DEMOCRATS OWN THE POOR, WHY WOULD THEY WANT THE POOR TO OWN ANYTHING?:

We Are What We Own: President Bush will keep pushing Social Security reform. But not tonight. (FRED BARNES, January 31, 2006, Opinion Journal)

For Mr. Bush, the ownership society initiative is temporarily gone--but hardly forgotten. He has a taste for ambitious proposals like transforming the Middle East into a hotbed of democracy. He dismisses smaller programs as "miniball." And an ownership society is his domestic big idea. Mr. Bush has never devoted an entire speech to it. But when I interviewed him in July for my book, "Rebel-in-Chief," he was enthusiastic about the idea and had given it considerable thought. Earlier, in his second inaugural, he declared: "To give every American a stake in the promise and future of the country . . . we will build an ownership society."

Where the phrase "ownership society" came from, nobody knows, not even Mr. Bush or political adviser Karl Rove. Nor did the program emerge in full form. Rather, it was patched together, like FDR's New Deal, from a handful of programs. By 2004, it consisted of five separate proposals: Social Security private accounts, flexible "lifetime" IRAs, HSAs, tax reform and home ownership assistance. Taken together, these represent a new direction in domestic policy. They would give individuals far more control over their own money. Individuals would decide how their payroll taxes were invested. They would have access to their IRA funds at all times without paying a penalty for early withdrawal. They would be encouraged to be more self-reliant and responsible and less reliant on government.

Liberals regard an ownership society with loathing. After all, it goes against 70 years of national policy in favor of expanding the size and scope of the federal government and the power of government officials. With the New Deal, JFK's New Frontier and LBJ's Great Society, government grew and grew, with liberals providing the impetus. For a half-century, conservatives have sought to reverse this trend and both slash federal spending and reduce the size of government. President Reagan briefly pared federal spending (1981) and Newt Gingrich, with the "Republican revolution," mounted a fleeting assault (1995) on it. But in trying to cut the supply of government, both essentially failed.

The notion behind the ownership society is that growth of government can never be halted by attacking supply. Only reducing the demand for government holds a promise of working. With individuals allowed to decide how to save, invest and handle their health-care expenses, they'd demand less from government. Or so the notion goes. GOP national chairman Ken Mehlman refers to this as demand-side conservatism.

The thing that makes Mr. Barnes's book so good--and especially useful as a corrective to David Frum's misguided memoir--is that he grasps the fact that "the creation of an ownership society is Bush's most radical policy," not the transformation of the Islamic World, and that it is specifically intended to alter the political equations of daily life by reducing demand for government.

Contrast this understanding with this story State of the Union Puts Bush on Collision Course With Himself (Ronald Brownstein, January 29, 2006, LA Times)

[O]n crucial issues such as the federal budget deficit, access to healthcare and America's dependence on foreign oil — all concerns Bush is likely to emphasize Tuesday — the nation is unlikely to make significant progress unless the parties narrow their differences. The evidence suggests that the best way to confront these problems is to blend ideas each side favors. The political imperative of greater contrast collides with the substantive imperative of more cooperation.

Consider healthcare. About 46 million Americans lack health insurance. All indications are that Bush wants to expand coverage by offering Americans sweetened tax incentives to open health savings accounts. With these tax-free accounts, people pay much more of their initial medical costs out of pocket (at least $2,100 for a family). Then they buy an insurance plan for catastrophic expenses.

These accounts can be a good deal for healthy people, and they might attract younger workers who now choose to remain uninsured. With proper safeguards to prevent a migration that leaves only the oldest and sickest in traditional insurance programs, Bush's health savings accounts could help expand access.

But these accounts alone are unlikely to significantly shrink the number of uninsured. Two-thirds of the uninsured come from families with incomes at twice the poverty line, or about $38,614 for a family of four, or less.

Even with tax benefits, health savings accounts "really don't lend themselves to the vast majority of the uninsured, because they don't have the money to pay" the required out-of-pocket expenses, says Bruce Bodaken, chairman and chief executive of Blue Shield of California.

Since most Democrats resist these accounts as a threat to traditional insurance, a Bush plan built on them alone would guarantee plenty of campaign contrast. But a compromise that joined these accounts with expansions of government programs, and perhaps new requirements on employers, could meaningfully expand access to care.

You almost have to assume that Mr. Brownstein is being intentionally blind when states that Democrats are concerned about protecting traditional insurance. The interest they want to protect, of course, is dependence on government programs. They well know that they can not afford politically for their constituents to build up wealth in HSAs because that would tend to liberate them from government and from the party of government.

Posted by Orrin Judd at January 31, 2006 5:26 PM