Will Obama Go After Social Security? My Editor and I Have a Bet

By Joshua Holland, AlterNet. Posted February 26, 2009.

Since then, the idea of spreading ownership around has been reiterated many times. It's become a signature idea in center-left policy circles. Ray Boshara, director of the Asset Building Program at the New America Foundation, argued for a bold approach to America's spiraling inequality that he dubbed the "$6,000 solution." He'd give every baby born in America $6,000 in an "American Stakeholder Account," which he explained like this:

Every one of the 4 million babies born in America each year would receive an endowment of $6,000 ... If invested in a relatively safe portfolio that yielded a 7 percent annual return, this sum would grow to more than $20,000 by the time the child graduated from high school, and to $45,000 by the time he or she reached 30 (assuming that the account had not yet been used). Funds in the American Stakeholder Account would be restricted to such asset-building uses as paying for the cost of higher education or vocational training, buying a first home, starting a small business, making investments, and, eventually, creating a nest egg for retirement. Withdrawals would of course decrease the account; work and saving would build it back up. Family members and others could also add money to the account.

The accounts could be made highly progressive by matching lower-income families' savings, either with direct contributions from the government, or through refundable tax credits. As Gene Sperling, former director of Bill Clinton's National Economic Council (and an advisor to the Obama campaign), advocated using "government funds to match contributions made by middle-income and lower-income workers," spreading "individual savings and wealth creation to tens of millions of American families currently falling through the cracks by offering all Americans the generous incentives and automatic savings opportunities that the best employer-provided 401(k)s offer their employees."

He suggested that the government kick in $2 for every buck poor families sock away, and a dollar-for-dollar match for middle-income families.

It's unlikely that Obama would propose anything as bold as Boshara's $6,000 Solution. But Bill Clinton twice called for the creation of "USA Accounts" on a smaller scale and, during the 2008 campaign, candidate Sen. Hillary Rodham Clinton called for new (optional) private accounts in which low-income families would be encouraged to save through refundable tax credits that would match the first $1,000 families manage to tuck away.

To varying degrees, these proposals address the kernel of truth behind Bush's rhetoric about creating an "ownership society" -- asset ownership is a darn good thing. But its concentration is at a crisis point in this country. And while progressives get into a lather -- rightly so -- about income inequality, it pales in comparison to wealth inequality; it's why "upward mobility" has largely become a myth in America -- a fond remembrance of another age.

The ugly truth is that your parents' wealth is the single greatest predictor of your lifetime success -- forget about pulling yourself up by the bootstraps. Dalton Conley, director of New York University's Center for Advanced Social Science Research and author of Being Black, Living in the Red, told me: "When you look at how similar parents and children are on a variety of economic or social measures like education level, or what job they hold, the similarity in terms of wealth is greater. Wealth very manifestly displays the anti-meritocracy in America -- the reproduction of social class without the inheritance of any innate ability."

But while progressives have been talking about this for some time, it took the conservative message machine to frame the issue of asset inequality in an accessible way. They threw in a few financial "crises" looming, supposedly, just over the horizon and then crafted "solutions" according to their ideology -- by trying to privatize great swaths of the public sector. They branded it with that catchy phrase -- an "ownership society."

It's possible that my editor will win his bet in the end. But I think it's more likely that Obama has in mind exactly the kind of center-left, technocratic solution that a modest universal savings account plan would represent.

We'll see.

See more stories tagged with: obama, social security, universal savings account

Joshua Holland is an editor and senior writer at AlterNet.

Liked this story? Get top stories in your inbox each week from AlterNet! Sign up now »