As the debate over Social Security privatization continues, so do the mainstream media distortions of the debate. On January 11, ABC News muddied the waters further with two one-sided and inaccurate reports.
On World News Tonight, anchor Peter Jennings started off the distortions in the show's "A Closer Look" segment. Having allowed that there is "some argument" about whether Social Security would, as Bush argued recently, "go bankrupt" without congressional intervention, Jennings continued: "But there's no question that baby boomers will place great strain on Social Security as they retire. And by 2042, by some measures, the system may not have enough cash to pay full benefits."
Actually, there's plenty of question about the notion that baby boomers will strain the system; the whole point of amassing a surplus in the trust fund in the first place was to absorb the strain of their retirement. And if it's true that "by some measures" (i.e., the Social Security trustees) the system won't have enough cash in 2042, it's also true that by other, less pessimistic, measures, it will; for example, the non-partisan Congressional Budget Office projects payment of full benefits through at least 2052-- at which point the oldest boomers will be 106 and the youngest 88 (Economic Reporting Review, 1/10/05).
Some economists point out that the system, if the economy grows about as quickly in the future as it has in the past, will most likely never run short of cash. These projected dates of Social Security running out of cash have been pushed steadily into the future in recent years as the dramatic slowdown that the Social Security trustees forecast continues to fail to materialize (Political Animal, 12/13/04).
Even if the system does need more cash four or five decades from now, it's not clear that this should be characterized as a "great strain." The amount of money necessary to keep paying full benefits could be raised by a tax increase that was about one-fourth the size of the Bush tax cuts (Washington Post, 1/12/05).
The segment continued with ABC's Robert Krulwich providing commentary over an animated cartoon purporting to explain the Social Security system and Bush's privatization proposal. According to Krulwich, despite the widespread belief that money paid in to Social Security is put "somewhere safe," that money is actually spent by the government, leaving "no money, just IOUs." Bush's proposal, Krulwich said, allows workers to have "a nest egg you can call your own and government can never take away."
The IOU argument is a favorite of pro-privatizers, but it has little basis in reality. Those trust fund "IOUs" exist in the form of U.S. government bonds, just like those held by private investors and foreign countries like Japan and China. Such bonds are considered among the safest investments one can make; there's never been a historical instance of the U.S. defaulting on a bond. To suggest that those bonds are not "somewhere safe" is to suggest that the U.S. government might default on its loans to its own retiring workers-- an event that is far less likely than a bank or other private investment institution defaulting on privately held retirement accounts. But both Jennings' and Krulwich's points were presented unopposed, leaving viewers with a very skewed picture of Social Security.
The same day, ABC's Good Morning America aired a segment that promised to "cut through some of the political rhetoric and look at the reality of what [Bush's Social Security plan] might mean." The show presented Bill and Vicki Wilson, a two-income couple with two kids and "retirement 20 years off," and turned to Michael Tanner of the pro-privatization Cato Institute for expert analysis of the Wilsons' situation.
Tanner told the Wilsons that under the current system, Bill should receive approximately $2,250 and Vicki $2,200 per month-- but that there's a "catch." ABC's Claire Shipman explained:
"One thing everyone agrees on, the Social Security system as it exists now won't be able to afford those payments for long after the Wilsons retire."
Not only doesn't "everyone agree" with this statement, it's patently untrue. Since the Wilsons will retire in about 20 years (or 2025), they would enjoy their full payments for nearly 20 years even under the pessimistic assumptions of the Social Security trustees, and nearly 30 years according to the CBO. Statistically, the Wilsons are quite likely to be dead before there is any question about Social Security's ability to pay their full promised benefits.
Tanner went on to claim that turning over some of Social Security to private investment accounts "would be enough to bring you back up above what you otherwise would get" after proposed benefit cuts. The numbers Tanner provided to ABC, however, show the Wilsons doing worse after privatization: With benefit cuts along with "a small investment in a private account and a modest return," their total Social Security benefits under the privatization plan were estimated to be about $300 less per month each than the income that they would get if the system were unchanged.
But because the Wilsons had been assured-- inaccurately-- that "everyone agrees" that Social Security would be unable to provide them with the benefits they had been promised, they were inclined to think that this roughly 15 percent reduction in benefits was not such a bad deal.
While Vicki Wilson did express concern about the $2 trillion to $3 trillion cost of creating private accounts, it was quickly resolved by her own suggestion that "maybe the way to suck it up somewhere along the line is to take a small benefit cut like what you showed us."
No other opposition to Bush's plan or questions about its effects received any mention; in what the ABC segment labeled "the mother of all debates," such voices from the other side of the table were conspicuously absent.
Please contact ABC and urge them to include a full range of debate on the Social Security issue. Tell them to stop presenting highly debatable claims as if they were not in dispute.
World News Tonight
Good Morning America
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NOTE: Tanner estimated Bill Wilson's benefits at $1,952 and Vicki's at $1,881 per month. An earlier version of this alert understated the difference as $300 less per year rather than per month.