How to Talk to a Conservative About Social Security

The White House and their deep-pocketed allies have launched a $35 million public relations effort

to spread misinformation about President Bush’s Social Security
privatization scheme. This fact sheet will arm you with all the facts
you’ll need to take them on.

Fiscal Outlook

Claim: “By the year 2042, the entire system would be exhausted and bankrupt.” [President Bush, 2/2/05]

Fact:
In 2042, enough new money will be coming in to pay between 73-80
percent of promised benefits. Even with this reduction, new retirees
will still receive more money, in inflation-adjusted dollars, than
today’s beneficiaries. [The Washington Post, 2/5/05]

Claim:
“In the year 2018, for the first time ever, Social Security will pay
out more in benefits than the government collects in payroll taxes.”
[President Bush, 12/11/04]

Fact:

“In 14 of the past 47 years, including 1975 to 1983, Social Security
paid out more in benefits than the government collected in payroll.”
[MSNBC, 1/14/05]

Fact: Under Bush’s plan, expenditures will begin to exceed revenues even earlier, in 2012. [The New York Times, 2/4/05]

Claim:
“Under the current system, today’s 30-year old worker will face a 27
percent benefit cut when he or she reaches normal retirement age.” [GOP
Guide to Social Security Reform, 1/27/05]

Fact:
According to the Congressional Budget Office, younger workers would
receive better benefits from Social Security as it exists now, even if
nothing changes, than from President Bush’s private accounts plan.
[Economic Policy Institute, 2/05]

The President’S Plan / Private Accounts

Claim:

“As we fix Social Security, we also have the responsibility to make the
system a better deal for younger workers. And the best way to reach
that goal is through voluntary personal retirement accounts.”
[President Bush, 2/2/05]

Fact:
Analysis of the plan so far does not prove the accounts would be a
better deal for anyone not working on Wall Street. Workers who opt for
the private accounts would recover forfeited benefits through their
accounts only “if their investments realized a return equal to or
greater than the 3 percent earned by Treasury bonds currently held by
the Social Security system.” But CBO factors out stock market risks to
assume a 3.3 percent rate of return. With 0.3 percent subtracted for
expected administrative costs on the account, “the full amount in a
worker’s account would be reduced dollar for dollar from his Social
Security checks, for a net gain of zero.” [The Washington Post, 2/4/05]

Claim:
“You’ll be able to pass along the money that accumulates in your
personal account, if you wish, to your children or grandchildren.”
[President Bush, 2/2/05]

Fact:
Most lower-income workers will be required to purchase government
lifetime annuities, financial instruments that provide a guaranteed
monthly payment for life but that expire at death. Money in these
annuities cannot be passed on to heirs. [The New York Times, 2/3/05]

Claim: “We must pass reforms that solve the financial problems of Social Security once and for all.” [President Bush, 2/2/05]

Fact:

“A Bush aide, briefing reporters on the condition of anonymity [said]
that the individual accounts would do nothing to solve the system’s
long-term financial problems.” The long-term gap in revenue would “have
to be closed through benefit cuts that have yet to be detailed.” [LAT, 2/3/05; The Washington Post, 2/5/05]

Claim: “A personal account would be your account, you would own it, and the government could never take it away.” [President Bush, 2/8/05]

Fact:
Bush’s Social Security plan is a far cry from the private ownership
he’s touting, however. For example, instead of private plans that let
Americans control their own investments, there are tight restrictions
on which conservative stocks and bonds the public will be allowed to
buy. And, as The New York Times reports, “the more restrictions
there are, the harder it would be for people to achieve the outsized
returns the administration has generally promoted to sell the public on
private accounts.” [The New York Times, 2/6/05]

Claim:

“Best of all, the [private] accounts would be replacing the empty
promises of government with the real assets of ownership.” [President
Bush, 2/8/05]

Fact:
Social Security trust funds “hold nothing but U.S. Treasury
securities,” recognized as “the safest, most reliable investment
worldwide.” [Century Foundation, 1/26/05]

Claim:
“The problem that we now face is not one that we can tax our way out
of, for a very simple reason: The costs and the current program are
growing faster than the underlying tax base. So if we were to raise
taxes today to deal with it, and the costs of the program continued to
grow faster than the tax base, then in the future, future generations
would simply have to come back and raise taxes again.” [Senior White
House official, press conference, 2/3/05]

Fact:
An alternative proposal by Peter Diamond and Peter Orszag would resolve
Social Security’s funding problems directly and permanently through
modest tax increases. The Congressional Budget Office states that,
“under Diamond-Orszag, the trust fund balance would always be positive
and scheduled benefits would be fully financed.” [CBO, 12/22/04]

History

Claim:

“Social Security was a great moral success of the 20th century, and we
must honor its great purposes in this new century.” [President Bush, 2/2/05]

Fact:
Conservatives have been trying to gut Social Security since its
inception. Both Barry Goldwater and Ronald Reagan endorsed
privatization in 1964. In 1983, the Cato Institute laid out a
privatization plan similar to President Bush’s, stating, “We will meet
the next financial crisis in Social Security with a private alternative
ready in the wings.” [Miami Herald, 2/7/05]

Rhetoric

Claim: “I think it’s important for people to be open about the truth when it comes to Social Security.” [President Bush, 2/4/05]

Fact:
The Bush administration has lobbied hard for privatization while being
notably closemouthed about the details. [The Washington Post, 2/6/05]

Fact: The Wall Street Journal

reports the White House is quietly assembling a coalition of
deep-pocketed allies “that will privately raise $35 million for an
advertising and lobbying effort to push the politically risky measure
through Congress.” [Wall Street Journal, 2/4/05]

Claim:
“The role of a president is to confront problems - not to pass them on
to a future president, future Congress, or a future generation.”
[President Bush, 2/4/05]

Fact:
Dick Cheney admits trillions of dollars in future borrowing will be
necessary to cover the cost of establishing private accounts. This
deficit would have to be repaid by today’s younger workers. [The New
York Times, 2/6/05]

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