NEW YORK (CNN/Money) -
When he accepts his party's nomination for a second term this week, President Bush likely will promise to give individuals greater control of their savings, retirement and health-care benefits, shrink the federal budget deficit and make recent tax cuts permanent.
Viewers can expect his stated goal to be to make the economy more productive, make the government more efficient and give people more control over their own destinies.
But critics say the plan will shift the tax burden from the upper to the middle and lower classes, while ensuring massive budget deficits for years to come.
President Bush, in his acceptance speech Thursday night, will likely repeat a theme he has touted in recent weeks on the campaign trail, calling for the establishment of an "ownership society," in which families are given incentives and rewards for owning homes and businesses and for controlling their own savings, health and retirement benefits.
"I believe strongly in ownership, because I know if you own something, you have a vital stake in the future of the United States of America," Bush said at a campaign rally in Taylor, Mich., this week.
The president has so far offered few details of his plan, and there may be some surprises Thursday night -- anything from a reform of the tax code to a call for some kind of national sales tax may be possible -- but here are the highlights of what he's proposed in the past:
As he did years ago, the president could again ask for a partial privatization of Social Security, giving workers the option to shift some of their payroll taxes into personal accounts they manage themselves.
Supporters say this could help solve some of the problems affecting Social Security, which some analysts warn could break down when Baby Boomers start retiring at the end of this decade.
|Year†||Deficits (surpluses in parentheses)†||Percentage of GDP†|
|1993†||$ 255 billion†||3.9†|
|†* 2004 numbers are projections|
|†Source:††Congressional Budget Office|
"We're in a society where an awful lot of the institutions we have were built for a different era, an era where we had 16 workers for every retiree," said Stephen Friedman, director of the president's National Economic Council.
But critics warn that reductions in payroll tax revenue will drain money from Social Security, which will still pay benefits to those who choose traditional retirement. Critics also say that, by letting individuals gamble with their retirement money, the government will raise the number of financial failures it'll have to clean up anyway. Friedman dismissed this concern.
"I can't conceive of an investor with a long time frame who can't sort out a way to invest this money in a very prudent and responsible way [if they don't have] excessive ideas about a realistic rate of return," Friedman said.
In keeping with the "ownership" theme, Bush likely will also call for tax-free Lifetime Savings Accounts and Retirement Savings Accounts, offering further incentive for private saving and investment, which supporters say will spur greater productivity and economic growth in the future.
"What we want to focus on long-term is how to make America the most productive economy in the world," Friedman said. "That's what lifts income, enables workers to be paid more and makes foreign investors want to invest here."
Critics say these plans will shift the tax burden to those who live from paycheck to paycheck, who can't afford to save. Such plans will also drain tax revenue, with upper-income families able to sock away several thousands of dollars in income, tax-free, every year. Without significant spending cuts to match them, critics say, government debt will rise, which will undercut national saving.
"We need to figure out how to help more lower- and middle-income people save for retirement," said Robert Greenstein, founder and executive director of the Center on Budget and Policy Priorities, a think tank that's frequently criticized Bush's policies, "not lose large amounts of money by giving people breaks at high-income levels, who already have substantial assets to fall back on."
Bush would also raise deductions for Health Savings Accounts, give people a tax credit to buy their own insurance policies and create health-insurance pools for businesses. Such plans would cost far less than the $650 billion or so that Sen. John Kerry, (D-Mass.), Bush's rival in November, wants to spend on health care.
Critics say they won't go far enough to fix the serious problem of rising health care costs, and they say the plan will eventually force people out of the safety net of traditional, employer-provided insurance and into the individual insurance market, where some shoppers will have hard going.
"If you're young and healthy, this can work well," Greenstein said. "If you're not young and healthy, it can be a disaster, and you can end up much worse off than you currently are."
Tax cuts, deficits
The president will also likely call for making the tax cuts he pushed through Congress in 2001, 2002 and 2003 permanent. He asserts that they have encouraged investment and hiring and that reverting to old tax levels will, in effect, be a tax hike.
Critics charge that they will substantially expand the federal budget deficit after 2010, almost precisely at the moment when Baby Boomers will start retiring en masse, drawing federal benefits and putting a strain on the budget.
Bush has pledged to cut the deficit in half by 2009, and NEC director Friedman suggested that goal was attainable, with tax-cut-fueled economic growth and spending controls.
But most analysts doubt Bush will be able to pull it off, given the other proposals he's making. Similarly, most analysts also doubt Kerry could cut the deficit in half, as he has also pledged, given the costs of his proposals.
The big ownership-society proposals, including RSAs and private Social Security accounts, have been raised before and have met with stiff political resistance.
Bush could find more support for some of his smaller-scale proposals, including tax incentives to encourage people to own homes and open small businesses.
He also has pushed for the creation of "re-employment" accounts, which would provide money for worker re-training so they can find new jobs as the economy evolves. Critics say more needs to be done to spur job creation in the here and now and to stop jobs from moving overseas.
Bush will also likely call for litigation reform and an energy policy to reduce America's dependence on foreign oil sources -- issues that will also be politically charged.