In the wake of the wild gyrations on the stock market, Barack Obama has been trying to convince retirees that they would be in deep trouble if his Republican rival succeeded in privatizing Social Security. He is telling seniors that John McCain "wants to gamble with your life savings," and claimed that the Republican plan would cut "Social Security benefits in half." His predictions of doom are a gross distortion of McCain's position on Social Security.
McCain has expressed support for a never-adopted Bush administration proposal to allow Americans to invest a portion of the money that they now pay in payroll taxes in "personal retirement accounts" that would be tied to stock market performance. Participation would have been voluntary. Eligibility would have been limited to future retirees, with a cut-off date of birth dates after 1950.
As my fellow fact-checkers at Factcheck.org have pointed out, the Bush proposal would not have affected the current generation of retirees. It is therefore wrong for Obama to suggest that "millions of Floridians" who presently rely on Social Security would have seen their retirement nest-egg nosedive as a result of the battering that stocks have taken on Wall Street.
The Obama campaign has also been unable to produce satisfactory support for its claim, in the YouTube video above, that a McCain administration would slash Social Security benefits by half. According to a study by one of Obama's top economics advisers, Jason Furman, the 2005 Bush proposal would reduce the annual benefits of an average wage-owner who retires in 2045 by about 16 percent, compared with the benefits he is projected to receive under the current system. For the average wage earner who retired in 2075, the reduction would be in the region of 28 percent.
Under the Bush-McCain plan, Social Security benefits would still rise, but they would be pegged to inflation rather than wages. Click here for a more extensive analysis by Factcheck.org.
The Pinocchio Test
Obama has distorted McCain's position on Social Security, just as McCain has twisted Obama's position on taxes. (The McCain camp falsely claims that Obama wants to raise taxes across the board.) As the presidential election campaign enters its final phase, both candidates have resorted to scare tactics and a barrage of misleading, sometimes false, statistics to drum up votes.