[Homestead] A real ownership society, include poor with Kidsave

tvoivozhd tvoivozd at infionline.net
Thu Feb 10 19:13:35 EST 2005

tvoivozhd---you'd have to hump up the $1000 and $500 for five 
years---$100,000  seventy years down the road will probably be coffee 
money---and universal healthcare would be a necessity  so the first time 
the seventy-year-old got a cold his little savings account wasn't wiped 

Social Security---Kid Save accounts

 The New York Times
February 8, 2005
Mr. President, Let's Share the Wealth

President Bush said he was open to other people's ideas on

how to fix Social Security, so I hope he'll listen to


My idea starts with a blunt political observation.

Personal accounts - as they are currently envisioned - are

going to be hard to pass. Every important Democrat opposes

them. Jim McCrery, the Republican who is chairman of the

House Social Security subcommittee, says the president's

plan will have to fundamentally change if it is to have a


So my idea is this: If the president's current version of

personal accounts stalls, he should consider another

version - one that is more likely to win broad support,

and that achieves all the goals of an "ownership society."

The personal accounts I'm thinking of would be inspired by

a proposal called KidSave, which was floating around in

the late 1990's. KidSave was championed by Bob Kerrey when

he was a Democratic senator from Nebraska, but in its

different iterations it attracted support from a range of

Democrats (Lieberman, Moynihan and Breaux) and Republicans

(Gregg, Grassley and Santorum).

Under one version of KidSave, the government would open

tax-deferred savings accounts for each American child,

making a $1,000 deposit at birth, and $500 deposits in

each of the next five years. That money could be invested

in a limited number of mutual funds, but it couldn't be

withdrawn until retirement.

Over decades, it would grow and grow, thanks to the

wonders of compound interest, so that by the time workers

retired, they would each have a substantial nest egg, over

$100,000, waiting for them.

The KidSave idea was an early venture in what has become a

broad intellectual movement that goes by an infelicitous

name: asset-based welfare.

The idea behind asset-based welfare is that we are living

in the midst of a social revolution. It used to be that

only the rich owned financial assets like stocks. But over

the last 20 years, the number of American households with

money invested in the stock market has more than tripled.

But people in the bottom half of the income scale don't

get to join in to take advantage of compound interest.

They don't get a share of the growing national economy.

They don't get the psychological benefits of ownership.

All around the world, diverse writers are trying to spread

the benefits of asset ownership. The Peruvian economist

Hernando de Soto would like to help squatters get legal

ownership of the homes they've built. In Britain, Tony

Blair has created accounts like the ones proposed in

KidSave. In this country, there are proposals for

education and training accounts.

The idea is that just as the Homestead Act turned people

into pioneers, we would turn more people into capitalists

if we distributed capital more broadly. We would encourage

savings. We would increase social mobility, ameliorate the

wealth gap between rich and poor, and give people more

control over their own lives.

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


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.

They would be the first step in a broader ownership

agenda. They would pave the way for education accounts and

expanded medical savings accounts. They might pave the way

for other asset-based programs designed to give young

people a better start in life, not just secure their

retirement. They would cut across left-right polarities

and prove an irresistible political force.

Even in this age of political deadlock, I can't believe

that too many would be against a plan to give savings

accounts to poor kids.

tvoivozhd---Present proposals  made by the rich in the White House and 
Congress bring Joaquin de Setenti's jaundiced comment to mind,
"Be wary of the man who urges an action in which he himself incurs no risk.

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