Ownership vs. EntitlementCommentary by Pete du Pont
October 12, 2000
Every week it seems pundits try to put a different stamp on this year's presidential election. One could almost compare their explanatory contortions to John Lovits' old Saturday Night Live character. "This election is about Clinton fatigue. No wait a minute, it's about campaign finance reform. Check that, I think it's about Social Security reform. Gas prices ... No, prescription drugs ... definitely prescription drugs."
Yet as Election Day approaches, the debates have finally given the philosophic outline of what Campaign 2000 is all about. Put simply, this is a contest between ownership and entitlement. From taxes to education, Social Security to prescription drugs, each candidate's position can be boiled down to a belief in ownership or entitlement.
Here's what I mean, beginning with taxes. Vice President Gore spent an inordinate amount of his time in the first debate, decrying the Governor's tax cut plan as a giveaway to the richest 1 percent. While we can argue about the class warfare rhetoric, the key word is "giveaway."
"Giveaway" (or give) suggests that by cutting taxes government would be "spending" money. It's not. In fact, the opposite is true. It simply means the government in the future will "take" less of what an individual has earned. Gore seems to believe that workers are "entitled" only to the portion of their paycheck that the government deems to be fair. Bush believes that the surplus "is not the government's money, its the people's money." In other words, those who earn it, own it.
What about education? First, it is important to note that the federal government allocates only a small portion of the overall spending on schools, and the amount each school gets is based on attendance.
Bush proposes to mandate that any school receiving federal funds be required to test every year. Each school will be judged either a success or a failure based on the test scores. If the school fails to teach its children in three successive years, each parent would gain control over the federal funds allotted for their child, and could spend it on the school of their choice.
Gore primarily wants to spend more money to reduce class sizes. He argues that Bush's proposal would take money the public schools are entitled to. Simply, Gore believes the money belongs to the public schools.
What about the retirement program - Social Security? Social Security is a pay-as-you-go system, meaning today's payroll taxes go to pay benefits for today's retirees. Currently, the government takes in more money than it needs to pay promised benefits. That won't always be the case, as people are living longer and having fewer children. This demographic dilemma means that if fundamental changes are not made, payroll tax rates will have to skyrocket, benefits will have to be slashed, or both.
Bush's answer is to allow younger workers the option of controlling a small portion of their payroll tax dollars (essentially the extra payroll tax money being collected) that they could then put into a personal retirement account invested in the private capital market. These accounts would become the property of the individual and could be passed on to their spouses and children.
Gore sees that approach as taking money away from the government, which decides who is entitled to it. He would keep things as they are, and instead take the extra payroll tax money out of Social Security to buy back publicly held debt. By doing this, Gore argues, the government will be able to pay benefits for another couple of years.
Once again, Bush wants workers to be able to claim ownership and control over their own retirement, while Gore wants seniors to continue to be entitled to the generosity of future workers in whatever proportion the government decides is best.
Finally, prescription drugs: Gore would add coverage for prescription drugs to Medicare, giving seniors a choice at retirement to take it, or leave it. By many estimates, the added coverage could explode Medicare's costs, forcing the government to limit access to newer drugs and establish price controls, an outcome which would be disastrous for seniors' health.
Bush, on the other hand, would give seniors the ability to choose between a variety of competing private plans. In this way, seniors could have the option of owning personal insurance in the same way most non-seniors do.
The details of each candidate's plans will invariably change if either is elected. That's a fact of life. Therefore, it's not the fine print that matters as much as it is the overall vision. The question has been posed; do we favor entitlement or ownership?
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