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Fact Check: Obama's Social Security Whopper

Discussion in 'BBS Hangout: Debate & Discussion' started by basso, Sep 21, 2008.

  1. basso

    basso Contributing Member
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    http://www.factcheck.org/elections-2008/obamas_social_security_whopper.html

    [rquoter]He tells Social Security recipients their money would now be in the stock market under McCain's plan. False.
    Summary
    In Daytona Beach, Obama said that "if my opponent had his way, the millions of Floridians who rely on it would've had their Social Security tied up in the stock market this week." He referred to "elderly women" at risk of poverty, and said families would be scrambling to support "grandmothers and grandfathers."

    That's not true. The plan proposed by President Bush and supported by McCain in 2005 would not have allowed anyone born before 1950 to invest any part of their Social Security taxes in private accounts. All current retirees would be covered by the same benefits they are now.

    Obama would have been correct to say that many workers under age 58 would have had some portion of their Social Security benefits affected by the current market turmoil – if they had chosen to participate. And market drops would be a worry for those who retire in future decades. But current retirees would not have been affected.
    Analysis
    In our "Scaring Seniors" article posted Sept. 19 we took apart a claim in an Obama-Biden ad that McCain somehow supported a 50 percent cut in Social Security benefits, which is simply false. Then, on Saturday Sept. 20, Sen. Barack Obama personally fed senior citizens another whopper, this one a highly distorted claim about the private Social Security accounts that McCain supports.

    What Obama Said

    In Daytona Beach, Florida, Obama said in prepared remarks released by the campaign:

    Obama, Sept. 20: And I'll protect Social Security, while John McCain wants to privatize it. Without Social Security half of elderly women would be living in poverty - half. But if my opponent had his way, the millions of Floridians who rely on it would've had their Social Security tied up in the stock market this week. Millions would've watched as the market tumbled and their nest egg disappeared before their eyes. Millions of families would've been scrambling to figure out how to give their mothers and fathers, their grandmothers and grandfathers, the secure retirement that every American deserves. So I know Senator McCain is talking about a "casino culture" on Wall Street - but the fact is, he's the one who wants to gamble with your life savings.

    That's untrue. All current retirees would be covered by exactly the same Social Security benefits they are now under what the Obama campaign likes to call the "Bush-McCain privatization plan," which Bush pushed for unsuccessfully in 2005.

    Who Would Have Been Affected

    As the White House spelled out at the time, on page 5 of the document titled "Strengthening Social Security for the 21st Century," released in February 2005:

    Bush Plan: Personal retirement accounts would be phased in. To ease the transition to a personal retirement account system, participation would be phased in according to the age of the worker. In the first year of implementation, workers currently between age 40 and 54 (born 1950 through 1965 inclusive) would have the option of establishing personal retirement accounts. In the second year, workers currently between age 26 and 54 (born 1950 through 1978 inclusive) would be given the option and by the end of the third year, all workers born in 1950 or later who want to participate in personal retirement accounts would be able to do so.

    Nobody born before Jan. 1, 1950 could have participated, and anyone born on that date would be 58 years old now. The earliest possible age for receiving Social Security retirement benefits is 62, for early retirement at reduced benefits. Full retirement age is currently 66, and scheduled to go up to age 67 in coming years.

    It is certainly true that the stock market carries risks, as recent events remind us. The Dow Jones Industrial Average is down nearly 17 percent for this year, for example, and despite gains in other years it is still barely above where it was at the start of 2000. But historically there have also been rewards for those who make diversified investments and hold for long periods. When Obama spoke, the Dow Jones average still stood 305 percent higher than it had at the start of the 1990's.

    Disappearing nest eggs?

    Also worth noting here:

    * The private accounts would have been voluntary. Anybody fearful of the stock market's risk could simply stay in the current system.

    * Obama's reference to "casino culture," disappearing "nest eggs" and gambling with "your life savings" are also misleading exaggerations. Only a little over one-fourth of any workers' total Social Security taxes could have been invested (a maximum of 4 percent of taxable wages, out of the total 15.3 per cent now paid, split equally between worker and employer.)

    * Speculation in individual stocks would not have been permitted. Workers would have had a choice of a few, broadly diversified stock or bond funds.

    * While McCain has voted in favor creating private Social Security accounts in the past, and endorsed Bush's 2005 proposal (which never came to a vote in Congress), he is not making a strong push for them as part of his campaign. In fact, a search for the term "Social Security" on the McCain-Palin Web site brings up the following: "No documents were found."

    Footnote: When we contacted the Obama campaign for comment, spokesman Tommy Vietor defended Obama's remarks as accurate:

    Vietor: You don’t have to be retired to rely on Social Security. Millions of people who will one day retire rely on Social Security as they plan their future. Senator Obama's bottom line is absolutely true. If McCain got his way and we had private accounts . . . people who are relying on that money for their retirement would be in a very difficult situation.

    We would grant Vietor a point if Obama had made any mention of workers being fearful of their future retirement (although this would apply only to those who had chosen to participate in private accounts, and not to everybody.) But Obama did not say that. Instead, he referred to "elderly women" in danger of poverty. He spoke of families "scrambling to figure out how to give their mothers and fathers, their grandmothers and grandfathers" a secure retirement – not to families worrying about their own retirement. If Obama did not mean what he said to be a reference to current retirees, he could say so clearly and amend his words.[/rquoter]
     
  2. basso

    basso Contributing Member
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    and here's the scaring seniors Fact Check mentioned in the article above.

    [rquoter]An Obama-Biden ad says McCain supports "cutting benefits in half" for Social Security recipients. False!
    Summary
    A new Obama ad characterizes the "Bush-McCain privatization plan" as "cutting Social Security Benefits in half." This is a falsehood sure to frighten seniors who rely on their Social Security checks. In truth, McCain does not propose to cut those checks at all.

    The ad refers to a Bush proposal from 2005 to hold down the growth of benefits for future retirees. Compared to the buying power of benefits paid to today's retirees, that would not have been a "cut" for anybody. It would have been a "cut" of half only in relation to benefits now promised to retirees who have yet to be born. And for average workers, that "cut" in 2075 was projected by one of Obama's own economic advisers to be 28 percent, not "half."

    The ad also says McCain voted "in favor of privatizing Social Security." The term "privatizing" could give the wrong impression. McCain does support creating government-managed accounts that would allow individuals to invest some portion of their Social Security payroll taxes in widely diversified stock or bond funds.
    Analysis
    The Obama campaign made no announcement of this ad and won't say where they intend to run it. It was first aired on a station in Flint, Mich. on Sept. 16, where it was recorded by the Campaign Media Analysis Group of TNSI Media Intelligence. According to CMAG, the ad has been running in Florida, Michigan, Nevada, Ohio, Pennsylvania, Virginia and Wisconsin.

    Update Sept. 20: A day after this article was first posted the Obama-Biden campaign e-mailed an announcement to reporters with a script of the ad, saying it "began airing last week in key states across the country." We had originally called the ad "Social Security," the name CMAG assigned to it when first seen. The campaign calls it "Promise" and we have changed the name here to reflect that.

    Obama-Biden Ad:
    "Promise"

    obama_ad_social_security

    Obama: I’m Barack Obama and I approved this message.

    Announcer: A broken economy. Failing banks. Unstable markets. Families struggling. To protect us in retirement, Social Security has never been more important. But John McCain voted three times in favor of privatizing Social Security. McCain says, “I campaigned in support of President Bush’s proposal.” Cutting benefits in half, risking Social Security on the stock market. The Bush-McCain privatization plan. Can you really afford more of the same?
    Betting the Bank?

    The ad says McCain voted for "privatizing Social Security" and quotes him as saying he "campaigned in support of President Bush's proposal." McCain did say in March:

    McCain, Mar. 3, 2008: 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.

    The three votes featured in the ad are from 1998 and 2006. Two expressed a general "sense of the Senate" favoring creation of private accounts, and a third would have created private accounts only with the passage of additional legislation allowing younger workers to "opt out" of the current system. None would have actually resulted in changing Social Security without additional, specific legislation.

    The ad implies that Bush's plan bets the whole lot of Social Security funds on unstable stocks. In fact, it would have "privatized" only a small portion of Social Security taxes that Americans could have invested in private accounts, if they chose to do so.

    "Cutting Benefits"

    The ad goes on to claim that the Bush (and McCain) plan would cut "benefits in half." This is a rank misrepresentation. Nobody now getting benefits, or even close to retirement, would have seen any reduction in benefits or cost-of-living adjustments under the plan Bush proposed in April, 2005. What Bush proposed – in addition to creating private Social Security accounts – was to hold down the growth of benefits received by those retiring in the future. He embraced a proposal for "progressive price indexing" of future benefits. This would have been a "cut" only in relation to what the current formula would produce for future retirees, assuming that taxes are increased sufficiently to keep the system going.

    The "price indexing" would have tied the growth to the rate of price inflation, rather than to the growth of wages, as is the case now. Wages have historically risen faster than prices, so the current wage-indexed system pushes benefits for future retirees up faster than the rate of inflation. The "progressive" part would have held down the growth only for higher-income and middle-income workers, while allowing benefits for lower-income workers to rise in line with the current wage-based formula.

    The Obama-Biden campaign attempts to document their "cutting benefits in half" claim by citing a report by the Center on Budget and Policy Priorities written by Jason Furman, who is currently one of Obama's top economic advisers. This won't do. What Furman's study actually says is quite different from what the ad claims.

    Furman's report says that the "progressive price indexing" plan Bush supported would result in benefits for the average worker who retires in 2075 that are 28 percent lower than under the current formula. Obviously 28 percent is not "half."

    The Obama-Biden campaign notes that Furman's paper also says that full price indexing of benefits – even for low-income workers – would result in benefits 49 percent lower than the current formula in 2075. But that's not the plan Bush supported, and we find no evidence that McCain ever supported it either. We asked the Obama campaign to show us where McCain has ever supported full price indexing of benefits, but so far they have not done so.

    What McCain Says

    For the record, McCain has said that he would seek a bipartisan deal with Congress to fix Social Security's financial problems.

    During a Republican candidate debate last year in Orlando, Florida, he said:

    McCain, Oct. 21, 2007: Look, what Americans need is some straight talk. They need to know -- every man, woman and child in America needs to know that both of these are going broke. They're going broke and we've got to do the hard things. We've got to fix it for the future generations of Americans. Don't we owe that to young Americans today? I say we do. ... It's got to be bipartisan. ... And you have to got to the American people and say we don't -- we won't raise your taxes. We need personal savings accounts, but we got to fix this system.

    The system isn't exactly "going broke." But the latest official projection is that the trust fund will be exhausted by the year 2041, after which current tax rates will finance only 78 percent of currently scheduled benefits. We agree that "straight talk" is needed and that finding solutions will be hard. Ads like this, however, misinform the public and make the job of fixing the system more difficult.[/rquoter]
     
  3. aussie rocket

    aussie rocket Member

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    I think what he may of meant to say was ....

    "John McCain is so old his social security number is 1"
     
  4. Invisible Fan

    Invisible Fan Contributing Member

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    I think this BS is what's ruining this nation. Both candidates are veering into highly deceptive campaigns.

    That span from a month before conventions and a week after it probably influenced the Obama team's decision to go this route even more. Negative campaigning has been shown to work in spite of positive messages.

    I'm not sure how this will influence my vote.
     
  5. bigtexxx

    bigtexxx Contributing Member

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    It's not Obama's fault. It was the dude who wrote what was on Obama's telepromter. All Barack does is give a good canned speech - as long as it's written out for him on the teleprompter
     
  6. Roxfan73

    Roxfan73 Rookie

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    Post repaired!
     
  7. sook

    sook Rookie

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    its ok b.c palin isn't competent enough for a real debate.

    The fact that people like you try to justify it is laughable, so you lose all rights to badmouth obama. :eek:
     
  8. MystikArkitect

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    I've seen various interviews where people have tried to stump the guy and he's done nothing but answer their questions like a qualified candidate should. Tonight on 60 Minutes and before on O'Reilly were examples. He doesn't have a teleprompter in front of him everywhere. Palin on the other hand...
     
  9. Nolen

    Nolen Contributing Member

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    This is dishonest scare mongering by the Obama campaign. They shouldn't stoop to McCain's level. There's plenty of completely legitimate issues to hammer him on.
     
  10. B-Bob

    B-Bob "94-year-old self-described dreamer"

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    basso, for once at least, thanks for posting. I find this distortion disappointing, It is in no way beyond the limits mapped by the McCain campaign to date, but I find it unnecessary and manipulative.

    Politics as usual.
     
  11. FranchiseBlade

    FranchiseBlade Contributing Member
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    This kind of distortion is not acceptable. I'm glad he still isn't as bad as McCain, but there is no call for this kind of fear mongering.
     
  12. B-Bob

    B-Bob "94-year-old self-described dreamer"

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    I know this will have DRAMATIC impact, but I'll email Obama's campaign. :)
     
  13. mtbrays

    mtbrays Contributing Member
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    [​IMG]

    "000-00-002. Damn that Roosevelt!"
     
  14. IROC it

    IROC it Contributing Member

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    You keep touting Mr. "Anytime, Anywhere" Debate...

    Keep on.

    It's telling of your lack of understanding of just who backed out first. ;)
     
  15. rimrocker

    rimrocker Contributing Member

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    This is BS and the Fact check article is like reading the bible literally and doesn't place any of this in context.

    Bush, and McCain with him, wanted to privatize SS so they could pump a bunch of money into the stock market and have their buddies make a bunch of change handling all the transactions and directing the investments. Buoyed by a big pulse of cash, the market would do very well for a short time and they could then come back and move everyone over.

    It was a phase out plan pure and simple and IIRC they even wanted to cut some benefits.

    McCain supported it and whether what Obama said is absolutely literally true according to the written plan Bush initially sent to the Hill, his message was dead on target.

    This gives me a reason to bring this up again... your President explaining his Social Security plan...
    (And we want to trust this administration with $700,000,000,000? Or $1,000,000,000,000?)
     
  16. IROC it

    IROC it Contributing Member

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    15 yard penalty for abstract, religion based comparison. Oh, and loss of down. ;)
     
  17. rimrocker

    rimrocker Contributing Member

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    OK. We were talking about it at church today, so I guess it's still on my mind.
     
  18. IROC it

    IROC it Contributing Member

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    No big... I get what you mean. Without context it often misses (or we miss) the point.

    I getcha. ;)
     
  19. rimrocker

    rimrocker Contributing Member

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    Cool. Good night IROC it.
     
  20. sook

    sook Rookie

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    your one of the few republicans i still respect on this site, its safe to say that you haven't falled into the basso,tj,blight clique just yet.

    care to shed some light on who backed out first?
     

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