View From a Height
Commentary from the Mile High City
Thursday, November 04, 2004

The 2nd Term Begins 

Hey, if Mark Halperin can pronounce Bush a lame duck, he can start his 2nd term early, right?

President Bush has announced that he's going to move quickly to reform Social Security. This will include partial privatization, but surpsingly, will not cut seniors' benefits by 45%. This can only be good news. The window for action, especially on the domestic agenda, is going to be short.

The only real issue here is the transition costs, as money that would have funded current expenditures some years from now is in personal accounts instead. The main selling point here is that returns will, over the long haul, be much higher than the 1-2% you see now. Most of the middle-class is used to talking to financial planners. This is just going to be one more revenue stream for many of them.

The counter-argument will be that the poor, or working poor, don't have that familiarity and are liable to "gamble" their money on junk bonds or high-tech stocks or the next Big Bubble. Two answers. First, the poor and working poor are the ones who get cheated the most by the system as it stands. They put in less, get out less, have less saved for retirement, and the paltry returns mean they often don't live long enough to even get their money back.

Second, you can tailor a system to allow only certain kinds of investments. Mutual funds, or bond funds. Funds that don't jump around so much. Yes, the overall return won't be so high, but financial planners generally tell you to have some portion of your money in conservative investments. This can be that money.

Someone needs to figure out a simple way to explain future value to people. President Reagan liked to use charts. Maybe, when he's unveiling his proposal, President Bush can use a simple chart explaining how much more this will mean to the average middle- or lower-middle-class wage-earner.

I always felt that the "ownership society" was one of the key long-term accomodations to reality the country needs to make. It allows us to be more flexible, while at the same time relieving the government of a fiscal burden it's not going to be able to bear.

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