Following President Bush's State of the Union address, in which he described his plan to let workers divert a portion of their payroll taxes into private investment accounts, reporters and commentators have repeatedly and falsely claimed that private accounts are an attempt to address Social Security's long-term revenue shortfall, which the Social Security trustees estimate at $3.7 trillion over the next 75 years. In fact, even the White House has admitted that private accounts will do nothing to address this shortfall. Rather, Bush's plan will likely address the solvency of the program through substantial cuts in guaranteed benefits.
On the February 3 edition of FOX News' Special Report with Brit Hume, Roll Call executive editor and FOX News contributor Morton M. Kondracke accurately pointed out that even administration officials have admitted that private accounts will do nothing to address the solvency problem, contrary to Bush's public statements. But Hume insisted, “The president, as a matter of fact, is correct about that,” and abruptly cut off Kondracke when he tried to respond:
KONDRACKE: Well, I think the Democrats actually got a little bit of an assist today when it was reported that a senior White House -- senior administration official at a briefing yesterday said that there was no way that individual accounts would help solve the solvency problem of the Social Security system. And yesterday the president was, in effect, arguing that private accounts were a way of solving the solvency problem. Or at least that's what --
HUME: The president, as a matter of fact, is correct about that.
KONDRACKE: Well, but -- but it won't, in fact. You're going to have to cut --
HUME: Mort, we're not going to argue that tonight.
On the February 3 edition of CNN's American Morning, CNN White House correspondent Suzanne Malveaux said of Bush's speech: "[T]he centerpiece of his domestic agenda was reforming Social Security to allow younger workers to actually divert some of their payroll taxes into private accounts to make the system solvent." Later, on CNN Live Today, she explained: "[O]f course, really the centerpiece of his domestic agenda, reforming Social Security, a big item last night. The president saying that he believes that creating for younger retirees, younger workers, these private investment accounts is the way to go for the Social Security system to be solvent in the future."
But in a pre-speech briefing, an unnamed “senior administration official” admitted that private accounts will do nothing to address Social Security's long-term revenue shortfall. From the February 2 White House background briefing:
QUESTION: Can you give us a second ten-year estimate on the revenue effect? Can you tell us how you would pay for that, in the first ten years' revenue loss? And am I right in assuming that in the way you describe this, because it's a wash in terms of the net effect on Social Security from the accounts by themselves, that it would be fair to describe this as having -- the personal accounts by themselves as having no effect whatsoever on the solvency issue?
SENIOR ADMINISTRATION OFFICIAL: On the second point, that's a fair inference.
Apart from the administration's admission, some in the media have pointed out this basic fact about the effect of private accounts on the solvency of Social Security. The Washington Post reported on February 4:
It is still not clear how Bush's retooled system would work in total. The White House this week has chosen to discuss only a part of it, the private accounts. But those accounts will not close the projected $3.7 trillion gap between Social Security benefits promised over the next 75 years and taxes expected to be collected. That gap would have to be closed through benefit cuts that have yet to be detailed.
Even conservative Weekly Standard editor and FOX News contributor William Kristol admitted on FOX News' February 2 post-speech coverage, which Hume anchored, that private accounts are, at best, irrelevant to the solvency issue:
KRISTOL: But the Democrats really dislike the following, which they may have some truth to: The president is using an unquestionable fact, which is that there's a solvency problem with Social Security -- too many retirees, not enough workers to justify individual accounts --
HUME: He's using it to justify --
KRISTOL: Right. Which may be desirable, but are not necessarily implied by the solvency crises. You could solve that by simply raising taxes, decreasing benefits, increasing the retirement age, etc. Now, the president is entitled to say, “Let's do both things at once, let's deal with solvency and improve the system, as he sees it, by having individual accounts.” The Democrats want to split these apart.