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A Project of The Annenberg Public Policy Center

Pro-Bush Group Overstates Social Security Shortfall

Progress for America says Social Security will sink like the Titanic, a big exaggeration.


In a new TV ad, Progress for America exaggerates the true state of Social Security’s finances by comparing it to the Titanic. The ad claims the system will go “bankrupt” if nothing is done and that we must rescue the program “before it hits the iceberg.” Actually, neutral experts predict the system can pay between 70 and 80 percent of currently scheduled benefits even if the Trust Fund is exhausted, which isn’t predicted to happen for another 37 years, at least.

The ad also touts Bush’s plan for “voluntary personal retirement accounts” as though that would improve the system’s finances. But even the White House now acknowledges that individual accounts alone do nothing to fix the system’s long-term financial shortfall.


Progress for America released a new television ad March 8 urging voters to support the President’s plan to “save Social Security” with individual accounts and give workers “their own retirement nest egg.” The ad “Titanic” is a new 60-second version of a shorter ad they released exactly one month earlier. PFA Voter Fund, the group’s political advocacy arm, says it will spend $2 million to run the ad on national cable channels for three weeks. It describes the effort as giving the public “information they need to see through the misleading… campaign themes of liberal politicians.”

 PFA Ad: ‘Titanic’

Announcer: Some people say Social Security is not in trouble. Just like some people thought the titanic wasn’t sinkable. Once 16 workers supported one retiree. Today, three workers do. But when younger workers retire, only two will support each retiree. Soon Social Security will be in the red, spending more than it takes in. If nothing is done, it will go bankrupt.

President Bush wants to rescue Social Security now, before we hit the iceberg. The Bush plan: voluntary personal retirement accounts, to give younger workers the choice of saving for their own retirement nest egg. No payroll tax increases and no changes for those 55 or older.

President Bush (State of the Union, 2005): But we have to move ahead with courage and honesty, because our children’s retirement security is more important than partisan politics.

Announcer: We don’t have to hit the iceberg. Urge Congress to help President Bush save Social Security now.

Both versions of the ad feature a clip of Bush’s State of the Union address in which he tells Congress, “We have to move ahead with courage and honesty, because our children’s retirement security is more important than partisan politics.” Yet their own ad presents a distorted image of the system’s problems.

Social Security Isn’t the Titanic

The ad opens by showing an iceberg on screen while an ominous voice says, “Some people say Social Security is not in trouble. Just like some people thought the Titanic was unsinkable.” The announcer continues to say that soon the system “will be in the red, spending more than it takes in.”

It’s true that under current law, the Trustees predict that the system will pay out more than it collects in taxes in the year 2018, at which point it will require money from general tax revenues to cover benefits owed to retirees. However the ad says, “If nothing is done, it will go bankrupt,” and we’ve said before that the use of the term “bankrupt” could give the wrong impression. Although the word has been used by Democrats and even journalists in the past, it could still be easily misunderstood since Social Security will not go out of business, nor will it disappear like a sunken ship. The system would continue to pay benefits — just not as many.

According to the assumptions of the Social Security Administration’s chief actuary, the current system can pay out full benefits until the year 2042, when the Trust Fund will be exhausted. And even then, the chief actuary predicts that without any tax increases, Social Security can still continue to pay 73 percent of promised benefits, though that figure would fall each year thereafter, reaching only 68 percent by 2078.

The Congressional Budget Office is even less pessimistic about the system’s finances, predicting it won’t go “in the red” with benefits exceeding taxes until 2020, two years later than the actuary predicts. CBO also projects that the Trust Fund will last an additional 10 years, drying up in 2052.  At that point CBO forecasts that the system can pay 78 percent of what beneficiaries are owed under current law.

The ad does get some basic facts right. Social Security faces mounting demographic challenges that only worsen with time as the baby boomers start to retire and birth rates continually decline. The ad correctly notes that in 1950 there were actually 16.5 workers to support each beneficiary, whereas today that ratio has fallen to only 3.3 workers. The Trustees predict the number will continue to drop so that by the time workers in their 20’s start to retire in 2040 there will be only 2 workers per beneficiary.

Bush to the ‘Rescue’

In their ad, Progress for America tells voters that the President will “rescue Social Security” before it hits the iceberg with his plan for individual retirement accounts. But in fact, there’s still no specific Bush rescue plan. Even the White House now acknowledges that individual accounts alone do nothing to shore up the systems long-term finances. In the most detailed briefing to date on Bush’s proposal, a senior administration official said on condition of anonymity that individual accounts would have a “net-neutral effect” on the long-term fiscal outlook, thereby leaving the system no better off than it currently is and still headed for PFA’s “iceberg.” And in the shorter term, individual accounts would create a new financial problem because they require massive federal borrowing to pay benefits as workers divert a portion of payroll taxes into their own accounts.

Beyond describing the shape of his proposed individual accounts, Bush has not endorsed any specific plan to fix the system’s financial problems. He said as recently as March 10 that “all ideas are on the table.”

The Nest Egg

PFA refers to individual accounts for workers as “their own retirement nest egg,” but fails to mention that workers would “own” these accounts only in a limited sense. As described by the senior Bush administration official, workers would not be permitted to withdraw their savings before retirement, at which point the government would require that some or all be converted into an annual stream of payments received over life, called an annuity. The senior administration official said the amount of money to be funneled into a mandatory annuity is the amount necessary to keep a retiree above the poverty line — currently $12,490 for a couple or $9,310 for a single person. The actual money that is “yours” would depend on the amount left over after annuitization.


View PFA Ad: “Titanic”



Congressional Budget Office, “Updated Long Term Projections for Social Security ,” March 2005.

White House Office of the Press Secretary, “Background Press Briefing on Social Security,” press release, 2 Feb 2005.

US Department of Health and Human Services, “Annual Update of the HHS Poverty Guidelines,” Federal Register 13 Feb 2004: 7336.