The Orbis

Now that President Bush has been reelected, he and his allies in Congress will undoubtedly redouble their efforts to build what he has called, “an ownership society,” in which the government promotes individual saving and asset accumulation.

Of course, “ownership society” is just Bush’s code phrase for plutocracy.

If his first term is any indicator of what his second term will be like, then Bush will pursue further tax cuts weighted toward the wealthy, thereby exacerbating the already gaping wealth gap in America.

Encouraging saving and investment has always been wise long-term policy, but giving tax breaks to the small minority of individuals who own the majority of this country’s wealth only benefits that same minority. Such policies only affect existing wealth and do nothing for the large number of people who must spend their entire paychecks to pay for necessities.

There is a way that the government can create new wealth for all Americans. A few politicians, such as Rep. Harold Ford, D – Tenn., have proposed the creation of American Stakeholder Accounts. Under the system, the government would simply give an amount of money (say, $6000) to every baby born in America in the form of a deposit into an individual account. The funds would be reserved for future asset building or investment activities such as making a down payment on a house, paying college tuition, or starting a small business. The account sums, which would grow exponentially through compound interest, could be open for additional deposits.

The reason why many lower income American families cannot rise into the middle class is that they have difficulty saving the money needed, for example, to buy a house or to invest in their children’s futures by paying for their college educations. American Stakeholder Accounts would give all Americans a head start in building for a successful future by giving them a foundation on which they can build economic security.

Similar programs aimed at asset building such as the Homestead Act and the GI Bill, as Ray Boshara of the non-partisan New America Foundation points out in his essay “The $6000 Solution”, have been some of the mostly wildly successful programs in American history. The GI Bill, for example, “has generated returns to our country of up to $12.50 for every dollar invested.”

The American Stakeholder Accounts would not represent a massive attempt to rob from the rich to give to the poor, and not just because every newborn American benefits regardless of social class. The program would cost only $24 billion each year if $6000 were given to each of the four million babies born in America each year. To put that figure in perspective, $24 billion represents less than two percent of the estimated $1.6 trillion cost of Bush’s first tax cut.

In theory, American Stakeholder Accounts could garner bipartisan support. Democrats would embrace the idea of giving underprivileged children the same advantages that children born into wealthy families have. And Republicans could rally around the goal of promoting wealth creation and match their “ownership society” rhetoric with meaningful action. American Stakeholder Accounts could give every newborn a greater chance to prosper in life by generating extensive returns on a relatively small investment.

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