How alternatives to the welfare state evolve.(Politico)

On December 8, 2003, the White House and Tom DeLay twisted arms to pass an expansion of Medicare that is now estimated to cost $534 billion over the next decade. Then in his State of the Union Speech on January 20, President Bush called for reforming Social Security by giving younger Americans the option of investing part of their Social Security taxes in personal savings accounts. And on January 22, Congress finally passed a spending bill that included 1,700 tuition vouchers for low-income students in Washington D.C.

Here were three very different approaches to the three largest government entitlements: retirement income, health care, and education.

Conservatives were elated that the President called for putting America on the path toward Social Security investment accounts. That could turn the greatest experiment in statism in American history (Social Security eats up 20 percent of the federal budget) into an engine that dramatically expands the nation's investor class to include 100 percent of our citizens. Conservatives were distraught that the administration and Congress chose to dramatically expand Medicare spending, nationalizing a large portion of the provision of prescription drugs. And conservatives were delighted that amidst a large increase in government education spending, a small experiment in school choice for parents was enacted.

Let's look at the political life cycle of these three sharply diverging outcomes:

* Social Security. In 1978, Peter Ferrara wrote Social Security: The Inherent Contradiction, explaining that the pay-as-you-go Ponzi scheme was going broke and would provide a much worse return on investment than the stock market. This inaugurated a public education campaign that over a generation would convince younger Americans that Social Security was not likely to be there for them in any meaningful form. Also in 1978, Congress created Individual Retirement Accounts and expanded 401 (k)s, sketching the outline of Social Security alternatives. As a result, the number of investors has increased from 20 percent in 1983 to 52 percent in 2001; the amount of assets with IRAs of 401(k)s, has quadrupled just since 1990, from $637 billion to $2.3 trillion. Nearly every American now either has a portable pension or knows someone who does.