U.S. News' Pethokoukis falsely claimed McCain is not calling for carve-out Social Security accounts

››› ››› MEREDITH ADAMS

On MSNBC Live, James Pethokoukis claimed that "Senator [John] McCain is not calling for privatizing Social Security. He's talking about perhaps separate accounts, but he's not actually talking about taking your Social Security payments and funneling them in the stock market." In fact, in a March Wall Street Journal interview, McCain reiterated his support for private Social Security accounts that would be funded through existing payroll taxes and could be invested in the stock market.

On the September 18 edition of MSNBC Live, U.S. News & World Report money and politics reporter James Pethokoukis claimed that "Senator [John] McCain is not calling for privatizing Social Security. He's talking about perhaps separate accounts, but he's not actually talking about taking your Social Security payments and funneling them in the stock market." In fact, in a March Wall Street Journal interview, McCain reiterated his support for private Social Security accounts that would be funded through existing payroll taxes and could be invested in the stock market. McCain said: "Actually, I'm totally in favor of personal savings accounts and I think they are an important opportunity for young workers. I campaigned in support of President Bush's proposal and I campaigned with him, and I did town hall meetings with him." A Journal article about the interview quoted McCain saying: "As part of Social Security reform, I believe that private savings accounts are a part of it -- along the lines that President Bush proposed." Bush's plan called for "allowing [younger workers] to put part of their payroll taxes in personal retirement accounts" and to put the money in those accounts "into a conservative mix of bond and stock funds."

Additionally, as Media Matters for America documented, on the July 8 edition of CNN's American Morning, McCain said: "I want young workers to be able to, if they so choose, to take part of their own money, which is their taxes, and put it into an account, which has their name on it. Now, that's a voluntary thing, it's for younger people. It would not affect any -- any present-day retirees or the system as necessary."

From the March 3 Wall Street Journal interview:

Q: In 2000, you campaigned for president on a plan to use a part of payroll taxes to create Social Security private accounts. Now your Web site talks about accounts as "supplements" to Social Security. Why the change?

A: Actually, I'm totally in favor of personal savings accounts and I think they are an important opportunity for young workers. I campaigned in support of President Bush's proposal and I campaigned with him, and I did town hall meetings with him.

Q: Your Web site says something different.

A: I'll correct any policy paper that I've put out that might intimate that personal savings accounts are not a very important factor. They allow young workers to provide for their retirement, and a much larger retirement over time.

The way I would fix Social Security is to sit down with Republicans and Democrats together at a table, voicing my opposition to tax increases, and sitting down and negotiating a fix to Social Security, which is the only way that Social Security is going to be fixed. That's my solution to the Social Security system.

From the March 3 Wall Street Journal article:

A centerpiece of a McCain presidential bid in 2000 was a plan to divert a portion of Social Security payroll taxes to fund private accounts, much as President Bush proposed unsuccessfully. Under the plan, workers could manage the money in stocks and bonds themselves to build a nest egg and, at retirement, also receive reduced Social Security payments from the government. Proponents say the combination of the nest egg and government payouts could give a retiree more than the current system, but opponents say the change would undermine the Social Security system.

Sen. McCain's 2008 presidential campaign Web site takes a different view, proposing "supplementing" the existing full Social Security system with personally managed accounts. Such accounts wouldn't substitute for guaranteed payments, and they wouldn't be financed by diverting a portion of Social Security payroll taxes.

[...]

Asked about the apparent change in position in the interview, Sen. McCain said he hadn't made one. "I'm totally in favor of personal savings accounts," he says. When reminded that his Web site says something different, he says he will change the Web site. (As of Sunday night, he hadn't.) "As part of Social Security reform, I believe that private savings accounts are a part of it -- along the lines that President Bush proposed."

From the July 8 edition of CNN's American Morning, McCain was interviewed by anchor John Roberts:

ROBERTS: Senator, I'm sure that you're also hearing from them about Social Security, because you say that --

McCAIN: Yeah.

ROBERTS: -- part of this -- part of this plan, if you're going to balance the budget, is to reform Social Security.

McCAIN: Sure.

ROBERTS: You've talked about the idea of private accounts, as President Bush tried to get through and couldn't. What else would you do to reform Social Security?

McCAIN: I would sit down with Democrats and Republicans the way Ronald Reagan and Tip O'Neill did in 1983.

ROBERTS: Hmm-mm.

McCAIN: And they said, "OK, we've got everything on the table here, let's come to an agreement." The approval rating of Congress right now is 12 percent last time I saw. I know how to work across the aisle. I've done it with Democrats and I've done it for many, many years. And we'll sit down across the table with the backing of the American people.

ROBERTS: But do you have any idea on what you could do?

McCAIN: On the privatization of accounts, which you just mentioned, I'd like to respond to that. I want young workers to be able to, if they choose, to take part of their own money, which is their taxes, and put it into an account, which has their name on it. Now, that's a voluntary thing, it's for younger people. It would not affect any -- any present-day retirees or the system as necessary. So let's describe it for what it is. They pay their taxes and, right now, their taxes are going to pay the retirement of present-day retirees. That's why it's broken. That's why we can fix it. We can do it together, Republicans and Democrats alike.

From the 4 p.m. ET hour of the September 18 edition of MSNBC Live:

SHUSTER: And welcome back to MSNBC, the place for politics. Barack Obama is out with a new campaign ad in the battleground state of Michigan, and he's taking direct aim at John McCain on the issue of privatizing Social Security.

NARRATOR [video clip]: A broken economy, failing banks, unstable markets, families struggling. To protect us in retirement, Social Security has never been more important, but John McCain's voted three times in favor of privatizing Social Security. McCain says, "I campaigned in support of President Bush's proposal."

SHUSTER: And this brings us to our daily segment we call "Where They Stand," and today we're looking at the issue of saving Social Security, which will run out of money unless we make some major changes, at least in the next several years. Jim Pethokoukis is a money and politics columnist for U.S. News & World Report, and Jim, let's first go through Senator McCain's plan. He does support private investment accounts to help grow retirement funds. He prefers slowing the growth in benefits as opposed to raising taxes. He has not ruled out raising the retirement age for benefits, he has not ruled out raising the income level for paying Social Security taxes. What are the strengths and weaknesses of McCain's proposal?

PETHOKOUKIS: Well, first we should be clear that, while he may have advocated in the past, as far as a presidential candidate, Senator McCain is not calling for privatizing Social Security. He's talking about perhaps separate accounts, but he's not actually talking about taking your Social Security payments and funneling them in the stock market. That idea, at least as I can tell, is nowhere on Capitol Hill these days. It was big a few years ago, that we know having several bad years in the stock market has sort of killed it. So he's not calling for that at all. And in the past he actually has called for raising Social Security taxes in the past, though right now he's not saying that. It would be my guess, to be honest with you, that no matter who's president you're probably going to get some sort of Social Security compromise that's gonna have a mix of probably slightly higher taxes and some sort of reduction in the growth of spending on Social Security benefits.

Posted In
Economy, Social Security
Network/Outlet
MSNBC, U.S. News & World Report
Person
James Pethokoukis
Show/Publication
MSNBC Live
Stories/Interests
John McCain, 2008 Elections
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