The New America Foundation's Ray Boshara makes a strong case for promoting asset ownership through social policy in the Washington Post today, including establishing "a privately owned 'KIDS Account' at birth for each of the 4 million children born in this country every year and fund those accounts progressively -- thus creating a lifetime platform for saving, asset accumulation, retirement security and wealth that can be bequeathed." This is a cause I've believed in for a long time, and one with increasing bipartisan support.
In the New York Times, meanwhile, David Brooks offers a paint-by-numbers version of the same argument. He says Bush might want to shift from his push for private accounts in Social Security to an asset promotion plan (yes!), but then things go off the tracks:
The Social Security problem is a chance to enact this kind of thing on a decisive scale, with the KidSave proposal serving as a framework for a new vision of personal accounts.
We could start by indexing Social Security benefits to prices, not wages, so the system wouldn't go broke. Then we could give everybody under a certain age KidSave accounts. This money could either supplement the reduced Social Security benefits, or individuals could divert some of their payroll taxes into their KidSave accounts, trading guaranteed benefits for more ownership.
We'd have to take care of today's 20-somethings, who are already too old to benefit from the new accounts, but this proposal would lead to less red ink than the president's current plan. And let me commit an act of heresy: it would be smart for Republicans to forgo making the Bush tax cuts permanent in exchange for these kinds of accounts. The Bush cuts are going to be repealed by the next Democratic president anyway, but these accounts, once created, would be forever.
If people can divert their payroll taxes into the KidSave accounts, it creates most of the same problems as Bush's current proposal, and is likely to face most of the same opposition. Price indexing will also be fiercely opposed by Democrats. This ends up sounding like a repackaged version of Bush's current proposal. Despite Brooks' preening, it is not going to break the logjam on Capitol Hill. He's right to call for rolling back some of Bush's tax cuts, though; if we could use some of that money to pay for the asset-building accounts and figure out a separate, bipartisan package of fixes for Social Security, then we'd really be making progress. That's utterly unrealistic, of course, but it highlights the problem - there's no money for these accounts in the general budget without tax cut rollbacks. Bush can only fund personal accounts by siphoning payroll taxes. So there are very few alternative options as long as the President holds the line on his signature policy initiative.
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