Factcheck.org: More Social Security Spin

Summary
An Obama-Biden TV ad once again twists McCain's position on Social Security.

This is becoming a pattern. In a Sept. 19 article we criticized an Obama-Biden ad for its false insinuation that Sen. John McCain favored massive cuts in current Social Security benefits. And in a Sept. 20 article we criticized Obama for claiming in a stump speech that Social Security recipients would have had their money tied up in the stock market if the plan McCain once endorsed had been enacted. That was also false. Nobody who is now older than 58 would have been allowed to invest in Bush's proposed private accounts.

Doubly Deceptive
Now the Obama-Biden campaign is out with a new ad, which first aired Oct. 1 on a station in Miami, Fla. It is worded a bit more carefully to avoid claiming that any current retiree would have been affected. It refers to "future retirement benefits," which is an improvement over previous attempts to frighten retirees.

But the new ad is still deceptive, and doubly so.

A plan to risk your benefits? This ad says McCain "campaigned for Bush's plan to risk your Social Security in the stock market." That is deceptive. Bush's plan would have allowed younger workers, born in 1950 or afterward, to divert some of their Social Security taxes into private accounts managed by the government. Those accounts would indeed have been exposed to the risk (and the potential rewards) of the stock market. But nobody would have been required to put money into private accounts, which would have been voluntary. And by no means would all of "your Social Security" have been put at risk, since less than one-third of Social Security taxes could have been invested.

Investing at Lehman? Even more deceptive is this bit: "Imagine if McCain and Bush had gotten their way, and invested your future retirement benefits at Lehman Brothers. Bankrupt. AIG, bailed out. Merrill Lynch, Sold."

No such thing could have happened under the Bush plan. No account holder would have been allowed to directly buy stocks of Lehman, AIG, Merrill Lynch or any other company. The only choices would have been a few, broadly diversified stock funds and made up of investments in a large number of companies, with risks spread widely over different firms and industries. And at least one of the choices would have been to avoid stocks entirely, and invest only in interest-bearing government bonds.

Bush never secured enough support in Congress for his plan to present it as formally drafted legislation. But details were laid out in a briefing to reporters just before his 2005 State of the Union address. Under the ground rules, reporters agreed that the person briefing can be described only as a "senior administration official." The full transcript of that briefing can still be found on this State Department Web Site:

Bush also made clear in an April 28, 2005 news conference that one of the options would be to invest private account funds entirely in interest-bearing Treasury bonds:

One more thing
We should also point out that the term "privatize" is one Democrats use, but which Bush himself came to discourage. It could easily give listeners the wrong impression. What Bush proposed in 2005 would have left the private accounts under government management.