SCHIP is described as serving “poor children” or children of “the working poor.” Everyone agrees that it is for “low-income” people. Under the bill that Democrats hope to pass over the president’s veto tomorrow, states could extend eligibility to households earning $61,950. But America’s median household income is $48,201. How can people above the median income be eligible for a program serving lower-income people?
Incidentally, though there are some very significant differences, Will also notes that Hillary Clinton’s 401(k) proposal does contain some crucial concessions to the Right’s longstanding arguments for Social Security reform:
Clinton’s idea for helping Americans save for retirement is this: Any family that earns less than $60,000 and puts $1,000 into a new 401(k)-type plan would receive a matching $1,000 tax cut. For those earning between $60,000 and $100,000 the government would match half of the first $1,000. She proposes to pay for this by taxing people who will be stoical about this — dead people — by freezing the estate tax exemption at its 2009 level.
A conservative case can be made for something like Clinton’s proposal. It is a case for reducing the supply of government by reducing demand for it, and doing so by giving people ownership of enlarged private assets as a basis for their security. It is a case for raising the nation’s deplorable saving rate and simultaneously encouraging the nation’s economic literacy and temperance by giving more people a stake in equities markets.
George W. Bush made this case in his advocacy of personal accounts financed by a portion of individuals’ Social Security taxes and invested in funds based on equities and bonds. When he proposed this, Clinton stridently opposed him, and not just because she thought it would undermine Social Security’s solvency and political support. She also said it was a dangerous gamble that would make retirement insecure by linking retirement savings to the stock market. Echoing a trope from Al Gore’s 2000 presidential campaign, she said investing retirement funds in the stock market was a “risky scheme.”
Today her Web site calls her proposal a way to save for “a secure retirement.” After an undisclosed epiphany, she belatedly recognizes that 401(k) funds invested in equities are a foundation for security.
Of course, Clinton – as usual – is proposing this in addition to Social Security (while she has been suggesting that Social Security taxes be raised, as well as estate taxes and all the various other things she proposes to pay for with new taxes), and like many Clinton plans it involves careful slicing and dicing of the economy via “targeted” tax cuts. Still, the movement is in the right direction.
The great strategic error that Bush made in 2005 on the Social Security battle was in many ways a reprise of the WMD fiasco in the run-up to the Iraq War: he banked on the wrong arguments and gave short shrift to the better ones. Bush tried to argue that personal, semi-private* accounts were necessary to fix Social Security’s projected shortfalls. The problem is, we are already in a hole on Social Security benefits that are owed without the ability to pay for them under current tax/benefit policies, and the personal-accounts system would do nothing to make the hole smaller; all it would do is stop digging new holes for the future. That’s a great virtue of the proposal – it would make the system perpetually self-financing, rather than financed on a Ponzi scheme footing of using current receipts to pay current benefits without any necessary connection between the two – but Bush oversold the extent to which it could pay for the massive unfunded debts we already have.
*Semi-private in that the accounts are subject to private control and ultimate ownership; they would still be part of a mandatory government program.