On Thursday night, Bush reintroduced himself as a "compassionate conservative" and delivered his "positive, upbeat" plan for the next four years: a terrorist-busting strategy abroad and, at home, the creation of an American "ownership society".
On Friday, Jonathan Chait published the most illuminating and alarming article of the season (IMO) in the New Republic (at the American Prospect, Robert Reich offered this less impressive version of same) explaining exactly what that "ownership society" entails and why we're likely to see it come to fruition if Bush gets a second term with a Republican Congress. For those who can't access TNR, here are the relevant portions of Chait's analysis:
Bush has yet to provide many details about his "ownership society," but he has suggested it would have three main elements. The first are Health Savings Accounts (HSAs), a component of last year's Medicare law, which Bush would expand by $25 billion over ten years. HSAs are a way for individuals to buy health insurance. You put money--say, $5,000--into an account and deduct the $5,000 from your income taxes. The money is then used to pay your health care expenses up to a certain level, after which the insurance company pays for everything. If you don't spend the money on health care, you can keep it. Proponents claim these accounts will control costs (by giving patients an incentive to economize on their care) while expanding health insurance. In reality, though, HSAs are likely to do the opposite.
...Another problem with HSAs is that they mostly help the affluent. Financing the accounts through a tax deduction means they are worth more to those in higher tax brackets. Take that $5,000 deposit. If you're in the 35 percent income tax bracket, the government would pay for $1,750 of your deposit. If you're in the 10 percent bracket, the government would kick in just $500. If you don't earn enough to pay income taxes, you would get nothing. (The deduction does not count against payroll taxes.) This is extremely unfair--why set up a health care program that gives the greatest benefits to those who earn the most? And that unfairness undermines the program's ability to cover the uninsured, 90 percent of whom are in the 15 percent tax bracket or lower, according to the Center on Budget and Policy Priorities...
...The second element of Bush's "ownership society" is the privatization of Social Security accounts. Social Security is another form of insurance--insurance against the risk of making bad investments, the risk of outliving your savings, the risk that a disability keeps you from working, or the risk of being widowed. (To some extent, it also treats the possibility of earning a low income as a risk, giving low-earning workers a higher return on their payroll taxes than high-earning workers.) The program is designed to spread those risks among the working population.
...[T]here's a deeper philosophical principle at stake. If you control your own retirement, you have a better chance of striking it rich in the stock market. But you also have a better chance of losing your money. In other words, privatization concentrates the risks on the individual, making impossible the risk-spreading that's the entire point of Social Security. As former Bush I Treasury official and current Yale Law School tax professor Michael Graetz told National Journal, "ownership of assets does not spread risks in the way that insurance does."
The last element of the "ownership society" is Bush's plan to cut taxes on investment income (again). Bush has pitched this idea as a way to modernize and expand pension coverage for workers, but his actual proposal--which he offered up in his 2004 budget but quickly withdrew--bears no relationship whatsoever to this goal.
One problem is that low- and moderate-income workers tend to spend all the money they have. Another problem is that, as noted above, IRAs work by offering tax deductions, and tax deductions are worth far more to those at the top than those at the bottom. People in the top tax bracket get 35 cents back from the government for every dollar they deposit into an IRA. People in the bottom tax bracket get 10 cents, and the 33 million workers who don't pay income taxes get nothing. So it's not surprising that these accounts are mainly used by the affluent. And most studies have found that they don't encourage new savings. Mostly they're a windfall for those who would have saved the money anyway.
...Bush's economists can't be stupid enough to think this will work. The real intent of the plan is to take another step toward the conservative dream of a revenue system that taxes only wage income and exempts investment income altogether. The problem is that, by giving such generous retirement tax shelters to those at the top, employers may feel less need to provide companywide pension plans for their (less well-off) workers, given that their own needs can be met through an individual government savings account.
What Bush is proposing here isn't remotely compassionate and, more to the point, it bears no relation to any conceivable definition of "conservative". Bush's vision of an "ownership society" is essentially a vision of an insolvent government, paying for its military and domestic law-enforcing requirements by borrowing from the Chinese government and from its own wealthy citizens, paying them back at interest. It's a vision of a society in which those citizens starting from the best socio/economic situations legally owe almost nothing to preserving the public good. It's a vision of a society in which the risk-sharing role of government is eliminated and the government's role in protecting citizens from the ravages of the stock market and giving the aged and infirm a safety net is dismantled through "partial privatization" of Social Security -- though it's unlikely Bush's grand scheme ends at "partial".
Four years ago, Bush charged that Gore's "targeted tax cut" would require "numerous new IRA [sic] agents". Yet here we have Bush's own "targeted tax cut", the bizarro-world counterpart of his old opponent's, where those "targeted" for the cuts are not the economically disadvantaged desiring to save for college or pay for child care or health insurance and becoming eligible for refundable tax credits (transfers), but, instead, the economically most advantaged, looking to pay for the same, and becoming eligible for exemptions from extra-payroll income tax. The bureaucracy-expanding effects of Bush's targeted plan are pretty similar to Gore's, but the cuts are correspondingly bigger to reflect the bigger incomes they pertain to, and the results of their implementation correspondingly more inequitable and budget-busting.
So what does this have to do with the current White House race? Bush and his minions have been doing their utmost to paint Kerry as a "Massachusetts liberal". But Kerry is unquestionably the real conservative in the race, just like Gore was four years ago. Part of the conservative ideal is honouring and preserving the great programs that exist -- programs created by FDR but expanded by Eisenhower, tolerated even by Reagan -- programs that make the US a livable, essentially First-World, non-caste society. Bush wants to destroy these New Deal programs, piece by piece, forfeiting our history and prooven system of social insurance in favour of a radical new agenda. A real conservative like Eisenhower would turn in his grave.
On Thursday night, Kerry responded to Bush's acceptance speech at a midnight rally in Ohio. In my opinion, Pessimist over at The Left Coaster has it about right: it was a simply terrible performance. Kerry wallowed at length in the "who served?" mud, coming off whiny, narcissistic and pseudo-aggressive, once again defending at length an issue -- his indisputable honour as a soldier -- that is humiliating and absurd for him to defend at all. He rambled, quoted talking-point slogans ("All hat, no cattle", "They're unfit to lead this country", "mislead the country into war"), offered fake-sounding anecdotes about children donating their piggy banks to his campaign, and made vague promises about "changing the direction", "creating more jobs", "closing loopholes", "making health care more affordable" and offering the electorate "the truth". What Kerry didn't do was lay out a specific rebuttal to the terrifying domestic program Bush has on offer, any kind of challenge that could make people, and the press, think again about what they'd heard earlier from Bush concerning that nice-sounding "ownership society". What he didn't do was defend the programs and the New Deal legacy that have made the US a livable, humane country for the past sixty years.
As Frank Rich explains today, Bush is up by (probably) four points, and Kerry's negatives have soared past 40%, because the Republicans have done their utmost and largely succeeded in transforming Kerry into a "girlie man", a fag, someone who's simply not man enough to be Commander in Chief. This is ugly, emotional, fundamentally illogical stuff, but it's the ugly, emotional stuff on which national elections are won and lost unless the Democrats can change the subject, focus Americans' attention on what lies beneath the President's swaggering "manhood" and his gauzy ideals of ownership. Repeating vague bromides about "creating jobs" and "one America, red white and blue" won't focus that attention. Kerry needs to engage the electorate's (and his press corps') minds, speak in Chait-specific language about what Bush's schemes mean: not conservative "reform" but something closer to anarchy, a system by which wealth is redistributed straight upward, and the majority of Americans receive no benefits while essentially everybody, of all income brackets, suffers indirectly from the long term adverse effects of a dismantled safety net, an insolvent government and the intellectual demolition of the concept of social responsibility.
Four years ago, Gore made the same mistakes Kerry is making now. As a conservative Democrat, he was never going to overly impress Robert Kuttner or the majority of people at DKos. But his mistake wasn't running too far right or too far left -- it was failing to make a substantive defence of government and the New Deal against what Bush was threatening to do to them or present himself clearly as their defender -- failing in a sense to treat the electorate like adults with the capacity to get beyond the fuzzy campaign images and slogans that were always going to play to Gore's detriment. Gore spoke fairly forcefully about universal health care and civil rights enforcement and big new investments in education, and his campaign rhetoric ("for the people", "fighting for working families") hinted broadly at the sort of campaign he needed to run. But it wasn't until the last week of the campaign, after Bush's famous gaffe about Gore "talking about Social Security like it's some kind of federal program" that he replaced some of the "working families", anti-HMO vagueries with a specific, engaging defence of the federal government as society's insurer and protector against the market and against misfortunes of birth. That's when his numbers started turning around and it's IMO the major reason the election wasn't decided decisively on union lullabies, Love Story and who invented the Internet.
Liberals and conservatives, neolibs and progressives can and will argue and fight about globalization issues, foreign policy, the WTO, welfare reform, the right to a guaranteed minimum income, instant runoff voting, the need for a third party, the efficacy of single-payer health care and even whether capitalism is the best model for a 21st Century post-industrial society. No Democratic candidate will ever satisfy us all. But all of us must agree that government is a fundamentally good thing, that no developed society can function without it, and that its role is to protect us to some extent from our worst economic tendencies and the dangers of an unregulated market. This is both a liberal and a conservative argument, and Bush -- who denies it -- is neither a liberal nor a conservative which should make him fundamentally vulnerable in an election. Anyone who believes in a working federal government simply cannot vote for Bush. This is a powerful concept, but it has to be explained. Cowed by the anti-tax, anti-government rhetoric of the New Conservative movement, Democrats have been failing to explain it. Kerry (a tough, smart, excellent candidate with a deep understanding of the issues of our day) is currently failing once again to explain it and is instead defending those Purple Hearts, simultaneously being labeled by the "liberal" media and various bored columnists as little more than "not-Bush" -- an absurd proposition for a man of Kerry's history and character but one that's threatening to consume his candidacy.
If Kerry doesn't start making this argument in defence of traditional government -- if the Democrats don't try to show the "ownership society" for what it really is, a grotesque anti-conservative, anti-government boondoggal -- then it will go a long way to prove that they have nothing to say about the single biggest issue of our time: that they cannot defend liberalism or conservatism, equality of outcome or equality of opportunity, social values or (economic) family values. We'll not only lose the election, but we'll lose the discourse in a very fundamental way and it will become that much harder for us to ever regain it. Kerry needs to get specific and make his stand.