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In the Ownership Society, We’re All Equal (But Some Are More Equal Than Others)

There’s something positively Orwellian about this concept, which Bush is slated to talk about in his State of the Union address (for advance propaganda, see David Brooks’ Saturday New York Times column). The idea seems to be that America is inexorably becoming an “ownership society”: if you own something, it doesn’t matter how little you own or how inadequate that may be for your needs. You are (lucky you!) a full and equal part of the ownership society.

Of course, some are a bit more equal than others in this glorious new society. Take retirement savings, really the focus of Bush’s proposals to shepherd this new ownership society along. At this point, huge numbers of Americans–75 million workers and their spouses–have no employer-provided retirement accounts whatsoever and hence no easy way to hold stocks and join the ownership society. And the ones who do aren’t necessarily flush: the average stock holdings of a middle income household are only $15,000–even among those approaching retirement age, the average amount in retirement accounts is only about double that figure.

So lots of people don’t have employer-provided retirement accounts (including 86 percent of part-time workers and 83 percent of those who work for small firms). And those who do typically don’t save enough. In fact, an amazing 94 percent of those who have a 401(k) plan don’t contribute the maximum to that plan.

What’s the solution? Give everyone access to a 401(k) plan and make it easier to save? Nah. That’s what silly Democrats would say! Since some are more equal than others, the sensible thing is to create a new category of tax-favored accounts with higher contribution limits ($7,500), so that the affluent, who already max out their retirement contributions in 401(k)s, can save more without being taxed. Not only that, they get a bigger break for doing so, because their marginal tax rate is higher. Perfect!

That’s, in essence, what the administration’s plan for new Lifetime Savings Accounts/Retirement Savings Accounts (LSAs/RSAs) will accomplish. Sure, anyone can take advantage of these vehicles, but it stands to reason that the people most likely to do so are those with extra money they want to hide from Uncle Sam, not those (94 percent) who aren’t even contributing the maximum to their employer-provided plans. Nor is it likely that those who currently lack such a plan are going to come out of the woodwork to contribute to LSAs/RSAs. Indeed, even with currently existing tax-favored vehicles like IRAs, 96 percent of those eligible still don’t contribute the maximum.

What possible excuse can there be for this kind of public policy? The only kind they can offer is pure ideology: since everyone will be an owner (or at least have the opportunity to own–practically the same thing!), it doesn’t matter a whit whether some have much and others have too little to get by. They are all participating–or could participate–in the noble act of ownership and so their material situation is not that important; it’s the idea of ownership that’s important, not the actual number of dollars you own.

Wow. You think DR’s kidding. Nope. That’s what these folks really believe. DR had the rare privilege of attending and speaking at a recent Capitol Hill forum on “The Investor Class” sponsored by the New American Foundation. DR and Gene Sperling tried to keep ‘em honest, pointing out the facts mentioned above and many others, but it didn’t make much of an impression on Grover Norquist and his buddies. It just didn’t seem to matter much to them whether folks had enough for retirement. Provided some of their money was in stocks and they were therefore part of the “investor class” and (of course) the “ownership society”, they were on the road to freedom! Hallelujah and all that.

Moreover, these folks believe that, as more people enter this investor class, they are likely to become Republicans and therefore this trend leads inexorably toward GOP domination. DR’s a wee bit skeptical of this analysis, but he’s a charitable fellow, so he’ll go their bid to increase the investor class one better. Instead of these clunky LSAs/RSAs, which won’t produce real gains in stock ownership, since the folks most likely to use them already have stock, let’s make everyone an investor.

The way to do this is to adopt Sperling’s suggestion to set up a universal pension system that would provide every worker with a fully portable retirement account. Under such a system, all the various IRA and related accounts would be rolled into one tax-favored account and workers could direct cash from any and all their 401(k) accounts into this universal account, which would remain with them as they moved from job to job. These accounts would be further supported by providing up to $1,000 a year in matching contributions for savings deducted from paychecks–a one-to-one match for middle-income workers and a two-to-one match for lower-income workers.

According to the Norquists of the world, Democrats would be signing their death warrant by backing such a system, since practically everyone would wind owning some stocks (and more would wind up owning significant amounts). So why aren’t Norquist and the rest of the GOP rushing to embrace this proposal instead of these inefficient LSAs/RSAs which would only marginally increase the investor class, the foundation stone of their ownership society? Guess it’s more important to make sure some are still more equal than others in their ownership society.

Sounds like an opening for Democrats to DR. Our ownership society vs. theirs. DR suspects that the public, given a choice, will go for ours every time. Let’s make sure they get that choice (are you listening, Democratic presidential candidates?)

Comments

Hi Ruy,

Happy HOLIDAYS. I AGREE THAT THIS SO CALLED "INVESTOR CLASS" IS JUST HYPE ON THE PART OF REPUBLICANS. MY FEAR, HOWEVER, IS THAT THE REPUBS ARE SO VERY GOOD AT GETTING THIS TYPE OF MESSAGE OUT AND PROMOTING IT AS A VIABLE POLITICAL OPTION. IT IS SO FRUSTRATING TO SEE THE DEMS FALL ALL OVER THEMSELVES ON THESE SEMMINGLY EASY ISSUES. UNFORTUNATELY, UNLIKE THE REPUBS, THE DEMS LATELY HAVE BEEN ALMOST USELESS WHEN IT COME TO GETTING THEIR MESSAGE OUT. TWO CASES IN POINT: THE HYPE ABOUT SADDAM'S CAPTURE AND THE FACT THAT WE ARE NOT ANY SAFER TODAY THAN WE WERE PRIOR TO HIS CAPTURE (I.E., THE HIGHTENED SECURITY TO LEVEL ORANGE) AND THE MEDICARE VOTE - WHERE WERE OUR GUYS DURING THE PUBLIC DISCOURSE. IT APPEARED TO ME THEY WERE TO AFRAID TO STAND UP AND FIGHT FOR WHAT THEY BELIEVE.

I REALLY BELIEVE THAT THIS ELECTION IS THERE FOR THE DEMS TO WIN. THEY HAVE MOST OF THE ISSUES MOVING IN THEIR FAVOR GOING INTO THE ELECTION YEAR. BUT I CAN'T HELP FEELING THIS PANGE IN MY GUT THAT TELLS ME WE ARE GOING TO DROP THE BALL ONCE AGAIN. WHERE IS THE CONGRSSIONAL LEADERSHIP? ARE WE REALLY GOING TO TRUST SENATOR DASHEL TO CARRY THE ISSUE AGAIN? HOW MANY TIMES IS THIS GUY GOING TO FUMBLE BEFORE WE TAKE HIM OUT OF THE GAME. WE NEED A NEW MINORITY LEADER IN THE SENATE - BEFORE THE STATE OF THE UNION - BEFORE THE 2004 ELECTIONS.

(PS) SORRY FOR THE CAPS LOCK, ITS A MEMORY THING WITH WINDOWS NT)

It pains me deeply that the current front runner will be (if he wins the nomination) in the opposite position, of "raising" taxes on all people.

Years of experience in politics teaches you that complex, multi paragraph "explanations" of the truth (e.g. the multiple bullet points of The Bush Tax message, or long refutations of any charge buried in stump speeches that people don't hear) do not cut through the clutter or parry the simpler charges, such as "he wants to take more of your money."

Becuase the fact to remember is that regular people don't care about policy details and long-winded explanations. Sigh.

One more point - Ruy's piece illustrates how any Democratic counterpoint will have to be "packaged" just as well as "ownership society." It can't be a mere laundry list of policy ideas, it must cohere simply and philosophically.

Best example of this recently is Edwards "rewarding wealth vs. rewarding work". Too bad he's so far out of the game now. Hope somebody steals his message.

Your proposal is better on the merits. But then, that's never been the political problem for Democrats, now has it?

People largely living off their dividends, interest, and capital gains are the investor class. The vast majority of us, regardless of whatever sham the Republicans cook up, will be dependent upon the fruits, such as they are, of our labor.

As for ownership, we are largely a nation of of wage or salary earners. Owning stocks or bonds doesn't make you part of the ownership society. A true owner largely determines the nature, destiny, and direction of his or her business through the power of decision making. While we can technically vote our stock, it means nothing with respect to a reasonable defintion of ownership.

While I own stock, this abstraction has nothing to do with ownership. I have no real stake in these companies and will sell or buy stock at a moment's notice based upon the whims of the marketplace.

The dominant American reality is that we have become Wal Marted, Home Depoted, Targeted, and Amazoned. Wal Mart is the biggest corporation in the world, maybe the biggest corporation ever. It and others are instrumental in destroying small town, small business, and even some relatively big businesses in America. The $8.00 an hour employee, if he is lucky, may be able to own a few shares of stock but will never be an owner like the ones who inhabited the now dormant businesses along the dead mainstreets of virtually every small town in America.

If we want to enable people to put some money aside for their future, especially if they are going to be Enronned to death, then fine. But let's not call what we are evolving into the ownership society. Let's call it the Wal Mart society. We are owned, not owners.

I am not aware that any candidate is proposing solutions to this ever worsening problem. We have heard rants about companies off loading jobs overseas and the fact that we need better international labor and other standards in place. The enemy is not foreign countries; the enemy is us. It is "American" companies that are busy dismantling our economy. It is American companies that our bleeding every last penny out of our workers. It is American companies who are exporting our jobs. But ranting against them will not get the job done and, besides, even the largest companies become subject to the dictates of the global market.

The mantra is free trade. But it is free trade that largely got us into this mess. Are we to expect that more of the same will get us out of the mess?

If this reality is seeping into the American consciousness, the candidate that can propose a solution to address this issue will be the candidate who will win.

The moment any Democrat uses the phrase "ownership society" to desribe this plan, the battle is over and the Democrats have lost.

Both words were deliberately chosen to convey positive emotions that are difficult to argue against.

Chose a different phrase to describe this plan. I would suggest calling it "The William Bennett Gamble Away Your Life Savings Act Of 2004."

But whatever you do, for heaven's sake, please stop using GOP catch phrases that have been carefully crafted to make you lose.

I call it "The Work Will Set You Free Society".

Kaja: if you think the current front-runner's domestic policies are politically dangerous (I don't disagree), then what do you think of his statement the other day that we shouldn't pre-judge the guilt of Osama bin Laden? What do you think RoveBush will do with THAT one?

And I write that as a disillusioned Dean supporter, too. This guy has so much potential, but he's squandering it because he has no ability to muzzle himself.

The small ownership/full partnership part worked for Bush. (The Texas Rangers) He must think all of us has his advantage. How can you get dumb enough to succeed?

Hmm. Social Security privatization anybody?

How about home ownership? http://www.realtor.org/Research.nsf/files/2002HBHShilites.pdf/$FILE/2002HBHShilites.pdf.

Scare quotes like this
"At this point, huge numbers of Americans–75 million workers and their spouses–have no employer-provided retirement accounts whatsoever and hence no easy way to hold stocks and join the ownership society" miss the fact that many of these people are covered by defined benefit pension plans (in addition to Social Security) and are thus indirect owners. The largest single stockholding entity in the world is CalPers (California state pension system).

People invested in home ownership and defined benefit pension plans probably don't need any more "ownership"

Self employed (but not wealthy) people like me are very careful about our real estate and financial investments.

DEAN HAS GONE TOO FAR!

I've been against Howard Dean's candidacy for a long time. I think he is a weak nominee who has potential to hurt the party downballot, and even in future elections (by returning the party's image to where Mondale and Dukakis left it). His almost daily gaffes (from "America won't always have the strongest military" to his bizarre appeal to the Confederate flag) and flipflops (Medicare, Social Security, NAFTA...)are enough to make any sensible Democrat who hasn't "drunk the Kool-Aid" cringe.

But I always vowed to support him if he became the nominee. We've got to beat Bush, after all, right? So I suffered through all his smears against not only his campaign rivals but all "Washington Democrats" that he all but calls traitors to the party. These are--mostly--good men and women who have fought for years for the environment, for the rich to pay their fair share, for labor, for equal rights for all. But Dean trashed them all and implied that they weren't real Democrats, that he alone represents "the Democratic wing of the Democratic party".

Never mind that he took this line from the late great Paul Wellstone, and that Paul Wellstone's spokesman Jim Farrell wrote about Dean in The Nation (May 8) that "when held up to the progressive standards of a Paul Wellstone, his deeds are sorely lacking." More excerpts of his piece:

Slackerinc,

I am not a Deaniac or a Clarkite. In fact, I think any of the Democratic candidates would make a far better president than Bush. And either Clark or Dean, preferably both in either order, would have the potential to be a great administration.

That said, let's make sure our criticism does not inadvertently provide Republicans with the ammo to shoot us down. See Krugman today.

Dean wasn't my first choice either, or my second, but he's going to be our nominee now, so we had better figure out how to get him elected.

Dean's veiled threat (if that's what it was) is regrettable, but it's small potatoes beside what Lieberman and Kerry have done lately.