On the January 4 edition of the Christian Broadcasting Network's The 700 Club, host and Christian Coalition of America founder Reverend Pat Robertson echoed the Bush administration's misleading crisis rhetoric to hype the need for Social Security reform and made rosy predictions about the results that a privatized system would produce. Robertson falsely claimed that “in about 15 to 20 years everybody is going to find there's no [Social Security] money.” He added that if we switch now to the privatized system, in 20 years Social Security will be “very solvent” and retirees will be “blessed.”
From the January 4 edition of The 700 Club:
ROBERTSON: Now, the president must get through these privatization programs, so that younger workers can put a portion of their Social Security money into compulsory private accounts. It'll make a huge boost to the stock market and it'll be a wonderful thing. And I think almost every younger worker, younger as in under 50, thinks it's a good idea. And you couple that with a reduction in the payout and Social Security suddenly becomes solvent.
Politicians haven't been willing to deal with it, but it's a crisis and some of the Democrats have been saying, “Oh, there's no problem.” There is a problem -- in about 15 to 20 years, everybody is going to find there's no money or we're going to be hit with a 23 percent tax on payroll, which is going to be ungodly. It would hurt the economy. We can come out of this, but it's going to take forceful, bold action.
And while the president is getting bold, he might as well go all the way and, you know, let younger workers take the whole thing and put it in a savings account. It'll take a couple of trillion dollars in bonds, more or less off-budget bonds, and they can be repaid over 20 years or what have you, and by that time Social Security will be very solvent and the retirement of the workers will be blessed, not to mention what it will do to the stock market. ... If we don't deal with it now, it's going to get completely out of hand, and it's not something we can play with.
Robertson's claim that there will be no Social Security money in 15 to 20 years is wrong by any expert projections, as Media Matters for America has previously documented (here, here, and here). Social Security is not projected to run out of money until 2042, according to the Social Security Board of Trustees' 2004 Report of the Board of Trustees of the Old-Age and Survivors Insurance and Disability Insurance Trust Funds (OASDI). In 2018, the approximate date to which Robertson alluded, the program's payouts to retirees are projected to exceed tax revenue. At that time, as planned, the government will have to supplement revenues with the Social Security Trust Fund to meet its payment obligations to retirees, but the system will remain solvent until 2042.
Robertson's optimistic predictions are also misleading. He claimed that retirees would be “blessed” under Bush's purported plan, which would partially privatize Social Security and base guaranteed benefits entirely on inflation rates rather than using the wage index to calculate a recipient's initial benefit level upon entering the program. But The Washington Post has noted that according to numbers from the chief Social Security actuary, if such a plan were enacted, total expected retirement income “would not match the benefits currently being promised.” This expected income would include guaranteed Social Security benefits and income from the new private accounts.
From an article published in the January 4 Washington Post:
A retiree in 2032 would see a promised monthly benefit of $1,343 drop to $1,231, an 8.3 percent cut from both the payable and promised levels. But by 2052, returns on personal accounts would push total benefits for a middle-income worker to 129.4 percent of the payable benefit, even though the total benefit would still be about 6 percent less than promised because of the rising number of retirees.
But as Media Matters has noted, some economists consider the chief Social Security actuary's 6.5 percent assumed rate of return on equities, used in calculating the above numbers, to be overly optimistic. University of California at Berkeley professor of economics J. Bradford DeLong has argued that there would be “no Social Security financing problem at all” if in fact the rate of return were to be 6.5 percent. Even if one assumes that rates of return would average 6.5 percent, that number would still only be an average, meaning that many workers and retirees would actually experience a lower rate. Further, an individual worker's investment choices, as well as year-to-year fluctuations in the overall stock market, will impact the account value upon a worker's retirement.
Despite the risk involved, Robertson advocated allowing younger workers to invest all of their payroll taxes in private accounts, saying: “And while the president is getting bold he might as well go all the way and you know let younger workers take the whole thing and put it in a savings account.” The Bush plan will reportedly allow younger workers to divert nearly two-thirds of the employee-paid portion of payroll taxes to private accounts.
The conservative religious organization Family Research Council (FRC) has also endorsed the Bush administration's privatization proposal. In a December 16 “Washington Update” on current policy issues, which was emailed to supporters, FRC president Tony Perkins wrote:
Even though the President [George W. Bush] has not yet put a full plan on the table [to privatize Social Security], the loud, partisan opposition from the National Organization of Women, AARP, NAACP, AFL-CIO and the mainstream media serves to convince me that, by offending the champions of a welfare state, the President is on the right track. Only by changing the current system will our children be given the safety net that Social Security was originally supposed to provide.