Obama's Social Security Whopper

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.

Reprinted with permission from Factcheck.org.

Sources
The White House, "Strengthening Social Security for the 21st Century," Feb 2005.

Dow Jones & Co. "Dow Jones Industrial Average Historical Performance" Spreadsheet accessed 20 Sep 2008.

© 2008