During a campaign stop in West Palm Beach, President George W.
Bush wasted no words in explaining his vision of an ownership
society: “No one ever washes a rental car. When you own something,
you care about it.”
And so, the theory behind the “ownership society,” whether we’re
talking about health care, tax cuts or Social Security, is quite
simple. When it comes to retirement planning, it says we’ll care
more, and therefore be more efficient, if we own our own retirement
accounts and are in charge of moving our money around between
various mutual funds in order to maximize our returns, just like
the rich guys.
With the plan for the partial privatization of Social Security,
first proposed by candidate George W. Bush in 1999, younger workers
would be permitted to invest 2 percent or so of their paychecks
into private, individually-owned accounts. Economically, based on
the long run performance of the market, that’s probably a better
bet than the currently projected skimpy returns in the Social
Security system for those just entering the workforce. And
politically, it creates a whole new class of stock-owning investors
— the type of people who are more likely to be red than blue.
As it now stands, only 22 percent of American households have
savings invested directly in the market. Expand this investor
class, argue some Republican strategists, and it’ll automatically
produce an electorate that’s more likely to vote for the kind of
free market-oriented, pro-business economic policies associated
with GOP administrations.
That rosy scenario for Republicans is supported by the findings
in a Washington Post poll last year that examined the
attitudes and political leanings of Americans with money invested
in the financial markets: “The Post survey found that
Americans who have bought individual stocks — ‘direct investors’
— are more optimistic about the economy, more likely to identify
themselves as Republicans, have a more favorable view of the GOP
and are more inclined to support Bush’s reelection than are
non-investors of comparable income.”
The Post poll found, for example, that “40 percent of
direct investors with incomes of more than $50,000 identify
themselves as Republicans, compared with 22 percent of
non-investors” in the same income grouping, while “among those with
incomes below $50,000, 34 percent of investors identified
themselves as Republicans, compared with 23 percent of
non-investors.” As a bonus for the GOP, investors are also more
likely to vote than non-investors of the same income level.
As with the privatization of retirement, Mr. Bush is expected to
push the idea of health savings accounts as a way to expand
individual ownership of health insurance through tax-free savings,
expand competition among health care providers and insurers, and
establish a market force of millions of self-interested consumers
who will shop around for the best deals in medical care. The
theory? No one washes a rental car and no one cares about a $100
aspirin when the cost is being shifted to a third party payer.
On taxes, Bush will push to make his 2001 and 2003 tax cuts
permanent, many of which are set to expire, and for tax
simplification. Again, the idea is that people in an “ownership
society” should be allowed to own more of the money they earn and
they shouldn’t be spending hundreds of billions of dollars each
year to figure out how to comply with the tortuous and convoluted
rules of the tax code.
In addition, empowered by his own reelection and wider GOP
majorities in both houses of Congress, Mr. Bush might well now call
for an economic program that aims for tax cuts that are even more
ambitious than the ones he signed in his first term and for an
overhaul of the income tax system that cuts even further the level
of taxation on investment income.
Currently, the top fifth of American households are picking up
over four-fifths of the federal income tax tab, and a third of
those taxpayers are small-business owners, the nation’s chief job
creators. Along with tax relief, Mr. Bush’s “ownership society”
agenda in the second term for this sector of entrepreneurs and
small-business owners seeks to remove obstacles to growth and job
creation by way of reining in the costs of over-regulation and
over-litigation.
Overall, it’s a big agenda. As Michael D. Tanner at the Cato
Institute sums it up, “Bush wants to be the Republican FDR.”
