On the February 24 edition of MSNBC's Hardball with Chris Matthews, former Representative Susan Molinari (R-NY), president of the public affairs unit of public relations firm Ketchum Inc., falsely asserted that President Bush's plan to allow workers to divert payroll taxes from Social Security into private accounts "doesn't change anything for people in terms of that [benefit] guarantee from today. If anything, it strengthens it for younger people." Molinari also erroneously suggested that, for those who opt not to adopt private accounts, Bush's plan will not "change the way you currently participate in Social Security." In fact, under the model that is widely expected (see here, here, here, and here) to form the basis of the reform plan Bush will propose, beneficiaries will face substantial cuts in guaranteed benefits compared to what current law promises, and those who choose to set up private accounts will face additional cuts in guaranteed benefits beyond that.
As Media Matters for America has noted, "Model 2" from Bush's 2001 Commission to Strengthen Social Security calls for a reduction in benefits for all future beneficiaries. Initial benefit levels would be set according to the rate of inflation, instead of the rate of wage growth during a worker's lifetime (as it is now), which would result in lower benefits than promised under current law. More recently, a leaked memo about Bush's plans for Social Security from Peter H. Wehner, head of the White House Office of Strategic Initiatives, also endorsed this concept.
Further, the Bush administration has explained that those who opt for private accounts will face additional cuts. The Washington Post reported on February 4: "The White House offered further explanation of President Bush's Social Security proposal yesterday, detailing how contributions to new personal investment accounts would be offset by dollar-for-dollar reductions in Social Security's guaranteed benefits."
And while Molinari's suggested that Bush's plan will "strengthen" Social Security for younger workers, private accounts would result in increased financial risk to individuals by shifting money out of Social Security and into the stock market. As the Post noted, if the money in an individual's private account earned less than 3 percent above the rate of inflation, the worker would receive less than he or she would have if all their payroll taxes remained within the system.
Molinari's employer, Ketchum, hired syndicated TV and radio host Armstrong Williams to promote the No Child Left Behind bill for the U.S. Department of Education. Williams did not disclose his $240,000 deal with the Bush administration on his television and radio programs. As The New York Times reported on February 19, "Ketchum has received $97 million in government public relations contracts since 2001 [when Bush took office]."
From the February 24 edition of MSNBC's Hardball:
CHRIS MATTHEWS (host): We got a poll here, an NBC poll last week that came out, that nobody has paid much attention to. It says that by 2 to 1, the American people are more insistent on the guaranteed part of Social Security, the insurance part, we're going to get the money, than they are on this option of going to a personal account.
MOLINARI: Sure, I actually think that the reverend [fellow Hardball guest Reverend Al Sharpton] is right, that that is what the people are concerned about right now. I think the Republicans have failed to answer that question as articulately as they can, it's the plan that has taken place, but I think it is something they will overcome. But it has definitely put members of congress at a disadvantage as they go home and try to sell the personal savings account while they are failing to give people the kind of comfort and confidence that they should have, because the Bush plan does guarantee that. It doesn't change anything for people in terms of that guarantee from today. If anything, it strengthens it for younger people.
MOLINARI: Nobody is going to force you to take up a personal savings account and change the way you currently participate in Social Security.