Says Connie Mack IV co-sponsored a bill to "take a third of the Social Security Trust Fund ... give it in individual accounts to the senior citizens, who then were to invest it in the stock market."
Bill Nelson on Monday, August 20th, 2012 in remarks at a campaign event
Bill Nelson said Connie Mack wants to take Social Security money, give it to seniors, and them invest it in the stock market
We’ve heard plenty about U.S. House budget chairman and vice presidential nominee Paul Ryan’s plans for Medicare lately, but what about his efforts to reform Social Security? U.S. Sen. Bill Nelson would sure like to discuss it -- and tie his opponent, Rep. Connie Mack IV to Ryan’s largely unpopular past plans for the program.
"My opponent co-sponsored a bill with none other than congressman Paul Ryan, a bill to privatize Social Security," Nelson said. "Specifically what they did was they were going take a third of the Social Security Trust Fund, they were going to give it in individual accounts to the senior citizens who then were to invest it in the stock market."
Never mind for a moment the claim that the GOP wants to privatize Social Security -- we’ve found that particular Democratic condemnation of personal savings accounts to be Mostly False, since they would be voluntary. Let’s delve into the specifics Nelson is citing, and find out how clear he is on the whole Republican plan.
A taxing analysis
Although Mack wasn’t mentioned by name, Nelson’s office told us the senator was referring to Ryan’s Social Security Personal Savings Guarantee and Prosperity Act of 2005, which was co-sponsored by Mack and 12 others. The proposal, which never became law, aimed to reform Social Security by allowing workers to divert some of their contributions away from the traditional Social Security program and into personal savings accounts. (Ryan has proposed several versions of this plan over the years.)
That’s enough for Nelson to try to fire up his liberal base, but the specifics of his claim are off base.
Nelson said this would rob the trust fund, which is funded through payroll taxes. But that fund was never going to have money taken directly from it, nor was the fund going to be abolished. The Ryan plans called for the fund to be compensated with general tax revenue in order to maintain benefit levels for people who stayed in the traditional system.
We should note that the plan Mack co-sponsored would have allowed people to divert half their payroll taxes, not a third as Nelson said.
An age-old debate
More critically, Nelson said the Ryan-Mack plan would have senior citizens invest payroll taxes in the stock market. This gives the wrong idea about who would be affected.
Every plan advanced by Ryan has stated the changes in the system would only affect workers younger than 55, with no changes in Social Security for workers and retirees older than that. No one older than 55 would even be eligible for the personal savings accounts, let alone be given an account to invest on their own.
Among younger workers who chose to invest in the accounts, government oversight of the accounts would not allow them to invest on their own. The Social Security Administration would have ensured future retirees with those accounts would receive at least the equivalent in payouts as the traditional system, if not more so, if the investments had a higher rate of return.
If the accounts fell short due to losses from the stock market, general revenue tax money was slated to cover the difference, which was a source of criticism after the Great Recession savaged investments in 2008.
The accounts are no longer part of Ryan’s budget resolutions, the most recent of which passed the Republican-led House but not the Democratic Senate.
Nelson said that Mack "co-sponsored a bill with none other than congressman Paul Ryan, a bill to privatize Social Security. Specifically what they did was they were going to take a third of the Social Security Trust Fund, they were going to give it in individual accounts to the senior citizens who then were to invest it in the stock market."
There are few things wrong with this.
The 2005 proposal Mack co-sponsored allowed one-half of payroll taxes to be used, not a third.
Payroll taxes do replenish the Social Security Trust Fund, but the money to fund personal savings accounts would have been replaced with general revenue taxes to pay out traditional benefits.The trust fund would have remained balanced, with fewer people entering the system by using personal accounts instead. Redirecting one third of payroll taxes from the trust fund does not constitute removing one third of the total trust fund, in any case.
Those accounts also wouldn’t have gone to senior citizens, as Nelson alleges, because no one over the age of 55 would have been eligible for the accounts in the first place. Every version of Ryan’s plan maintains this age limit.
Nelson had a point that Mack has supported Ryan’s plans for private or personal accounts in the Social Security program.
But his comments gave the wrong impression to a roomful of seniors that it would have affected them. A constant in Ryan’s budget proposals is the exclusion of senior citizens to any changes in the current system.
We rate this statement False.