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Angie Drobnic Holan
By Angie Drobnic Holan June 13, 2008

'Privatization' gets 'personal'

Democrats jumped on a comment that Sen. John McCain made at a town hall meeting in New Hampshire on June 12, 2008.

"I am not for quote 'privatization of Social Security.' I never have been, never will be," McCain said in answer to a voter question.

The Democratic National Committee quickly spliced that video onto file video of McCain on C-Span.

"Without privatization, I don't see how you can possibly over time make sure that young Americans are able to receive Social Security benefits," he said in 2004.

The 26-second spot wraps up with a photo of McCain and George W. Bush, and audio of a crowd shouting "Four more years!"

Seems like an obvious flip-flop, right?

Not so fast.

The DNC ad truncates McCain's remarks at the 2008 town hall. The Nashua (N.H.) Telegram reported the following exchange:

"Amherst Democratic activist John Mendolusky engaged McCain in a sharp but respectful exchange over Social Security reform.

'You stated you are in favor of private accounts which really is privatization of Social Security,' Mendolusky began.

'Why would you have workers risk their nest eggs on the roulette wheels of Wall Street?'

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'I am not for quote "privatization" of Social Security. I never have been, never will be. That is a great buzzword for an attack,' McCain shot back.

'Workers should have the right to put their own taxes, their own money into an account. If they don't want to, don't do it.'"

McCain's rejection of the word privatization goes back to President George W. Bush's 2005 push to allow workers to divert a portion of the program's payroll taxes to personal investment accounts. The thinking was that private accounts would give younger workers the ability to manage their retirement nest eggs without government interference and it would keep the system solvent.

McCain supported Bush's plan, going so far as to accompany the president on a series of town hall meetings in March 2005.

It was around this time that Bush and his party decided that most people didn't like the idea of "privatizing" Social Security. Pollsters found that if you didn't call Bush's plan "privatization" but instead called it "personal accounts," you could increase support for the plan significantly — even though it was the same plan.

So Bush and his supporters stopped referring to the plan as privatization and started calling it "personal accounts." Bush complained that privatization was a "trick word" designed to "scare people."

Hence the 2004 video of McCain talking about "privatization" contrasted with 2008 video rejecting the term.

Not that the new terminology worked. Personal accounts didn't get very far legislatively, and the initiative went down as one of Bush's biggest defeats in domestic policy.

So what is McCain proposing for Social Security if he's elected? We looked at this question previously and found that McCain has offered only a broad outline for the program. His Web site says he wants to supplement the current system with personal accounts but adds the accounts will not be a substitute for addressing benefit promises that cannot be kept. It also notes McCain wants to work with Democrats on a Social Security plan but is prepared to go it alone if they don't want to play.

The full context of McCain's comment at the town hall meeting, which the DNC was happy to leave on the cutting room floor, shows McCain thinks that voluntary personal accounts do not amount to privatization of Social Security. He reiterated that position on the campaign trail the day after the New Hampshire town hall meeting.

"I will not privatize Social Security, and it's not true when I'm accused of that," McCain said. "But I would like for younger workers, younger workers only, to have an opportunity to take a few of their tax dollars, and maybe put it into an account with their name on it. That's their money. ... And we will make sure that present-day retirees, I will commit, have the benefits that they have earned."

This makes answering the Democrats' implicit claim that McCain favored privatization a little tricky. On a certain level, the video speaks for itself. If by privatization you mean George Bush's plan, then McCain clearly did favor it. But Bush himself didn't like the term privatization and felt that it was misleading. McCain clearly believes he can offer personal accounts while keeping the rest of Social Security intact and rejects the privatization label. For all of these reasons, we find the DNC's claim to be Half True.

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