the middle class. And the big tax cut bears some responsibility for the federal budget deficit, now more than $400 billion this year and growing.
Vice President Dick Cheney once said deficits don’t matter, but those hefty interest payments the government must pay suggests they do.
Marianne Means is a Washington, D.C., columnist with Hearst Newspapers. Copyright 2004 Hearst Newspapers. She can be reached at 202-263-6400 or firstname.lastname@example.org