Media figures on network and cable news broadcasts, talk radio, and in the op-ed pages of national newspapers have repeated four misleading or false claims that support President Bush's proposal to create the option of private accounts and reduce future Social Security benefits: 1) that benefit cuts already mandated by “current law” are greater than what Bush has proposed; 2) that Democrats have “put forth nothing” in the Social Security debate; 3) that the “voluntary” nature of President Bush's proposed private accounts means they “can't do much harm” to the system; and 4) that Bush's proposal helps the poor at the expense of the rich.
Misleading talking point #1: Benefit cuts would be greater under “current law” than Bush's proposal
On the May 2 edition of Fox News' Special Report with Brit Hume, chief Washington correspondent Jim Angle drew a misleading comparison between Bush's proposal for so-called “progressive indexing” of Social Security benefits and what Angle called “current law.” Under the heading “Current Law Reductions,” Angle presented a hypothetical schedule of benefit cuts that would actually occur only if Congress changed current law.
Current law mandates a specific benefit schedule for future recipients. Without statutory changes, the federal government would retain the legal obligation to continue paying scheduled benefits -- in theory, out of general revenues - even when the Social Security trust fund is exhausted, projected by the Social Security trustees to occur in 2041 and by the Congressional Budget Office in 2052. But Angle used his misleading definition of “current law” to claim that “in most cases, workers would do better under the indexing option than if nothing were done.” Here is the on-screen chart that appeared during Angle's report:
Since an actual default by the government in the payment of benefits would be unprecedented, it is all but certain that Congress will enact changes to “current law” before the projected exhaustion of the trust fund. But Angle's graphic contrasted Bush's proposal with a straw man. The Social Security trustees project that the system will take in enough revenue in 2045 to pay 73 percent of scheduled benefits. But what Angle's chart labeled “current law” would actually occur only if Congress chose one specific option for restoring solvency -- an across-the-board 27 percent benefit cut -- that, to date, no one has proposed.
Misleading talking point #2: Democrats “have put forth nothing”
Angle also claimed in his report that “so far, Democrats have rejected the entire concept of indexing, along with the idea of negotiating over any details on how to fix the system.” He quoted Sen. Christopher Dodd (D-CT) to support this accusation, but in fact, Dodd and others have suggested ideas that address Social Security's solvency. On the May 1 edition of NBC's Meet the Press, Dodd suggested a way to restore long-term solvency without massive benefit cuts:
DODD: If you would just take what the president suggested in 2001 for his tax cuts, which were not to be permanent but to expire within 10 years -- if he would not make those permanent, those tax cuts will amount to about $11 trillion in revenue losses over the next 75 years. The solvency issue for the Social Security Trust Fund is around $3 trillion. Just reduce that tax cut by $3 trillion, keep $8 trillion if you want. That solves the solvency problem without cutting benefits at all.
Similarly, CBS' Bob Schieffer, Fox News' Chris Wallace, and CNN's Robert D. Novak all falsely claimed that Democrats still “offer nothing” on Social Security. On the May 1 edition of CBS' Face the Nation, Schieffer, responding to Sen. Sam Brownback (R-KS), said, “Democrats have put forth nothing, and I certainly agree with you on that.” Wallace, discussing Social Security with Sen. Patrick Leahy (D-VT) on the May 1 edition of Fox Broadcasting Co.'s Fox News Sunday, asked: “Can Democrats get through this entire question of Social Security without offering a single constructive idea of your own?” And on the May 3 edition of CNN's Crossfire, co-host Novak claimed that “Democrats haven't come up with anything except complaints.”
But in addition to Dodd's proposed solvency suggestion, Rep. John Conyers Jr. (D-MI) has offered "Alternative Proposals to Privatization" on his website, and Sen. Edward Kennedy (D-MA) and Sen. Debbie Stabenow (D-MI) have both expressed similar ideas to Dodd's. Moreover, Democrats have expressed willingness to address the solvency issue, and there have been a number of other proposals, including a plan by the Democratic Leadership Council and another plan by Massachusetts Institute of Technology economics professor Peter A. Diamond and Brookings Institution senior fellow Peter R. Orszag. As The Christian Science Monitor reported on May 2: “Democrats face criticism for having 'no plan,' but in fact, individual members have proposals, and Senate aides have been formulating proposals on future financing for Social Security if the president is willing to drop personal accounts carved out of Social Security payroll taxes.”
Los Angeles Times editorial page editor Michael Kinsley wrote in a May 1 op-ed that “if privatization is truly voluntary, it can't do much harm,” adding that “if that's Bush's price for being out front on a real solution to the real problem, the Democrats should let him have it.” Fox News host Bill O'Reilly made a similar claim on the April 29 edition of the nationally syndicated radio show The Radio Factor with Bill O'Reilly, asserting that “if an American citizen wants to take a small portion of his or her Social Security contribution and invest it in a private account...[i]t has nothing to do with you.” O'Reilly suggested that an individual's decision to divert a portion of his or her payroll taxes into a private account would have no bearing on the system as a whole, claiming: “It's an option -- it's a small part of it. You don't have to do it! It's bogus! It's bogus! All Bush wants to do is reduce the payouts the government has to make in 40 years!”
The Center on Budget and Policy Priorities (CBPP) has estimated the transition costs for private accounts to be $4.9 trillion through 2028, and it reported on March 24 that “Private accounts, unless financed by contemporaneous benefit reductions or tax increases, entail trillions of dollars of borrowing.” The burden of paying these transition costs will fall on all Americans, not just those who opt for private accounts.
Misleading talking point #4: Bush's proposal helps the poor at the expense of the rich
U.S. News & World Report senior writer and syndicated columnist Michael Barone ignored the effect of Bush's proposed indexing of Social Security benefits on middle-class Americans earning more $20,000 a year. In his May 3 column, Barone claimed that Bush's proposal would “pay for low-income workers' personal accounts by cutting high-income workers' future benefits.” In fact, the Bush proposal would likely cut guaranteed benefits for all workers making over $20,000 a year -- or just above the poverty threshold for a family of four -- while leaving benefit unchanged for those making under $20,000.