The day after the Census Bureau released its annual report recently, the headline in USA Today proclaimed, "Poverty rose by million." These numbers are overstated and misleading. For one, we should not measure poverty by income but by standard of living. Roughly 50 percent of people living in "poverty" own a home. Two-thirds have air conditioning, 97 percent own a television - 50 percent of those own two - and 26 percent are obese. We don't have a poverty problem in the traditional sense of the word; poverty in this country generally does not mean people are going without food, clothing or shelter. More importantly our poverty numbers, because they are based on income, omit many kinds of cash and noncash income such as Medicaid, food stamps and public housing.
That said, we can do better, and indeed we must. In the past we made the mistake of treating poverty as if it were a chronic disease from which we could alleviate the pain but for which there was no cure. We created welfare and entitlement programs to ease the pain of poverty. Social Security was originally designed to save older Americans from poverty, and for years it did just that. But today, 80 percent of workers are paying more in payroll taxes than in income taxes. The program that was designed to keep seniors out of poverty is preventing too many workers from escaping it.
We reformed our welfare laws by enacting welfare-to-work to restore incentives to work, but that was not enough. Now we must take the next step and make it possible for all workers to save for their homes, their education and their retirement.
The real problem of poverty in this country is a poverty of ideas and imagination among public officials such as Federal Reserve Chairman Alan Greenspan, who said recently that we must cut Social Security benefits because the government can't "afford" to pay what it promises retirees.
Of course it can't; neither could the Soviet Union for all those years nor can communist Cuba today keep the promises it makes. The key to modernizing Social Security is not to cut benefits to save the socialistic tax-and-transfer program that demands each successive generation of workers pay for the retirement of preceding generations but rather to transform Social Security into a true worker-based investment program that allows each worker to save for his own retirement.
The pain of paying for the transition to personal retirement accounts should fall on obese government, not individual Americans. The Congressional Budget Office projects that under current trends, the size of government will increase by two-thirds between now and midcentury.
nly a small fraction of the increased spending (about 5 1/2 percent) would be required to pay for the transition to personal retirement accounts without cutting benefits or raising taxes. Empower more workers; pay fewer bureaucrats!
The key to creating an investor nation and making every worker an owner by creating a fully funded personal retirement system will be modest government spending, growth restraint and continued long-term economic growth, which is where tax reform enters the picture. By offering voters a realistic vision of these reforms, the Republican Party will take a giant leap toward becoming the All-American Party capable of competing for every vote in every district in America. Sen. John Kerry has demonstrated he intends to keep the Democratic Party as a cradle-to-grave security blanket.
President Bush intends to position the Party of Lincoln as a party of poverty-to-prosperity opportunities.