[Marxism] In Bush's 'Ownership Society, ' Citizens Would Take More Risk
walterlx at earthlink.net
Fri Mar 4 04:49:11 MST 2005
(Since Washington has laid out a roadmap for what it
hopes to do to Cuba should it succeed in its efforts
to overthrow the Cuban government, it's useful to be
clear about what the Bush administration's plans are
for the United States: privatizing social security
and gutting what few tattered remnants remain of the
social safety net which was developed in the 1930s,
when the capitalist world was faced with the challenge
of a post-capitalist alternative in the Soviet Union.
[sorry for run-on sentence!] After World War II the
US and its allies created a system of welfare programs
to cushion the effects of life under capitalism partly
as a way of countering the example of the USSR, even
though that was a very troubled example. Now that the
USSR has collapsed and is no longer a factor, even an
exemplary one, the western powers have begun to gut
the remaining social programs.
Washington's roadmap for Cuba is the report of the Bush
transition commission, which is important to read and
be familiar with. Study guides and commentaries are
available for the humungous document. Here we see some
of the elements of Bush's roadmap for US society and so
people in the US should keep these in mind when we look
at Washington's plans for Cuba...
Walter Lippmann, CubaNews
In Bush's 'Ownership Society,'
Citizens Would Take More Risk
Beyond Social Security Moves,
His Vision Encompasses
Health Care and Housing
Shrinking the Safety Net
By JACKIE CALMES
Staff Reporter of THE WALL STREET JOURNAL
February 28, 2005; Page A1
WASHINGTON -- President Bush's campaign to revamp Social
Security is just the boldest stroke in a much broader
effort: To rewrite the government's social contract with
citizens that was born of Franklin Roosevelt's New Deal and
expanded by Lyndon Johnson's Great Society.
In what Mr. Bush calls an "ownership society," Americans
would assume more of the responsibilities -- and risks --
now shouldered by government. In exchange, the theory goes,
they would get the real and intangible benefits of owning
their own homes, controlling their retirement savings, and
using tax credits or vouchers to shop for education, job
training and health insurance.
The emphasis would be on the individual, supplanting a
70-year-old approach in which citizens pool resources for
the common good -- and government doles out benefits. In
the Bush vision, the nation's social safety nets would
still exist, but on a smaller scale, targeting the most
needy. Others would move to private-market alternatives of
their own choosing.
The president's policies, his advisers say, reflect his
deeply held belief that "ownership" has the power to
transform people, just as he feels transformed by a midlife
decision to quit drinking and embrace religion.
No program better exemplifies the longstanding social
compact than Social Security: Workers are taxed to pay
benefits to current retirees and the disabled, and expect
to be helped by future generations. But with fewer workers
supporting swelling ranks of retirees, the program by
midcentury won't be able to pay full promised benefits.
That is the problem Mr. Bush wants to fix. He calls it
"reforming great institutions to serve the needs of our
Yet the centerpiece of his fix -- letting workers divert a
third of their 12.4% payroll tax to personal accounts,
which they could invest, spend in retirement or pass on to
heirs -- won't help Social Security's long-term solvency,
the president acknowledges. That, he says, will require
separate reductions in future benefits.
His private accounts have another purpose. "When more
people own something, the more they'll have a stake in the
future of this country," he said recently in a speech.
He's pursuing this agenda on other fronts as well. "We will
widen the ownership of homes and businesses, retirement
savings and health insurance," Mr. Bush said in his
inaugural address in January. "By making every citizen an
agent of his or her own destiny, we will give our fellow
Americans greater freedom from want and fear, and make our
society more prosperous and just and equal."
In health care, Mr. Bush is pushing Health Savings
Accounts, which combine low-cost, high-deductible insurance
policies, along with private accounts to cover smaller
expenses. Such accounts allow people to pocket savings if
they don't go to the doctor. In housing, Mr. Bush hopes to
help Americans buy homes, while shrinking government's role
as landlord to the poor. In education and job training, he
pushes vouchers and tax breaks for savings accounts that
individuals can tap to buy services in the marketplace.
The president's vision goes beyond Ronald Reagan's. The
late president tried to make government smaller, not
different, and largely failed. In 1983, the last time
Social Security was changed, Mr. Reagan agreed to reduce
benefits and raise taxes without fundamentally changing the
system. But he faced a House of Representatives controlled
by Democrats, protective of their New Deal legacy. Like FDR
and LBJ, Mr. Bush enjoys a Congress led by his party.
"We have it within our grasp," White House adviser Peter
Wehner wrote in an e-mail to conservative allies earlier
this year, "to move away from dependency on government and
toward giving greater power and responsibility to
Critics say Mr. Bush's vision is blind to economic risks
facing Americans, especially lower-income workers. William
Gale, a Brookings Institution economist, dismisses the
president's agenda as "the Dismantling-the-Safety-Net
Society." Some applaud his rhetoric, but say the
president's policies -- heavy on tax breaks -- don't
broaden ownership, but favor the well-off. The poorest
workers, exempt from income taxes, can't take advantage of
tax breaks for savings. Eugene Steuerle, a Reagan-era
Treasury official now at the Urban Institute, titled a
recent analysis, "An Ownership Society, Or A Society For
Those Who Already Own?"
According to the White House, Mr. Bush first used the
phrase "ownership society" in a Feb. 28, 2002, speech on
Social Security. Only last year, while running for
re-election, did he elevate it to the theme for his
second-term domestic agenda.
The idea, says Glenn Hubbard, an economic adviser during
Mr. Bush's first term, is that ownership "changes
The president's philosophy reflects a libertarian,
free-market bent common to Texas and its small-town
Petroleum Clubs, made up of local business leaders. As far
back as the young oilman's losing bid for Congress in 1978,
Mr. Bush proposed carving private accounts from Social
After his defeat, Mr. Bush went back to the oil business,
and then became part-owner of the Texas Rangers baseball
team. His own financial risks and business failures through
the 1980s were cushioned by investors drawn from his
Through the 1980s and early 1990s, up-and-coming Republican
conservatives such as future House Speaker Newt Gingrich
and Congressman Jack Kemp, who later became housing
secretary in the first Bush administration, were
popularizing "empowerment" initiatives and a "conservative
opportunity society" to shrink "the welfare state." In
Britain, Prime Minister Margaret Thatcher was overhauling
state pensions and selling public housing to tenants. Their
ideas -- shrinking government and cutting taxes so
individuals would fend more for themselves -- were the
basis of Mr. Bush's thinking, according to past and current
In the 1990s, a movement was growing on both sides of the
political spectrum, based on the belief that government
should promote ownership of assets among the poor, instead
of only providing income through bureaucratic programs.
Both sides agreed the status quo discouraged recipients
from acquiring assets, by cutting off benefits, and left
families mired in poverty for generations.
With the 1996 welfare law, Democrat Bill Clinton and a
Republican Congress agreed to set time limits on benefits
and require able-bodied recipients to work. That galvanized
thinkers on the left and the right to press for subsidies,
government matches and tax breaks to encourage the poor to
save and invest.
Welfare reform also marked a move of the pendulum away from
traditional New Deal social programs. The change coincided
with an unusually strong economy, which helped many of
those moved off welfare to find jobs. Though a debate over
its long-term effects continues, the reform now has
survived one recession without provoking the kind of
political or social backlash that some predicted. The
change was a step toward a changed, and somewhat reduced,
At the time, George W. Bush was governor of Texas and
inviting policy wonks to Austin to discuss a range of
issues as he prepared to run for president. "He said,
'We've done welfare reform. What are the next things to
help people as they move off welfare?' " recalls economist
John Weicher, who attended one session and is now Mr.
Bush's Federal Housing Commissioner at the Department of
Housing and Urban Development. "He saw homeownership as one
of the next logical steps to get into the middle class."
Here's a look at some of the ways Mr. Bush would put his
ownership society into practice.
The president's plan for individual accounts is a major
departure for a program designed as social insurance
against the risk of destitution. Mr. Bush argues private
accounts would allow workers to earn more through
investments than they would receive from Social Security,
especially after traditional benefits are reduced to make
the system sustainable.
His plan would limit choices to a small menu of stock and
bond mutual funds. Backers argue that, over time, market
returns exceed those of Treasury bonds in which Social
Security funds are invested. Opponents counter that Mr.
Bush would weaken Americans' retirement income, by making
the one guaranteed benefit dependent on economic and
financial market conditions.
Private accounts don't only appeal to conservatives. Half
of Americans have no stake in financial markets, despite
the spread of Individual Retirement Accounts and 401(k)
accounts. "This could be a great opportunity to build
assets for the poor," says Ray Boshara at the New America
Foundation, a nonpartisan think tank known for its research
on private accounts to fight poverty. But, he says, the
government would have to make matching deposits to allow
low-income workers to build adequate investment accounts --
something Mr. Bush isn't proposing. "Thus far, I don't see
the incentives for poor people to save and build sufficient
assets," he says.
Though the president says he sees a continued role for
Social Security, Democrats insist his goal is complete
privatization and fear a partisan motive as well.
Conservative activist and White House ally Grover Norquist,
for example, says more stock owners would mean more
Republicans, making the party "a true and permanent
national majority." He adds: "Obviously Social Security is
the key to getting this done."
Though the New Deal was mainly about big federal relief
programs, it gave rise to the 30-year mortgage, which
allowed millions of Americans to acquire their single
biggest asset -- a home. Through the mortgage-interest
deduction, the tax code provides a huge subsidy for home
ownership. In 1948, it became a federal goal that everyone
should have a suitable place to live, which led to public
housing and rent subsidies for the poor.
Mr. Bush signaled a new course in an April 2000 speech in
Cleveland. For the government, he said, "It makes a lot
more sense to help people buy homes than to subsidize
rental payments forever." For the individual, owning a home
"is different from renting. Suddenly you belong somewhere.
Just like that, you're not just visitors to the community
anymore but part of it -- with a stake in the neighborhood
and a concern for its future."
The percentage of American families who own homes is a
record 69.2%, up from 67.5% when Mr. Bush took office. For
first time, a majority of minority families own homes. Low
mortgage rates are the chief reason. But the president
takes credit as well.
His American Dream Downpayment Initiative of 2003 has
subsidized down payments that allowed about 4,000
low-income families to buy homes, the administration says.
New federal rules press mortgage giants Fannie Mae and
Freddie Mac to make more funds available in underserved
areas. A new program permits low-income people to use
federal rental vouchers toward a home purchase, though the
administration says finding willing lenders is a problem.
Mr. Bush has failed to get Congress's approval for his
proposal to allow the Federal Housing Administration to let
first-time buyers purchase a home with no money down;
currently a 3% down payment is required. Nor has he gotten
fellow Republicans to adopt a proposed tax incentive for
builders that construct affordable homes in neglected
areas, similar to an existing break for rental
construction. They say he hasn't pushed it.
But for low-income renters, the situation is getting
tighter. Spending for rental vouchers isn't increasing
enough to cover rising housing costs, or the number of
families seeking help. Mr. Bush's budget request for fiscal
2006 through 2010 would, by the final year, leave the
government able to fund vouchers for 370,000 fewer families
than this year, according to the Center on Budget and
Policy Priorities, a frequent critic of the president's
policies. At the same time, the federal government and
local housing authorities are steadily cutting back on the
stock of public housing.
"This is the most radical change in national housing policy
since the New Deal," says Sheila Crowley, president of the
National Low-Income Housing Coalition. She says many
low-income families are better off renting, given the
instability of their jobs, their vulnerability to predatory
lenders who end up with the houses if owners fall behind,
and the scarce supply of affordable homes.
When the 2006 budget came out earlier this month, Housing
Secretary Alphonso Jackson said it "reflects some of the
tough choices we must make to continue meeting our nation's
key priorities. Our commitment to expanding economic
opportunity through homeownership continues and we will
make certain we house and serve those who are most
For decades, the government promoted employer-sponsored
health insurance for workers, and Medicare for retirees and
Medicaid for the poor, based on the share-the-risk model of
group insurance. Mr. Bush now seeks to move to a system in
which individuals shop for health care much like anything
else, seeking the best prices and products among competing
providers. Such competition would help restrain rising
health costs, proponents say.
The key: Let people keep the money set aside in a Health
Savings Account -- created as part of the 2003 Medicare law
-- so they have a reason to use health care more
judiciously. "Hopefully...when I get to be an old guy, my
HSA will be bulging with money," Mr. Bush told an audience
recently, "and I will be comfortable in the security of
retirement because my HSA will be a part of...other options
to provide good health care for me and my family."
Opponents fear employers will take advantage of the
accounts to shift more costs to employees, and that only
the healthiest and wealthiest will open accounts. Others
would stick with conventional group insurance, which would
become more costly. A study by the Employee Benefit
Research Institute, a nonprofit, nonpartisan group, found
that HSAs are more attractive to individuals than to
families, and that the potential to build retirement
savings "is limited." It cast doubt on the ability of such
savings accounts to drive down health expenses because a
small fraction of people -- the oldest and sickest -- are
responsible for most costs and can't effectively shop for
The administration doesn't see HSAs replacing other
health-care options, whether conventional private insurance
or the financially stressed Medicare and Medicaid programs.
To make the idea more attractive to the poor, Mr. Bush
proposes an annual government contribution of up to $1,000
for eligible low-income families, and a $2,000 tax credit
to help buy the companion insurance policy that covers
major medical expenses. But as with much else, budget
deficits will be a big hurdle to passage in Congress.
Write to Jackie Calmes at jackie.calmes at wsj.com2
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