And I do mean NUT shell.
Conservative think-tanker Norm Ornstein, "scholar" at the American Enterprise Institute, has a proposal for how to remedy income inequality. Now let me say up front, while Ornstein is a conservative, he's an old-style one of the compassionate variety, and not just another Tea Party grifter.
Anyway, he wrote up his solution, which is a rehash of "bipartisan" pipe dreams from the 90s:
It is called KidSave, and it was devised in the 1990s by then-Sen. Bob Kerrey of Nebraska, with then-Sen. Joe Lieberman as cosponsor. The first iteration of KidSave, in simple terms, was this: Each year, for every one of the 4 million newborns in America, the federal government would put $1,000 in a designated savings account. The payment would be financed by using 1 percent of annual payroll-tax revenues. Then, for the first five years of a child's life, the $500 child tax credit would be added to that account, with a subsidy for poor people who pay no income. The accounts would be administered the same way as the federal employees' Thrift Savings Plan, with three options—low-, medium-, and high-risk—using broad-based stock and bond funds. Under the initial KidSave proposal, the funds could not be withdrawn until age 65, when, through the miracle of compound interest, they would represent a hefty nest egg. At 5 percent annual growth, an individual would have almost $700,000....
KidSave drew support from liberals and conservatives, from unions and business interests, from the Heritage Foundation and AARP. For conservatives, it meant a universal investor class. For liberals, it meant giving wealth and security to tens of millions of people who have little or nothing. But for reasons I can't explain, it went nowhere.
The same was true of a second iteration of the program, where each child would get an initial $2,000 loan at birth from Social Security, with the money also placed in a retirement account invested through the Thrift Savings Plan; the initial $2,000, as adjusted for inflation, would be paid back in five annual installments starting at age 30, but with the accrued investment growth continuing to build in the individual's account. That plan was cosponsored by Kerrey and fellow Sens. Rick Santorum, Daniel Patrick Moynihan, Charles Grassley, and John Breaux, but it still died on the vine.
Well, first off, there's something a bit hinky about the math, which more than one commenter at National Journal leaps on with glee:
If you put 1000 in an account at 5% NAI compounded annually, you will have 1276 in five years. Put in 500 per year for five years at 5% NAI compounded annually and you add another 2762. Together, the contributions produce 4038 in five years (assuming the 500 credit overlaps and starts at the beginning). Compound the 4038 for the next 60 years at 5% NAI compounded annually and the person has 75,426 at age 65. Where does the 700,000 come from? Ornstein is off by almost a full order of magnitude.
The proposal is, of course, a wedge to undo the the last tattered remnants of the social safety net. Burgeoning private accounts look tempting, at least until the market crashes. And until you're forced to use those funds for all the things the state should be providing to buffer its citizens from the inhuman brutality of unregulated global capitalism. When some future congress or administration decides you should be using that money not just for your retirement but also for everything else the state used to help out with, from paying for your healthcare to subsidizing your education to starting your own business. Hey, Ornstein's actually already proposing exactly that! At least let your trojan horse get inside the gates before you start undermining it, man!
Other commenters, I think, didn't read quite as carefully. They burn him at the stake as a marxist, a liberal, a crazy person, and a hander-out to the moocher class:
If you want to reduce income inequality, stop giving money out for being unproductive!
LOL! What an asinine idea! That money would be spent on diapers by the parents! The kid would never see one dime and the author knows it. It sounds good though doesn't it? Give every kid a welfare payment from day one. But it is Progressive, Marxist nonsense.
I wonder how this money will be spent by blacks?
The chances of desperate poor people squandering that money on consumables to dull the pain of their lives is about 100%. One reason people are poor is the inability to defer gratification.
Hell yea. Give every baby $1K in a trust that cannot be touched until they are 65.... An cannot vote dumbocrat...
The dumbasses who don't want to work wont invest anything they will just spend it on the xbox games, their beer, weed, and porno while they cash their welfare checks.
I know another word for social inequality! It's called LIFE! Suck it up.
A better idea (and cheaper) would be to insert a contraceptive impant into every 14-year-old girl who lives in a single-parent household. Can't get it out until you graduate high school, get married, and have a job.
I'm glad there's a growing gap in income inequality. Here's why:
People who contribute little to their fellow man get little in return. That's what a market economy does, it rewards you in accordance with how much you make the lives of OTHER people better. If you empty a garbage can, not so valuable since anyone can do that. If you perform brain surgery, very valuable.
So. Zero will always be zero. People who don't benefit the lives of other people around them will have close to zero.
On the other end of the spectrum, are the people who contribute GREATLY to the lives of everyone around them. They balance a million different variables and keep something like Wal-Mart rolling along, providing inexpensive goods to people from sea to shining sea. That's worth a lot.
Well, you get the drift.
An elite that can't do the math, and a base so rabid they can't even see their party's need to engage with the reality of people's actual lives in 21st century America. Instead they cling to their vision of the harsh purity of markets and its allocation of value, no matter the cost.
It's just one more example of the "familiar problem for Republicans in this age of conservative ideological domination: how can one show bipartisan appeal without unforgivable ideological concessions?"
Short answer? They can't.