Ownership Society versus New Deal

Bush's push to reform Social Security and other programs frames a deeper clash between individualism and safety net.

President Bush's domestic agenda, particularly his proposal to reshape Social Security with private accounts, might mark the most profound change in the relationship between Americans and the federal government since the New Deal helped pull the United States out of economic depression some 70 years ago.

Where the New Deal offered government aid to bring the nation out of an unemployment morass, Mr. Bush's "ownership society" offers increased individual choice and responsibility as an answer to the financial needs of the modern age.

But with increased freedom may come increased risk - and that's perhaps the nub of the debate over Bush's programs. What's the proper role of Washington in ensuring the security of US citizens? How much should Americans simply depend on themselves?

Opponents say Bush wants to unravel a safety net that's worked well for more than half a century. Proponents say he is simply promoting the national credo of individualism.

"People would really have choice, and the benefit to direct their own lives," says Karl Zinsmeister, an American Enterprise Institute fellow and expert on social issues.

"Ownership society" is a unifying theme that the Bush administration uses to cover a variety of domestic proposals. The establishment of private accounts within Social Security is clearly the highest-priority item involved, but far from the only one: The established health savings accounts, plus home ownership incentives and even tax reform, would all be "ownership society" components, according to Bush officials.

Yet it's possible to exaggerate the extent to which the administration's proposed legislative changes would actually go toward remaking American society. Individuals would probably be limited in their choice of investment vehicles for any private Social Security accounts, for instance. Traditional Social Security would still exist, and still offer a guaranteed benefit - albeit a smaller one than beneficiaries might otherwise expect.

"No one is proposing that there not be some kind of safety net," says Mr. Zinsmeister, who is also editor of the AEI magazine The American Enterprise.

But breaking the current system, in which Social Security beneficiaries all reap the same reward for the same investment, would constitute a profound change in the nature of the system, say some experts.

"Since 1935 there has been an understanding that in return for a deduction from one's wages, there would be compensation in the form of old-age insurance. This would undermine that contract significantly," says William Leuchtenburg, professor emeritus of history at the University of North Carolina and one of the most prominent chroniclers of the New Deal era.

The paradox is that the New Deal in general, and Social Security in particular, were originally designed with Americans' famous attraction to personal liberty in mind.

President Franklin D. Roosevelt promoted Social Security as a government program consciously modeled after private insurance, says David Kennedy, a professor of history at Stanford University and author of "Freedom From Fear: The American People in Depression and War."

The Great Depression had swept away the financial security of many Americans. The elderly in particular saw that all their savings and work meant little in the face of widespread unemployment and bank failures.

Yet even so the architects of Social Security were highly sensitive to any implication that the new program smacked of socialism. Frances Perkins, then secretary of Labor, reacted indignantly to congressional implication that the Roosevelt administration was imitating, however so slightly, European socialistic programs.

"This is in our national DNA: We're wary of government, wary of the intrusive state," says Dr. Kennedy of Stanford.

When President Truman tried to expand Social Security by adding health insurance, Republican opposition doomed the plan. But by the time of the Eisenhower administration, old-age pensions and unemployment insurance had become politically untouchable, says Dr. Leuchtenburg of the University of North Carolina. No Republican would have thought of undercutting it - with the exception of Sen. Barry Goldwater of Arizona, who in his 1964 presidential bid inexplicably chose St. Petersburg, Fla., as the site to announce his intention to do away with US old age insurance.

During the Great Society era of the Johnson presidency, the addition of Medicare greatly expanded the US safety net for the elderly. Ironically, the biggest expansion of Social Security arguably came during the Nixon years, when congressional Democrats pushed through legislation providing for automatic increases in Social Security benefits.

This traditional system is still the best way to protect the nation against the possibility of poverty in old age, say proponents. Social Security itself remains one of the most popular and successful programs in the nation's history.

Furthermore, measured against European social-welfare programs, US equivalents are both modest and in decent financial shape, say some.

"The New Deal was actually relatively modest," says Kennedy of Stanford.

But supporters of Bush's programs argue that this basic structure was set up at a time when telephones were the coming thing, the Ford Model A was the car of the moment, and Yankee-great-to-come Joe DiMaggio had just reached the major leagues. "Desperately clinging to the social and political philosophy of the 1930s is a losing proposition in a nation that has changed as profoundly as ours has in the three generations since," writes James Glassman, a resident fellow at the American Enterprise Institute.

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