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In remarks at the Associated Press annual meeting on April 14, 2008, Sen. Barack Obama took a shot at Sen. John McCain's plans for Social Security.
"He's promising four more years of an administration that will push for the privatization of Social Security — a plan that would gamble away people's retirement on the stock market; a plan that was already rejected by Democrats and Republicans under George Bush."
The truth is, so far McCain isn't promising much of anything concrete when it comes to Social Security. While on the campaign trail, he has hammered at the need for "straight talk" about a system that is going broke, but he has been short on details about what he would do, except to say that with bipartisan negotiations he thinks he can fix the program's projected bankruptcy in 2041 without raising taxes.
McCain's campaign Web site states that McCain supports "supplementing" the current Social Security system with personal investment accounts — "but not as a substitute for addressing benefit promises that cannot be kept."
This approach appears to rule out a plan like the previous Bush plan, which would have diverted some Social Security payroll taxes to fund private investment accounts controlled by individual workers.
That's a bit of a change for McCain, who in his presidential bid in 2000 proposed an option for workers to invest at least 20 percent of their Social Security payroll taxes in private accounts.
In 2005, McCain stumped alongside President Bush when Bush pitched a plan to let workers born after 1950 to divert a portion of their payroll taxes into personal retirement accounts invested in stocks and bonds. In exchange, workers would have had to accept a cut in the traditional Social Security benefit. This time around, McCain is staying fairly vague about details of his plans.
In a Q&A; with the Wall Street Journal , published on March 3, 2008, McCain was asked why he had changed his plan from one that would use some payroll taxes to create Social Security private accounts to one that talks about accounts as "supplements" to Social Security.
"Actually," McCain responded, "I'm totally in favor of personal savings accounts and I think they are an important opportunity for young workers."
McCain's chief economic aide, Douglas Holtz-Eakin, told the Wall Street Journal in March 2008 that "McCain intends to keep Social Security solvent by reducing the growth in benefits over the coming decades to match projected growth in payroll tax revenues. Among the options are extending the retirement age to 68 and reducing cost-of-living adjustments, but the campaign hasn't made any final decisions yet."
John Rother, policy director at AARP, said he, too, has spoken with Holtz-Eakin and understands McCain's plan to be "sort of an in-between system" compared to his earlier efforts.
"I think there's a lot of unresolved questions," Rother said. "It's not clear how he plans to fund the 401(k) program or how everyone would take advantage of it. I am hoping Sen. McCain will have a chance to define things better going forward."
There's a lot we don't know about how McCain would deal with the financial problems in Social Security, but we know enough to say that Obama's statement that McCain's plan is the same as the Bush plan isn't accurate. Obama's statement suggests that McCain would entirely supplant the Social Security system with private investment accounts, but the Republican's campaign statements so far talk about using private accounts to "supplement" Social Security benefits.
For these reasons, we rate Obama's characterization of McCain's plans to reform Social Security as False.
Associated Press, Obama's Remarks at the Associated Press' Annual Meeting , April 14, 2008
New York Times, "McCain to Propose Middle-Class Tax Cut and Private Accounts Within Social Security," by Richard V. Stevenson, Jan. 11, 2000
On the Issues, "John McCain on Social Security"
Wall Street Journal, "McCain's Economy Platform: Big Tax Cuts, With Caveats" by Bob Davis, March 3, 2008
Wall Street Journal, "Campaign '08: McCain Interview: 'I'm Always for Less Regulation,'" by Bob Davis, March 3, 2008
Los Angeles Times, "Bush Urges an End to Attacks on Plan" by Peter Wallsten, March 23, 2005
Interview with John Rother, policy director at AARP, April 15
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