August 31, 2004


Selling The Ownership Society: Bush & Co. are pitching self-sufficiency, urging voters to take control of health-care and Social Security decisions (Lee Walczak, Richard S. Dunham, and Mike McNamee, with Howard Gleckman and Rich Miller, in Washington, 9/06/04, Business Week)

In New York, the President will take the wraps off a second-term domestic agenda built around the idea of an "Ownership Society" in which Americans would be empowered to save and invest more, playing a larger role in managing their own health care and retirement finances. By promising to fight for private accounts in Social Security and a simpler and more investor-friendly tax code, Bush will return to the big reform themes that served him well in his 2000 campaign. Given his track record for bold and surprising strokes, he may also use his convention speech to hint at an even more ambitious second-term reform agenda that would tilt the tax balance further away from investment and toward consumption.

While hardly original, Bush's Ownership Society approach is worlds away from the expanded government safety net that Kerry proposes to help strapped workers. The Democrat is making inroads with swing voters by promoting near-universal health coverage, tuition aid, and tax credits for new jobs.

Whatever else it does, Bush's throwing down the gauntlet will open one of the more striking debates of the campaign. That's because there's a philosophical gulf between liberals' evocations of social equity and the comfort of a government helping hand vs. conservatives' paeans to individualism and entrepreneurship. As he barnstorms the country, Bush promotes the virtues of ownership with near-religious fervor, seizing upon one economic number in particular that shines from a so-so record: the torrid pace of home buying. "If you own something, you have a vital stake in the future," the President said in St. Paul, Minn., on Aug. 18.

What's under the ownership umbrella? There's a renewed call, to be voiced in Bush's convention speech, for an aggressive trade-promotion agenda and for private Social Security accounts. The President also will talk up a health system built on individual -- rather than employer-provided -- insurance.

Bush is saving his biggest ownership flourish for last, however. All year his economists have debated whether the White House can commit to broad reform of the tax code as a second-term goal. Bush has now signed on and will promote the ideas of "pro-growth" reform in his address without dwelling too much on specifics. Says former Council of Economic Advisers Chairman R. Glenn Hubbard, a key architect of Bush's first-term tax cuts: "The President is a problem-solver. He's keenly interested in fixing the tax code's complexity and anti-savings bias."

In New York, Bush is expected to embrace a major tax initiative, vowing action on three fronts: He will fight to make existing tax cuts permanent; push for new individual retirement accounts that protect family savings from taxes; and direct the Treasury Dept. to outline changes that make the revenue code "fairer and simpler." That will trigger a foot-stomping celebration on the floor of Madison Square Garden, since GOP partisans equate those words with "lower and less onerous" rates.

But what is Bush's ultimate goal? The steps the President is taking to trim marginal rates and exempt bigger and bigger chunks of investment income are marching the tax code toward a long-time dream of mainstream GOP reformers -- retaining the core of the basic income tax while gradually easing the tax bite on savings and investment. Bush must tread cautiously, however, to quell voters' fears that he aims to throw out the existing tax code and replace it with a pure flat tax or national sales levy. To calm those worries, he will insist that any changes keep both the home mortgage deduction and the write-off for charitable giving.

Taken together, the Ownership Society themes resonate broadly, White House officials contend. The slogan returns Bush to the "reformer with results" rhetoric of his 2000 campaign. It permits the Texan to cast himself as a modernizer running against a Big Government liberal, as individual investing and exploding homeownership transform society. It fires up the GOP base with appeals for low taxes and property rights. And by turning the Social Security debate into a discussion of investor returns, Bush may lure young voters who have abandoned him. "The idea is to control your affairs through ownership, starting with homeownership and running to health care and retirement," says Dan Bartlett, White House communications director. "The question is: Do I trust myself more, or the government more?" [...]

Thus, in the election, two strains of the American character will collide: risk-taking and pioneering vs. a government safety net protecting citizens from the excesses of capitalism. "Americans are optimistic and aspire to ownership," says Darrell West, a Brown University political scientist: "But pushing the Ownership Society is still risky, because it plays to future aspirations without addressing people's current economic problems."

Over the long term, the ownership concept holds both power and promise given that it reflects profound changes in the way Americans live. George Bush's problem, though, is that he has a messy short term to traverse.

As Mayor Giuliani said last night, our great leaders--Churchill and Reagan--have had a unique ability to see past the troublesome moment to the promise that the future holds and their vision has always been rooted in the triumph of freedom. One of the ways in which Providence seems to have been at work on 9-11 is that President Bush started the war with Islamicism seeing that we were destined to win it and to transform the Middle East. His confidence--like Reagan's that we would leave the Evil Empire on the ash heap of history--by itself changed the political dynamics within the Islamic world. The question was no longer would the nations of the Arab world reform but how fast and whether from within or without.

Similarly, Mr. Bush's vision of the transformation that democratic society can achieve by following the Third Way--bringing free market principles to the concept of the social safety net--is so compelling that the terms of the conversation have already been drastically altered. In stories like this the argument of the Democrats is not that the Ownership Society can't or shouldn't be done or that it won't work but that this is not the optimal moment for what they're forced concede is a good and powerful idea.

When the reactionaries are reduced to arguing only the pace of reform the revolutionaries have already won.

Posted by Orrin Judd at August 31, 2004 9:31 AM
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