Tornado Alley (PROG)

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Risking the nest egg

September 6, 2004

WHEN PRESIDENT Bush speaks of an ownership society, people who own little beyond a house, a car, and the usual possessions of everyday life need to beware. The concept, if turned into major health care and retirement policies, would benefit the wealthy at the expense of those with fewer resources.

In his acceptance speech last week, Bush touted the benefits of health savings accounts, under which workers would buy insurance to cover catastrophic illnesses and set aside money, tax-free, to handle routine medical expenses. People with families or chronic medical problems should be especially wary of this concept. They could easily use up the money in the accounts to pay for frequent visits to the doctor. Those on limited incomes are better off with comprehensive health insurance, which covers a full range of treatments as frequently as needed.

"We must strengthen Social Security by allowing younger workers to save some of their taxes in a personal account -- a nest egg you can call your own and the government can never take away," Bush said in his speech.

The government has kept its promise to pay Social Security benefits to the elderly for 64 years. Bush's plan would threaten that commitment. He would drain resources from the system just when it is coming under stress from the retirement of the baby boomers. And there is no guarantee that individual accounts would earn enough of a return to compensate for the decline in the guaranteed Social Security benefit that is the inevitable consequence of any privatization plan.

Those Americans who already have the resources to make private retirement investments would have the experience and access to financial expertise to make the most of their Social Security accounts. Those with fewer resources could find their accounts hobbled by excessive fees, incompetent advice, and poor returns.

Two days before Bush spoke, Governor Arnold Schwarzenegger of California said in an address to the Republican convention: "If you believe that your family knows how to spend your money better than the government does, then you are a Republican."

Schwarzenegger has amassed a net worth of more than $200 million from his movie roles and shrewd investments. He would probably make money from individual and health savings accounts even though, with his great wealth, he does not have to worry about retirement or medical expenses. For those whom life has cast in supporting roles, Social Security and comprehensive health insurance can make the difference between a secure existence and poverty.

"Today, workers change jobs, even careers many times during their lives," Bush said last week. For most Americans, the ownership envisioned by Bush would heighten the uncertainties of a turbulent economy.

© Copyright 2004 The New York Times Company

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