It Is Time to Privatize Unemployment Insurance

I believe that President Bush's attempt to privatize Social Security (picture)would have created a nation of investors, would have left people far better off at retirement than the current system, and would have led to enormous growth for the economy as a whole. But the media and liberals argued that the policy was simply "too radical" and succeeded to undermine the support necessary to make it become law.

Bush should have started with something far easier to implement -- the privatization of Unemployment Insurance. This would be easier for several reasons:

* The number of people who will ever need unemployment insurance is considerably less than those who will need Social Security. Therefore it is "safer" to implement in this arena, than in something like Social Security. In other words, it would be perceived as a "minor experiment," rather than a radical shift in policy.

* This policy could have substantial flexibility in plan design, allowing individuals to store up money for the purpose of creating a business at the event of unemployment. This is something many would find attractive and would easily build support.

* Because we have enjoyed a few decades of low unemployment, and short periods of unemployment when they happen, rates would be very attractive compared to the arbitrary government taxes, and move a large number of Americans to support it.

* With a huge number of Baby Boomers approaching retirement age (and many being vulnerable to being laid off), yet not having adequate savings, they would love to have a "tool" like this to protect them. This would create a huge amount of support and momentum.

The benefits of this policy would be numerous:

* People would be able to design plans to meet their specific needs.

* People would have an incentive to get back to work quicker (or to create a business), in order to keep their rates low. Over usage would lead to higher rates, similar to the way other insurance is determined. The benefits to the economy would be obvious.

* It would contribute to a growing economy as revenues moved to private enterprise, both in premiums (which insurance companies would use for investments) and in the creation of new businesses because of the policy designs.

With the vast majority of Americans employed and many of them preferring to easily create a business if they lost their job, there should be plenty of support for a policy such as this. Furthermore, it could be a great wedge issue for the President to take support from the Democrats. This isn't a policy that should have to wait for a Republican President AND Congress. Rather, it is an issue Bush should pursue today and make it a referendum issue for 2008.