December 26, 2003


Bush's 'Ownership' Scam (Robert Kuttner, December 24, 2003, Boston Globe)

How does Bush propose to create this "ownership society?" Mainly through more tax credits. If people lack reliable health care, there are tax-favored savings accounts to buy health insurance. If corporations are abandoning good pensions, there are new tax incentives to set aside retirement savings. If jobs are precarious, there are tax credits to purchase retraining when your job moves to China. [...]

Interestingly, there is a very different version of an ownership society that actually works. It is called asset development. Tony Blair in Britain has already made a start on this approach, by giving every child a subsidized savings account at birth that grows and compounds and can be used in adulthood to subsidize everything from education to first-time homeownership and ultimately to supplement retirement.

In the United States, Al Gore proposed a variant of this. I've been working with Larry Brown, one of the pioneers of this approach at the Asset Development Institute at Brandeis University, on an even bolder version.

The difference is that genuine asset development gives people genuine opportunities using real public outlays, the way the GI Bill did. Bush's approach relies mainly on the funny money of tax credits, which are often useless to the very people who need them most.

Here's an instance of where Democrats' are inhibited from true social/political breakthroughs by their fealty to New Dealism. Mr. Kuttner has a valid point, but he can't get past his wasteful welfare state entitlement thinking to make it.

Such accounts should indeed start at birth--perhaps with an initial contribution from the government--and the government should certainly subsidize such accounts for the poor, but there's no reason the rest of us can't fund them ourselves, just as we do 401k's--with some mixture of personal and employee contributions, and this offers an opportunity to expand the pool, so that, for instance, grandparents or charities or whomever could contribute too.

The dichotomy he sets up--of "real public outlays" vs. "the funny money of tax credits"--is merely hysterical. The former approach would have government tax us and then hand us back the money--the latter shelters it from taxation in the first place and so is both more direct and more personal. The former is based on the idea that we are all dependent on government--the latter encourages us to look at such accounts as taking responsibility for ourselves. The differences go not just to the efficiency of the program, but to the mindset. Why not encourage people's sense of "ownership", the very ownership he scoffs at, instead of setting up a system where they are "owned" by the government.

If Democrats were truly interested in the constituents they are supposedly elected to serve--the underprivileged among us--instead of just in assuaging the special interests who keep them afloat, they'd take up President Bush on the ownership accounts idea, but insist that the program include these additional reforms too. Such a Democratic Party would be serving not just the people who need this kind of "asset development" the most, but the nation as a whole.

For all Mr. Kuttner's talk of a "bolder intiative", this kind of compromise would require real boldness in three ways: (1) the accounts would replace virtually the entire panoply of New Deal/Great Society programs--from home loans to medical care to retirement--and be an implicit admission that there's a better way to go than the direction the Democrats took us for 70 years; (2) it would be a genuinely bipartisan accomplishment--Third Way even--occurring on the hated George W. Bush's watch; and (3) because the initiative is such a good idea and because of #2, it could end up being a huge boon to the Republicans for a very long time. The kind of boldness that could accept all three of those things is a very rare thing in the species, requiring a selflessness that we're barely capable of, but if Mr. Kuttner and like-minded folk could be so bold they would be real American heroes.

Posted by Orrin Judd at December 26, 2003 10:03 AM

The only politician currently in sight that has this kind of boldness is.......George W. Bush.

He's the only guy around who is more than willing to let other people put their name on his ideas & programs---who doesn't care who gets the credit.

They sure ain't anybody over on the Dem side!

Posted by: ray at December 26, 2003 12:38 PM

I am happy to see that you found something good in Kuttner's article.

But you overlooked the most important point Kuttner made: The rich do not need help; the poor do. And the poor do not pay taxes.

This is why it is a scam. It looks good but only the rich benefit.

Posted by: Paul Sieagel at December 26, 2003 6:21 PM

It's a scam if people who pay taxes get to to keep them but not if those who don't pay taxes get money from the rest of us? Maybe I misunderstand the concept of a scam.

Posted by: oj at December 26, 2003 9:14 PM
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