Queens Chronicle, September 15, 2005

The Scary Truth About Bush's "Ownership Society"

 
President George Bush has been accused of single-mindedly focusing on the war in Iraq while allowing domestic issues, like Social Security, to collect dust. Unfortunately for most of us, this is frighteningly false. Bush is, and has been, pursuing a striking agenda of wealth inequality that threatens to turn the United States into a state akin to economic feudalism.

When Bush talked of an "ownership society" at the convention, it sounded like a big beautiful New Deal era vision: We will be a country where every family owns its home, has a hefty retirement account, and on the next line of their bank statement, a portable health care account.

It is a big vision. The problem is that it's only beautiful for those on the upper reaches of the tax scale. In fact, the biggest part of the plan rests on cutting taxes on savings, and shifting the economic burden of paying for government to consumption and wages. The real beauty of this plan, for Bush and allies like flat-tax proponent Grover Norquist, is that most Americans' eyes glaze over at this point. Bush won't talk about it in too much detail because if most Americans were to really understand what the "ownership society" has in store for the country, they'd be horrified.

The cornerstone of the "ownership society" plan is cutting taxes on savings. That sounds like a nice idea--encourage people to save money for retirement or a house instead of blowing it at the racetrack every Saturday. The problem is, Americans aren't blowing their paychecks on the horses. They are paying longer mortgages, ballooning healthcare fees and higher energy costs, that infect everything from gas to cereal. And they are paying unprecedented amounts in credit card bills. Credit cards, incidentally, that Bush has to hope people keep using so his measly job creation numbers can continue their slow crawl.

The tax cuts will allow the most wealthy Americans to shelter an appalling portion of their income from the IRS. The wealthiest 1 percent don't take home astronomically large paychecks every two weeks. Instead, their wealth creates wealth. They earn income from capital gains, dividends and interest. Because a millionaire's income comes from a bank account instead of a paycheck, it will be largely, or perhaps entirely un-taxed. In short, the "ownership society" will help the people who already own everything, own more.

Ordinary Americans are spending instead of saving, not because they prefer not to pay taxes on dividends. Most Americans have never received a dividend in their life, and most never will. They are spending because they have to. And fewer people can save because wages have barely kept up with the cost of living. In short, employers like Wal-Mart don't pay well, and rarely have a health insurance benefit.

Bush wants to increase the amount that can be contributed tax-free to a retirement account. But very few people have enough money to put in the current tax-free amount of $6,000 per couple. Tax-free IRAs are maxed out only by the very wealthy, who have a lot of money to keep away from the IRS. After increasing this tax break, he wants to create an additional tax-free way to invest, just in case an extra $10,000 found its way in the pesky "taxable income" column.

But someone has to pay for roads and schools, at home as well as in Iraq. That money will have to come from wage taxes, which are paid for mostly by ordinary Americans, from the upper-middle class to the very poor. This year's budget deficit alone is at $241 billion or nearly $300 billion, depending on who you ask. If it's left to the current administration, either the economy will collapse under the ever-expanding weight of this debt, or we will become a country of corporation-owning lords whose ever-expanding wealth will be supported by a legion of cubicle workers and cash-register operators.