McCain can’t defend privatization plan, so he redefines the word

Following up on an item from this morning, there’s already video proof that John McCain supports privatizing Social Security, just as Bush attempted to do in 2005. Realizing the pressure’s on, today McCain attempted to, well, lie about it.

For those who can’t watch clips online, McCain told voters at an event in New Jersey, “I just want to mention on the issue of Social Security. McCain wants to quote ‘privatize’ Social Security. My friends, I do not and will not privatize Social Security. It’s a government program, and it’s necessary, but it’s broken, and we gotta tell the American people that we gotta fix it. We gotta sit down together, the way that Ronald Reagan and Tip O’Neil did in 1983 and fix Social Security.

“But my friends, I will not privatize Social Security, and it’s not true when I’m accused of that, but I would like for younger workers — younger workers, only — to have an opportunity to take a few of their tax dollars, a few of theirs, and maybe put it into an account with their name on it. That’s their money. That’s their money.

“So, when I say that, when I say that, please don’t let them twist that as they have others. It’s their money. It’s their money. It’s your money. And we will make sure that present-day retirees — I will commit — have the benefits that they have earned. And nothing, any proposal, would change that.”

The irony is, in 2004, McCain acknowledged that he does, in fact, want to privatize Social Security, and in 2008, McCain insists he doesn’t, but his position hasn’t changed — only his definition of privatization has.

Matt Yglesias summarized this nicely: “In short, [McCain] stridently denies that he wants to favor privatizing Social Security. He just favors policies that are the same as the policies that were called ‘privatizing Social Security’ before the GOP found out that privatizing Social Security is unpopular.”

That’s really the entire debate. Dems say, “McCain, you want to privatize Social Security.” McCain responds, “No I don’t, I just want people to have private accounts with money that used to go into the Social Security system.”

Except that’s what privatization means. McCain admitted as much in 2004, and as Josh Marshall noted this morning, “[N]ot only is ‘privatization’ an accurate description of the policy but it’s also the one Republicans came up with and the one they used until polls showed definitively that the American people want to preserve Social Security and weren’t for privatizing it.”

With McCain, we’ve gone from debating “verb tense” to debating the meaning of “privatize.” Didn’t Republicans used to hate Bill Clinton for word parsing?

All of the same talking points from 2005 still apply, because all McCain has done is dust off Bush’s policy — which Americans overwhelmingly hated — and embrace it as his own. McCain insisted this morning, for example, that younger workers have an “opportunity” to move their money from the Social Security system into private accounts. But since Social Security is a pay-as-you-go system, and McCain insists he won’t cut benefits, McCain’s numbers don’t make a lick of sense. We don’t need to “twist” anything — McCain’s plain words are demonstrably ridiculous.

Thankfully, all of this has not gone unnoticed by the Obama campaign. Obama spoke today in Columbus, Ohio, where he hammered away on the topic of the day.

“Now, John McCain’s ideas on Social Security amount to four more years of what was attempted and failed under George Bush. He said he supports private accounts for Social Security – in his words, “along the lines that President Bush proposed.” Yesterday he tried to deny that he ever took that position, leaving us wondering if he had a change of heart or a change of politics.

“Well let me be clear: privatizing Social Security was a bad idea when George W. Bush proposed it. It’s a bad idea today. It would eventually cut guaranteed benefits by up to 50%. It would cost a trillion dollars that we don’t have to implement on the front end, permanently elevating our debt. And most of all, it would gamble the retirement plans of millions of Americans on the stock market. That’s why I stood up against this plan in the Senate, and that’s why I won’t stand for it as President.

“But Senator McCain’s campaign went even further a few months ago, suggesting that the best answer to the growing pressures on Social Security might be to cut cost-of-living adjustments or to raise the retirement age. I think there is another option that is fairer to working men and women. We have to protect Social Security for future generations without pushing the burden on to seniors who have earned the right to retire in dignity.

“Here’s where I would start. Right now, the Social Security payroll tax is capped. That means most middle-class families pay this tax on every dime they make, while millionaires and billionaires are only paying it on a very small percentage of their income. That’s why I think the best way forward is to first look to adjust the cap on the payroll tax so that people like me pay a little bit more and people in need are protected. That way we can extend the promise of Social Security without shifting the burden on to seniors. And we should exempt anyone making under $250,000 from this increase so that the change doesn’t burden middle-class Americans. This means that 97% of Americans will see absolutely no change in their taxes under my plan – 97%.

“Now, there was a time when John McCain thought this wasn’t such a bad idea. When he was asked a few years ago whether he could see himself lifting the cap on the payroll tax, he said, “I could.” But today, he’s attacking me for holding the very same position.

“You know, John McCain has proposed a series of debates, and I’m looking forward to having them. But when it comes to Social Security, he might want to finish the debate with himself first.”

Anyone who thinks McCain has a clue on this issue just isn’t paying attention.

“You know, John McCain has proposed a series of debates, and I’m looking forward to having them. But when it comes to Social Security, he might want to finish the debate with himself first.”

Oh I love that guy. That’s a smart line that slams McCain in two different ways (the debate issue and the SS issue) and most importantly undercuts McCain’s alleged credibility.

  • It just gets stranger and stranger the farther down we go in the Orwellian rabbit hole that is republican logic.

  • Hopefully folks will see through McCain’s BS. Obama’s “donut” approach is interesting. I wish, though, that those of us who are self employed didn’t have to pay double our share of FICA (social security and medicare). Sure some of it is deductible, but don’t try to tell me that as I’m writing out my estimated tax payment checks today.

    In other news… I’m not sure if anyone has posted this:
    http://news.yahoo.com/s/politico/20080612/pl_politico/11041
    Rezko: Feds pushed for dirt on Obama
    Kenneth P. VogelThu Jun 12, 3:33 PM ET
    Imprisoned Chicago businessman Antoin “Tony” Rezko has accused federal prosecutors of improperly pressuring him to implicate Barack Obama in a corruption case.
    ~~~~~
    Hmmmm, no political stuff going on here, move along, move along.

    Gee W, I wonder who was behind this?

  • #1 “he might want to finish the debate with himself first.”

    Oh I love that guy. That’s a smart line…
    ~~~~~~~

    And it could be applied to just about everything McLame since 2000: his religion (Episcopal to Baptist), torture, the war, Social Security, etc. etc, etc.

    Obama will run circles around him. Can’t wait.

  • The problem for the Chicago School of Economics (which is the source of this insanity) is that if you actually explain to the victums what they propose to do to them, the victums routinely reject it.

    Thus, the CSE has to wait for wars and ecological disasters to attempt to put their policies into place. Even then, they never work the way Milton Freedman said they would, and thus the CSE’s acolytes are stuck with destroying more and more of the public infrastructure of a country in their attempt to prove their prophet (of profit) correct.

    Read “Disaster Capitalism”, by Naomi Klein

  • One big problem for Republican candidates is that the party only wants them to be empty suits. They just want somebody to say the lines that they want said and thats’ it. That’s why their greatest president in modern history was an actor and why Bush Jr was more successful than Bush Sr, because HW wanted to know what the hell he was talking about and W didn’t. Junior was just happy to have something to say and didn’t care if it made sense.

    And so now McCain’s stuck having to take all the positions that every Republican presidential nominee has to take, but it really doesn’t fit him well at all. While empty suit Romney would have been perfectly at home saying these things, this totally conflicts with McCain’s “straight-talk” image and it really upset him every time.

  • “But my friends, I will not privatize Social Security, and it’s not true when I’m accused of that, but I would like for younger workers — younger workers, only — to have an opportunity to take a few of their tax dollars, a few of theirs, and maybe put it into an account with their name on it. That’s their money. That’s their money.”

    McBush just waterboarded and put sharp things under the fingernails of the word, “Privatization”. It has seen the light and will now answer to whatever he wants to call it.

  • My only problem with the Obama proposal is this. Social Security is a forced insurance program, not a welfare program.

    My grandmother used to call it “old age insurance” (back in the days when they called prisons “prisons” instead of “correctional facilities”, and the “Department of Defense” was called the “Department of War.”) The magic of Social Security is that everybody pays, everybody benefits; it’s insurance against living to a ripe old age.

    My grandmother lived to be 91. My Dad, unfortunately, passed away at 62. So my grandma collected benefits for 26 years while Dad paid in for 40+ years and never collected. But that’s the way insurance works.

    Under a privatization plan, my grandma would have run out of money in about 7 years and lived destitute, or dependent on her family, for 19 additional years, while my Dad would have collected nothing but left a pile of money to my Mom (money taken out of the retirement system).

    But the fairness of the system is that it’s not a transfer of money from one economic class to the other, it’s an insurance plan that everyone is covered by. It is true that the benefits are graduated a bit with an emphasis on basic necessities, i.e. it replaces a higher percentage of your initial income than it replaces for higher amounts. But otherwise it is designed to be a fair insurance plan for everyone.

    If we decide to tax high wage or income earners at amounts that bear no relationship to actuarially expected benefits, we change the basic structure of the plan. That could well undercut political support for the program and make it even more of a target (or political football) for a political contest between the super rich and the rest of us. We also make Social Security the first priority over other important things that higher taxes on the wealthy could be used for, such as Medicare or Medicaid, or rebuilding our national infrastructure that’s been neglected.

    I am all for fixing Social Security, but simply passing a tax on earners over $250,000 raises other questions. Relatively minor adjustments to the retirement age, the cost of living index, and the current cap could solve the problem without turning this into a class war issue. We already have more than enough need for the funds generated by rolling back the Bush tax cuts on the top bracket without promising them to the Social Security system.

  • pfgr (8) – This wouldn’t be an issue if the money received from SS payroll taxes were truly an “old age insurance”. The problem is that workers were essentially subsidizing other income tax cuts. Right now if you make $30K/yr you pay twice as much tax (payroll plus income) depending on whether you work for the money or make it through investments. The vast majority of people with million dollar a year income make most of it from investments.

    Furthermore, the more money you actually have, the easier it is to make more, the better discounts you can get, the better investment advice you have access to. The net result is an increasing wedge between rich and poor.

    The problem now is that the social security surplus is approaching an end. Then there will be a debt to the program that has to come from somewhere. Under Reagan the solution was to raise SS taxes. Bush wants to raise the age at which people can receive SS.

  • In the future we will also have to consider the greater longevity of people after retirement age that will be a result of universal health care.

  • That’s why I think the best way forward is to first look to adjust the cap on the payroll tax so that people like me pay a little bit more and people in need are protected.

    With these words, Obama just took the burden on himself. He’s effectively uttered those six words:

    He ain’t heavy, he’s my brother.

    McCain’s done. Stick a fork in him, stuff an apple in his mouth, and serve him up with poi and toast.

  • Another important point,
    Reagan “fixed” social security by raising taxes that the workers pay.
    McSame wants to do the same !!!!
    But I thought McSame is against raising taxes in this economy.

    Also, the Reagan promise was that the initial surpluses would pay for the Boomer bump in retires and pay-outs at the middle of this century. But then Reagan and Bush I used the surpluses to cover the true cost of the Reaganomics Voodoo tax cuts to the wealthy.
    In the 2000 election, Gore proposed putting the SSI surplus in a Lock Box to fund the Boomer bump since the Clinton policies had put the Fed on a balanced budget. And candidate Bush agreed.
    But pResident Bush II immediately declared that there should be a major cut in the income tax because the Fed was running a surplus. It was SSI that was producing the surplus but no Repub ever calls for an SSI cut because there is no benefit for their core supporters, the wealthy top 5%.

    Just to be clear, SSI has been running a surplus. Per CBO, in billions of dollars:
    1988-97 = 38.8 -52.4-58.2-53.5-50.7-46.8-56.8-60.4-66.4-81.3 = 498.9
    1998-07 = 99.4-151.8-163.0-159.0-155.6-151.1-173.5-185.2-186.5 = 1,549.8
    or about 2 Trillion dollars and not one cent in interest.

    But the Repubs and McSame want to keep the income tax cuts if W.
    The Repubs and McLame want to ignore money “borrowed” from SSI.
    The Repubs and McCain want to cut SSI benefits and/or privatize to “fix” SSI.

  • DanP at 9 — I agree with everything you say. The reforms under Reagan (income tax cuts and SS tax increases, and lending the surplus in SS to the Govt.) were the biggest transfer of wealth from the working class to the rich in history (including the transfer of the obligation to pay interest on the national debt). I’m all for raising the income tax on the top marginal earners back to historically more normal levels, and repaying the debt owed to the SS system. It may be semantics, but I think calling combining the two steps and calling it an additional payroll tax on the “rich” to pay SS, though, plays into the Republican class warfare argument.

    Here’s another idea I’ve seen floated, that makes sense — dedicate the estate tax revenue to SS. It would help bridge some of the gap and reinforce support for continuing the estate tax.

  • And we should exempt anyone making under $250,000 from this increase so that the change doesn’t burden middle-class Americans

    pfgr (14), The way I read this quote from Obama’s speech in Columbus, what he suggests is essentially an increase in marginal tax for the highest income people. Now this appears to be different from what he has on his issues page. As I read it, though, payroll taxes would be charged for up to $102,000 as they are now, and then again after $250,000. Personally I hope it would include cap gain income, because I still don’t get the idea that work should be taxed more than those who merely invest.

  • Gotta love the nannystate government. “We don’t think you people are smart enough to save for retirement, so we’ll force you to by putting you in our program and give you a few percentent interest on it. Ignore the fact that the Dow averages ~10% a year over the course of history. We are the government, we know best.”

    If you want the government to know what’s best for you-vote Obama!

  • Philip:

    Most people in the middle to lower income do not have the money to play the stock market. I have my own business and do not make $102,000 a year now, which is the cap. It is basic retirement insurance for people that if they had the money in their own hands would have spent it on things like Food, Clothing, medical. They never would have been able to save it. I like the idea of it being taken out of my paycheck. If you don’t have it in the first place to spend, you don’t miss it. You ajust your buget accordingly. But, if you have it to invest you probably wont. And young people have never been really good at saving money as getting old is a long ways off.

  • It is insurance, but it also includes disability and survivorship benefits. It is not simply retirement insurance. Also the retirement benefits are really a life annuity- they do not run out until you die.

    Ignore the fact that the Dow averages ~10% a year over the course of history.

    Actually if you look at the history of the stock market, it averages just a little over the risk free interest rate. It does not average 10% a year. Also, all those famous market managers? They do no better. The market follows a random walk that can be modeled by flipping a coin and adding drift to account for inflation. And of course, you seem to be ignoring the fact that social security was devised after everybody lost their money in the stock market crash, and nobody could afford to eat. It was designed to be separate from the market and to protect people if another crash occurred.

  • Thanks gttim,
    the survivorship and disability is ALWAYS glossed over by privatization shills.

    MANY Americans could do better with privatization.
    Many would get conned into the next Enron. If you restrict their choices, then it’s government knowing best again, isn’t it?

    If naive investors are allowed to bankrupt themselves, we’re back to elderly people panhandling like we had before Social Security was developed.

    Obama had to ignore raising the retirement age, but it makes sense over the long haul. People live a lot longer now and I don’t see it getting any better (worse). Centenarians are relatively common now. Why do they get to live off the younger folk for nearly a third of their lives?

    That’s not sustainable. If folks want to retire early, THAT’s what your private retirement account could do for you.

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