- The Washington Times - Wednesday, February 4, 2004

Congressional treatment of presidential budgets is a parable of public policy in Washington. Many programmatic seeds are sown, but few grow to full bloom.

That’s because, after it leaves the White House and travels down Pennsylvania Avenue, legislators put their shoulder to the plow, determining which programs flourish or wither on the vine. Some items take root, receive political watering and blossom into big-ticket legislative initiatives. Others perish due to the heat of competing alternatives, the lack of needed irrigation or inattention by congressional gardeners. And a few, while not enacted immediately, serve as vehicles to talk about important issues with new and powerful language.

Presidential initiatives bloom best when planted where congressional interest, sound policy and powerful political rhetoric intersect and create fertile soil. Such is the case with President Bush’s savings initiatives announced in the budget this week. Establishing new incentives for savings and investment will strengthen the American economy, reinforce Social Security reform efforts and plant rhetorical seeds for a new “ownership society”— reshaping how Americans think about the role of individual responsibility in the operation of government programs.

Mr. Bush’s initiatives, however, have also landed in some nurturing soil because they fit well into a long line of bipartisan savings and investment ideas spearheaded by Ohio Republican Rep. Rob Portman and Maryland Democratic Rep. Benjamin Cardin. No one expects Congress to adopt the president’s new savings initiatives exactly as proposed by the White House. Congress never does. Yet there are some reasons for hope that lawmakers can enact some needed policy in this area. If Congress gets sidetracked, however, due to the exigencies of election year politics, lawmakers should still use the budget initiative as a communication vehicle to reshape the way Americans think about the role of the government in retirement programs.

Experts have been sounding an alarm bell for some time, saying that Americans need to save more to augment Social Security. Social Security’s “pay-as-you-go” system becomes unsustainable as the Baby Boomers start retiring in greater numbers and the worker-recipient ratio shifts. Future retirees either have to save more now or lower their standard of living later.

That’s why the president’s initiatives on savings proposed in the budget deserve careful consideration by Congress. A key element of the White House proposal lifts all age and income limits on IRA contributions, raising the amount individuals can contribute up to $5,000 annually (indexed for inflation for future years).

Tilling the fields of pension and investment legislation is always backbreaking work, but during this election year, the landscape is particularly rocky. For example, despite the value of saving incentives, some Democrats will charge that lifting the income limits is a “giveaway” to the rich. This “flavor of the month” class warfare argument is predictable and should be addressed head on.

Here is one approach currently being discussed among some Republican lawmakers. Instead of relying solely on the government for transfer payments in their older years, lawmakers want to change American thinking about retirement. They want seniors to view themselves as “owners” not “recipients.” As ownership increases, the attitude of dependency decreases. Owning a “piece of the rock” creates an important psychological shift. Individuals recognize it is their money growing in a retirement nest egg, as opposed to a government transfer payment bestowed upon them in old age.

Last year, the Portman-Cardin retirement initiatives — one of the few measures on which the tax-writing committee found bipartisan consensus — got sidetracked in the now-infamous House Ways and Means Committee mark-up session, when Democrats staged a walkout/sit-in in the committee’s library, and the Capitol Hill police were called in to quell a disturbance. Issues deeper and bigger than the legislation under consideration caused the fighting. Yet, a long winter recess and some cooler heads, the president’s new retirement savings budget initiatives, as well as the long congressional history of interest and past success in this area, provide avenues for progress in this new year.

Retirement savings initiatives won’t make front-page news in the $2.39 trillion federal budget. Still, these ideas are sown in some fertile ground that could bloom into healthy bipartisan initiatives that democratize wealth creation in America. If politics prevail, however, and the legislation stalls, the president and his allies on Capitol Hill should aggressively sell this new way of thinking about retirement to the public. By beating political swords into ownership plowshares, lawmakers can begin changing public attitudes about retirement. Transforming an attitude of dependency into active participation and ownership creates a rich harvest indeed.

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