Reading Between the Lies: Report #3
By Hans Riemer, Senior Policy Analyst
8/8/02 | Get the PDF

"ELECTION STRATEGY FOR SOCIAL SECURITY PRIVATIZERS: LIE AND MISLEAD VOTERS"

No matter what you call it, diverting Social Security funds into stock investments will cut guaranteed benefits and increase risk

The growing crisis in retirement security has put the future of Social Security front and center in the 2002 elections. Make no mistake: this is a key moment in the history of Social Security. November’s election will be a referendum on the Republican Party’s agenda – and President Bush’s specific plans – for Social Security privatization.

In the interests of informed democratic debate, the Campaign for America's Future has led a nation-wide effort to demand that candidates for federal office tell voters the truth about where they stand on partial privatization and President Bush's proposals to divert Social Security taxes into private stock investments. One of this campaign’s key elements is challenging candidates to sign the Pledge to Protect Social Security and Medicare.

But some candidates with clear records of support for Social Security privatization have demonstrated that they are willing to misrepresent or lie about their record – and, in some cases, to distort or lie about the views of their opponents. A pattern is emerging: candidates for Congress who have long expressed support for diverting Social Security taxes to private accounts – widely known as privatization or partial-privatization – are now declaring their opposition to privatization. Many of these born-again opponents of privatizing Social Security add that they only support "giving people the option of investing some of their Social Security taxes in private accounts," while falsely claiming that private accounts would not jeopardize Social Security’s promise to current and future retirees.

It is time to set the record straight.

Exhibit 1: » Clay Shaw
Exhibit 2: » John Thune
Exhibit 3: » Tim Hutchinson and Greg Ganske
Exhibit 4: »George Gekas

National GOP strategy to mislead voters about “partial-privatization.”

In the face of a growing backlash against the idea of diverting Social Security money into the stock market, the Republicans’ new strategy is to say that they “oppose privatization” – even though they still support private accounts.

Consider the following quotes from prominent Republican leaders:

Rep. Bill Thomas (R-CA), chairman of the Ways & Means Committee, said, “no Republican plan privatizes Social Security. Our plans will strengthen the program. The Social Security Administration will remain intact. Seniors will still receive government checks.” [National Journal, 05/04/02]

Steve Schmidt, spokesman for the NRCC, said, "A lot of Republicans support the idea of personal accounts, but that is different from privatization. Democrats are using the word because it's a scare word." [Associated Press, 08/05/02]

Tom Davis (R-VA), chairman of the NRCC, said, "We don't intend to privatize Social Security. There is no bill out there to privatize Social Security introduced by a Republican." [NPR, 07/04/02]

Demonstrating the interchangeability of private accounts and privatization, Public Opinion Strategies, a leading GOP polling and strategy firm, instructs Republican candidates: “Don’t say privatization. Instead say private accounts.” [POS Hill Briefing, 04/25/02]

But the version of privatization that the Republicans say they oppose simply does not exist. Their definition is analogous to privatizing a municipal service such as garbage collection. No member of Congress, think-tank, advocacy group, independent expert or research organization has ever proposed it. The Republicans might as well say that they oppose turning Social Security into cottage cheese.

GOP tries to conceal issue of diverting funds away from Social Security.

The problem with the Republicans’ quibbling over the definition of privatization is that they are obscuring a more important debate about a policy that they still support: diverting Social Security taxes into private investment accounts. Diverting money away from Social Security causes sharp cuts in Social Security’s guaranteed benefits while putting retirees’ guaranteed benefits at the whims of a risky stock market.

President Bush has proposed specific plans to divert Social Security money into private investments, developed by a Presidential Commission that excluded any experts or organizations opposed to privatization. (For more information about the Bush Commission, including a profile of the Commission members and numerous analyses of its final recommendations, visit our Social Security Superpage.)

The President’s plans for partial-privatization would drain $1.5 trillion away from Social Security over only the next ten years and trillions more after that, jeopardizing our promise to current and future retirees. According to an independent analysis by economists Peter Diamond (MIT) and Peter Orszag (Brookings Institution), the Bush Commission plans would reduce Social Security’s guaranteed benefits by as much as 17% for today’s 35 year old workers retiring in 2032, and 41% for workers retiring in 2066. Workers who do not want to invest Social Security money would still face the same benefit cuts. Meanwhile, the Bush Commission plans require trillions of dollars in “magic asterisk” general revenues – money that could have guaranteed full Social Security benefits for well over 50 years. [Center on Budget and Policy Priorities, http://www.cbpp.org/6-18-02socsec-pr.htm]

This is the real issue that voters need to hear about: instead of phony arguments about what privatization or partial-privatization “really” means, the question of diverting Social Security money into private investments and its consequences for Social Security benefits should be at the center of debate in the election.

Exhibit 1: Clay Shaw denies his plans would “change” Social Security.

Rep. Clay Shaw (R-FL) is one of the leading advocates of privatization. He has also developed legislation that would radically change Social Security’s basic financing structure and the nature of its benefit guarantee. Under the Shaw plan (which is similar to plans proposed by Rep. Armey and Rep. DeMint), the government gives trillions of dollars worth of borrowed money to workers for private investments. Then, when the worker is ready to retire, the government taxes away almost all of the investments, and uses the tax money to fund Social Security benefits. It’s the Bizarro World version of privatization.

When asked by the AARP Bulletin whether his plan would privatize Social Security, Rep. Shaw responded by saying:

Well, when you talk about privatization of Social Security, that would imply that you are turning Social Security into something that it isn't today, and neither the president's principles nor the plan that I have supported would to any material extent change the nature of Social Security. So I would say that the use of the word "privatization" of Social Security really is very misleading. [http://www.aarp.org/bulletin/julyaug01/shaw.html]

Whether or not one uses the term privatization is almost irrelevant to the central claim advanced by Mr. Shaw – that his plan would not “change” Social Security to any “material extent.” When challenged by a local coalition to sign the Pledge against privatization (www.signthepledge.org), Mr. Shaw refused but said that his plan is in “full conformity” with the groups’ opposition to privatization. Rep. Shaw’s claim is just a plain old lie.

Exhibit 2: John Thune accuses Tim Johnson of supporting privatization.

Rep. John Thune (R-SD) takes the cake for the most daring attempt to mislead voters about privatization.

Rep. Thune has a long history of support for diverting Social Security money into private investment accounts – as well as for specific benefit cuts such as raising the retirement age. Consider the following quote by John Thune from 1996:

Social Security will have to be restructured if it is going to survive for future generations. We need to give future generations the flexibility to invest a portion of their payroll tax in a private retirement account that can be there for their future. We also will need to raise the age of retirement. [Rapid City Journal, 5/28/96]

This quote is unambiguous: John Thune supports partial-privatization and raising the retirement age.

Recently, the Thune campaign ran a radio ad about his opponent in the South Dakota Senate race, claiming, “Tim Johnson supports privatizing Social Security.” But Tim Johnson does not support privatizing Social Security at all. He has signed the Pledge against privatization that has been presented to him by the South Dakota Coalition Against the Privatization of Social Security, while John Thune has refused. And Johnson has repeatedly emphasized that he opposes diverting Social Security taxes into private investment accounts, while John Thune continues to support that policy. Rep. Thune’s claim is just a plain old lie.

Exhibit 3: Candidates refuse to Pledge, but claim they oppose privatization.

Some candidates, such as Senator Tim Hutchinson (R-AR) and Congressman Greg Ganske (R-IA), have refused to sign the Pledge – while continuing to argue that they oppose “privatization.”

Voters want to know more than whether a candidate calls his or her Social Security plan "privatization." They want to know whether candidates who want their support would vote in the next Congress to divert Social Security taxes to create private stock market accounts.

Across the country, civic-minded groups are doing just what democracy intends – they are asking candidates to sign the following Social Security pledge which gets beyond the word "privatization" to define the policy changes that even President Bush's Social Security commission admits will require significant cuts to Social Security's guaranteed benefits. If a candidate refuses to sign, it is a clear sign to voters that the candidate is at least open to voting for those changes -- commonly known as privatization.

I WILL OPPOSE PRIVATIZING SOCIAL SECURITY, PARTIALLY OR TOTALLY.

This means:

• I will oppose diverting any Social Security revenues to fund private investment accounts or substituting private investment accounts for any portion of Social Security’s guaranteed benefits.
• I will not support any of the White House Commission’s privatization plans, which involve diverting trillions of dollars from Social Security to fund private accounts, cutting Social Security’s retirement, survivor and disability benefits, and would have the effect of forcing future retirees to work longer than under current law in order to receive full benefits.
• I will oppose any plan that includes any of these benefit cuts to finance private investment accounts.

So far, almost 150 Congressional candidates have signed the pledge.

Many candidates have refused to sign – but still claim that they oppose privatization or partial-privatization. These candidates are misleading the voters.

Exhibit 4: George Gekas signs the Pledge against privatization – and then says that a future Congress might just do it.

In Pennsylvania’s 17th Congressional District, a local coalition of organizations challenged Rep. Tim Holden (D) and Rep. George Gekas (R) to sign the Pledge to Protect Social Security and Medicare.

Both candidates showed up and, despite a long record of advocating for diverting Social Security funds into stock investments, George Gekas signed the Pledge. Tim Holden also signed the Pledge.

But unlike Congressman Holden, when Rep. Gekas’ signed the Pledge he reversed a position on Social Security that he has held for years - while also contradicting a vote he cast on Medicare in the current Congress.

And then the same day that Mr. Gekas signed the Pledge against diverting Social Security money into stocks, he declared that a new Congress might just do it.

According to the Harrisburg Patriot-News, Mr. Gekas said:

“This does not mean that someday in the future some commission or some congressional plan…will allow individual Social Security payers to use some of those funds for other kinds of bolstering investments.” [Patriot News, 07/23/02]

Mr. Gekas is double-dealing on Social Security – and misrepresenting his views to the voters.

Nonpartisan groups define – and oppose – “privatization.”

The term “privatization” or “partial-privatization” is rooted in the concept of “private accounts.” Privatization or partial-privatization is an important and appropriate term because it invokes how risk is transferred from the government to retirees. Under Social Security’s present structure, workers receive a benefit that is guaranteed by the Federal government. Under privatization, however, Social Security’s guaranteed benefits would be scaled back sharply, with income from private accounts providing some substitution – more for those who are lucky or skillful, less for those who are not. Risk for workers and retirees will dramatically increase.

Check out these public policy positions from major national organizations:

AARP

“Some would “privatize” Social Security by moving it away from a social insurance program to one composed of individually controlled investment accounts that replace part or all of Social Security. This approach is sometimes called a carve out. Social Security should not be jeopardized by individual accounts that would replace all or a portion of Social Security’s guaranteed benefit.” [“The Policy Book: AARP Public Policies 2001,” Page 3-7]

Leadership Conference of Aging Organizations

“A privatized system of personal investment accounts would radically change the structure of the Social Security system from one with guaranteed benefits to one based on individual investment outcomes. Such proposals would divert some or all of current Social Security taxes into mandatory private accounts. The Leadership Council of Aging Organizations would oppose this approach.” (The Leadership Conference of Aging Organizations' members include the AARP, National Committee to Preserve Social Security and Medicare, Alliance for Retired Americans, Alzheimer’s Association, National Council on the Aging, Older Women’s League, and many others.)
[http://www.lcao.org/legagenda/ss/ss_privatization.htm]

National Committee to Preserve Social Security and Medicare

“The National Committee defines Social Security privatization as any proposal to allow workers to divert current payroll taxes to private accounts, or otherwise substitute today’s guaranteed benefits with earnings from private investment accounts.” [Barbara Kennelly, President and CEO of the National Committee to Preserve Social Security and Medicare, www.ncpssm.org]

Campaign for America’s Future “Truth Squad” cuts through spins and lies.

The Campaign for America’s future is putting the spotlight on misleading campaign messages. As supporters of privatization try to spin their way out of a fair debate over the consequences of their ideas, the Campaign for America’s Future’s “Truth Squad” will expose the misrepresentations and lies.

The Campaign for America's Future is encouraging citizen activists to be on the lookout for misleading statements on Social Security by a candidate in a newspaper or on the radio or TV. Where appropriate, the Campaign will do an analysis to set the record straight – and to challenge the media to inform the voters.