WE ALL BROKE IT, NOW LET'S ALL OWN IT:

Road map to an ownership society (Jack Kemp, August 16, 2004, Townhall)

Given recent speculation that Bush's soon-to-be-unveiled second-term economic agenda will include both fundamental tax reform and reforming Social Security with personal retirement accounts, some have suggested that he must choose one or the other. With all due respect, he should do no such thing. Tax reform and personal accounts are not mutually exclusive; they are mutually reinforcing, indeed mutually dependent.

Congressional Budget Office projections reveal that if the Bush tax cuts are repealed, due to the progressive nature of the tax code, tax revenues as a percent of GDP will grow well beyond the historic average (18.5 percent of GDP) to 20.5 percent in 2015, 22.6 percent in 2030 and 24.7 percent by midcentury. Without continued tax reform to lower the rates back at least to where they were when Ronald Reagan left the presidency, the economy will stagger under an increasing burden each year. Without tax reform to properly define how income will be subject to taxation, it will make the transition to a new fully reformed Social Security system more difficult and require more borrowing than necessary. Bush is on the right track to be talking about both personal retirement accounts and tax reform - what can be called an ownership society agenda, or what I would call the democratization of capitalism.

The idea of an ownership society is not new; it is the logical extension of Abraham Lincoln's Homestead Act in 1862 America, where clear title to 160 acres of federal land was "given" outright to citizens to settle and cultivate the land. The vision of an ownership society is one that looks back at a road long traveled, but one that is forward-looking and far-reaching; it is a vision that sees opportunity ahead, sunlight on the horizon.

There are going to be significant transition costs as we switch from the currrent social welfare state to an ownership society--big deal? Winning WWII drove the national debt to 150% of GDP even as it made us the world's pre-eminent superpower. At that rate we could afford to more than double our current debt and in the process we'd once again strengthen the nation.

Posted by Orrin Judd at August 17, 2004 6:31 PM