Thursday, May 12, 2005

Ownership society

I just finished reading "The Enduring Revolution: How the Contract with America Continues to Shape the Nation" by Fox News reporter, Major Garrett. In it he makes a powerful case for how the Republican Congressional members' Contract With America--despite its apparent failure when 4 years later Newt Gingrich resigned as Speaker of the House--drastically altered the US political landscape, and in ways that have persisted to the present day. By way of illustrating this, he starts the book by describing John Kerry's appearance in Davenport, Iowa in January of 2004 to kick off his campaign for the Democratic nomination for President by outlining his plan to protect tax cuts for the middle class, one of the touchstones of the Contract With America.

The book offers a fascinating backstage look at Congressional politics and maneuvering, and a compelling catalogue of the transformation in government and society wrought by the "Contract", perhaps the most notable being Welfare reform.

Toward the end of the book he deals with an event that some have seen as the final corruption of the "Republican Revolution": the 2003 passage of the Medicare prescription drug bill. This bill was seen by many conservatives, then and now, as a betrayal of the principles of conservatism, an unnecessary entitlement that swelled an already grossly bloated Medicare budget. The machinations that went into getting this bill passed make for interesting reading, but my point in bringing it up here has to do with a discussion I had about it at the recent meeting of our Townhall.com group.

In the meeting I repeated something told to me by Jeff Grossman, former chairman of the Washington county Republican party of Oregon; namely that the prescription drug bill needed to be explained to the rank and file of the Republican party, many of whom were angry about it. He explained to me that within this entitlement were planted the seeds of the destruction of Medicare. The secret to this is the inclusion of Health Savings Accounts (HSAs). Garrett, in "The Enduring Revolution", explains that the HSAs were not part of the original Senate bill, and that when they were included, Democrats fought it, and finally pulled support for the bill when they couldn't get them removed. As Jeff Grossman explained to me, when people find over time that their best option, the one that gets them the most return for their money, is to start their own Health Savings Account, rather than the myriad of entitlement card plans that are the alternative, they will go with the HSAs in ever greater numbers, and eventually the entitlements will wither from lack of participation.

This theory was challenged in the discussion at the meetup with the assertion that there was "no evidence" that it would work, but in "The Enduring Revolution", Grover Norquist, interviewed concerning the Medicare bill, makes a convincing argument that the HSAs will have the same effect as 401Ks and mutual fund IRAs have had on American society. Those tax shielded investment devices, over the space of a couple of decades since their inception in the late 1970s, have welcomed tens of millions of middle and lower-middle class Americans into inclusion of what had once been disparagingly called the "investment class".

Perhaps the most persuasive argument for the potential success of this strategy, however, is the way Ted Kennedy fought the Medicare bill over the single issue of the HSAs. And this is also most likely why the Democratic party is so intractably opposed to President Bush's plan to partially privatize Social Security: they recognize that within this design is the likelihood of the eventual death of Social Security. This is a specter  of unspeakable horor to the Dems; it threatens not only their political control over the American populace, but repudiates their vision of a human utopia achieved through government and impugns the high point of their historical influence--the "New Deal". 

The dream of the "Ownership Society" proposed by the Republican Party, embodied in mechanisms such as HSAs, 401Ks, mutual fund IRAs, and privatization of Social Security is removing citizens from the patronage of government oblige and restoring to their own hands the determination of their health care and retirement.  It's why these issues are so hard fought, for it goes to the philosophical heart  of the two parties, the core beliefs that define each group.  Can human reality be redefined through the largesse of government, and the rigid control of the economy; or should government be limited and act only as a facilitator for us to determine our own destiny? I vote for the latter.

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