We Are What We Own
President Bush will keep pushing Social Security reform. But not tonight.
BY FRED BARNES
Tuesday, January 31, 2006 12:01 a.m. EST
When running for re-election in 2004, and again last year as he campaigned for Social Security reform, President Bush repeatedly advocated an "ownership society." It was a bold concept aimed at producing a historic shift in power from Washington bureaucrats to individual Americans. But "ownership society" is not a phrase you're likely to hear from him tonight in his State of the Union address. Instead, he is expected to take a more conventional--and politically palatable--approach. His domestic agenda for 2006 includes easing the burden of rising health-care costs, trimming entitlement spending, increasing economic competitiveness, promoting measures to spur energy independence and making his tax cuts permanent. "No one will come away from the speech with ownership society on their lips," a White House official said.
At best, there will be faint echoes. Injecting free-market incentives into the health-care system is a major part of the ownership society idea. And the president plans to propose new tax breaks to reduce out-of-pocket medical expenses, especially to help the uninsured. Expanding health savings accounts, which allow individuals to decide on routine medical expenses, is a Bush priority. So is reducing the impact of the alternative minimum tax, a modest stab at tax reform. He also intends to note that Social Security is still headed toward bankruptcy.
That's it--all fairly tame stuff compared to the vast reach of his ownership society scheme. But after failing in his drive for Social Security reform last year, Mr. Bush has now gone incremental, hoping small steps will lead to bigger ones later. For 2006, however, he's reconciled himself to the fact that overhauling Social Security is an impossibility. And since Social Security reform is a necessary element of an ownership society, that idea is off the table this year, too.
But that's not the end of the matter. 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 desire to shrink government by any means seems a bit odd coming from Mr. Bush. Having declined to veto any spending bills--or anything else--in the five-plus years of his presidency, he's often associated with the rapid growth of government. In fact, two years ago on this page, I dubbed him a big government conservative. To many, this signified Mr. Bush is a liberal. He's not. A better label for Mr. Bush is strong government conservative.
In any case, he now believes an ownership society would foster a wave of self-sufficiency. "I think part of government's responsibility is to encourage certain cultures," he told me. "And a primary cultural change that I have been trying to instill ever since I got into public office" is a fresh "period of personal responsibility." Ownership "does a lot of things." One of them, Mr. Bush continued, is to increase "independence from government. Government sometimes, because you're dependent on it, undermines the sense of personal responsibility." Ownership also gives people "a vital stake in our country," he said. "There's a direct link between participation and ownership, participation and democracy and ownership."
Mr. Bush still yearns to modernize Social Security and create private investment accounts funded by payroll taxes. When informed last year that congressional Republicans wouldn't "scout" the political terrain ahead of him, he went ahead with his campaign for reform--alone. Now, an aide insists, "If the president sees a political opportunity [for Social Security reform], he'll seize it in an instant." He brought it up again in a private White House meeting last week. His comments were paraphrased by an adviser: "Look, I tried it. I put a lot of muscle into it. But it failed. But I'm going to keep talking about. In good conscience, I have to."
Indeed, he's likely to keep talking about Social Security and private accounts and perhaps even an ownership society. But not tonight, when he addresses the nation.
Mr. Barnes, executive editor of The Weekly Standard and co-host of "The Beltway Boys" on Fox News Channel, is author of "Rebel-in-Chief," just published by Crown Forum.
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