Obama's Social Security Whopper

He tells Social Security recipients their money would now be in the stock market under McCain's plan. False.

Brooks Jackson
factcheck.org
Sep 20, 2008 | Updated: 6:20 p.m. ET Sep 20, 2008
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."

http://www.newsweek.com/id/160179/output/print

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But it would be invested no? And those elderly people would be at risk because allowing private accounts removes this pool of money that is set up to provide a quality of life to retirees.

Is it wrong to want retirees to have something to fall back on? Is it wrong to care about the people who make bad investments and have zero retirement money?

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Tantum religio potuit suadere malorum
(To such heights of evil are men driven by religion)

It would have endangered payments because current payments into the system are used to pay SS benefits today because the politicos have robbed the system to pay for other things. Reducing what is paid in will endanger the current funding - an ugly truth those in favor of privatization do not want to address when discussing this.

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He who angers you, controls you!

Where are you getting this line of questioning from?

Obama lied regarding the plan,multiple times,end of story.

I injected no opinion into this post.

Now I will....
Do you pity all the poor folks whos 401k have been beaten up lately? Im one,pity me.Stocks are risky,its no secret.Inherent danger obviously but youve got to take the good with the bad.Its a marathon not a sprint.Sure if the chose to get in theyd have most likely lost some cash-but looking at the govt come in like Superman and save the days sets the stage for another round of upside.I dont pity them.

In the end,the Bush plan was voluntary.Or would there be 'predatory' agents sent out to dupe folks into them?

Now that youve successfully goaded me into a dialogue I didnt mean to begin,lets get back to the point....


Obamas a liar.

Will the media call him one? Lets see....

Nope

Nope

Almost...let the fish get away (NYT-shocking I know)

Supposed McCain mouthpiece Fox...nope.

Im glad to see neither of you actually tried to defend his lies this time,opting for deflection instead.You must be getting used to it by now.Admitting is the first step to recovery.

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