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A Project of The Annenberg Public Policy Center

Scaring Seniors

An Obama-Biden ad says McCain supports "cutting benefits in half" for Social Security recipients. False!


A new Obama ad characterizes the "Bush-McCain privatization plan" as "cutting Social Security Benefits in half." This is a falsehood sure to frighten seniors who rely on their Social Security checks. In truth, McCain does not propose to cut those checks at all.

The ad refers to a Bush proposal from 2005 to hold down the growth of benefits for future retirees. Compared to the buying power of benefits paid to today’s retirees, that would not have been a "cut" for anybody. It would have been a "cut" of half only in relation to benefits now promised to retirees who have yet to be born. And for average workers, that "cut" in 2075 was projected by one of Obama’s own economic advisers to be 28 percent, not "half."

The ad also says McCain voted "in favor of privatizing Social Security." The term "privatizing" could give the wrong impression. McCain does support creating government-managed accounts that would allow individuals to invest some portion of their Social Security payroll taxes in widely diversified stock or bond funds.


The Obama campaign made no announcement of this ad and won’t say where they intend to run it. It was first aired on a station in Flint, Mich. on Sept. 16, where it was recorded by the Campaign Media Analysis Group of TNSI Media Intelligence. According to CMAG, the ad has been running in Florida, Michigan, Nevada, Ohio, Pennsylvania, Virginia and Wisconsin.

Update Sept. 20: A day after this article was first posted the Obama-Biden campaign e-mailed an announcement to reporters with a script of the ad, saying it "began airing last week in key states across the country." We had originally called the ad "Social Security," the name CMAG assigned to it when first seen. The campaign calls it "Promise" and we have changed the name here to reflect that.

[TET ]Obama-Biden Ad: "Promise"

Obama: I’m Barack Obama and I approved this message.

Announcer: A broken economy. Failing banks. Unstable markets. Families struggling. To protect us in retirement, Social Security has never been more important. But John McCain voted three times in favor of privatizing Social Security. McCain says, “I campaigned in support of President Bush’s proposal.” Cutting benefits in half, risking Social Security on the stock market. The Bush-McCain privatization plan. Can you really afford more of the same?[/TET]

Betting the Bank?

The ad says McCain voted for "privatizing Social Security" and quotes him as saying he "campaigned in support of President Bush’s proposal." McCain did say in March:

McCain, Mar. 3, 2008: I’m totally in favor of personal savings accounts and I think they are an important opportunity for young workers. I campaigned in support of President Bush’s proposal and I campaigned with him, and I did town hall meetings with him.

The three votes featured in the ad are from 1998 and 2006. Two expressed a general "sense of the Senate" favoring creation of private accounts, and a third would have created private accounts only with the passage of additional legislation allowing younger workers to "opt out" of the current system. None would have actually resulted in changing Social Security without additional, specific legislation.

The ad implies that Bush’s plan bets the whole lot of Social Security funds on unstable stocks. In fact, it would have "privatized" only a small portion of Social Security taxes that Americans could have invested in private accounts, if they chose to do so.

"Cutting Benefits"

The ad goes on to claim that the Bush (and McCain) plan would cut "benefits in half." This is a rank misrepresentation. Nobody now getting benefits, or even close to retirement, would have seen any reduction in benefits or cost-of-living adjustments under the plan Bush proposed in April, 2005. What Bush proposed – in addition to creating private Social Security accounts – was to hold down the growth of benefits received by those retiring in the future. He embraced a proposal for "progressive price indexing" of future benefits. This would have been a "cut" only in relation to what the current formula would produce for future retirees, assuming that taxes are increased sufficiently to keep the system going.

The "price indexing" would have tied the growth to the rate of price inflation, rather than to the growth of wages, as is the case now. Wages have historically risen faster than prices, so the current wage-indexed system pushes benefits for future retirees up faster than the rate of inflation. The "progressive" part would have held down the growth only for higher-income and middle-income workers, while allowing benefits for lower-income workers to rise in line with the current wage-based formula.

The Obama-Biden campaign attempts to document their "cutting benefits in half" claim by citing a report by the Center on Budget and Policy Priorities written by Jason Furman, who is currently one of Obama’s top economic advisers. This won’t do. What Furman’s study actually says is quite different from what the ad claims.

Furman’s report says that the "progressive price indexing" plan Bush supported would result in benefits for the average worker who retires in 2075 that are 28 percent lower than under the current formula. Obviously 28 percent is not "half ."

The Obama-Biden campaign notes that Furman’s paper also says that full price indexing of benefits – even for low-income workers – would result in benefits 49 percent lower than the current formula in 2075. But that’s not the plan Bush supported, and we find no evidence that McCain ever supported it either. We asked the Obama campaign to show us where McCain has ever supported full price indexing of benefits, but so far they have not done so.

What McCain Says

For the record, McCain has said that he would seek a bipartisan deal with Congress to fix Social Security’s financial problems.

During a Republican candidate debate last year in Orlando, Florida, he said:

McCain, Oct. 21, 2007: Look, what Americans need is some straight talk. They need to know — every man, woman and child in America needs to know that both of these are going broke. They’re going broke and we’ve got to do the hard things. We’ve got to fix it for the future generations of Americans. Don’t we owe that to young Americans today? I say we do. … It’s got to be bipartisan. … And you have to got to the American people and say we don’t — we won’t raise your taxes. We need personal savings accounts, but we got to fix this system.

The system isn’t exactly "going broke." But the latest official projection is that the trust fund will be exhausted by the year 2041, after which current tax rates will finance only 78 percent of currently scheduled benefits. We agree that "straight talk" is needed and that finding solutions will be hard. Ads like this, however, misinform the public and make the job of fixing the system more difficult.

–by Lori Robertson and Brooks Jackson


Furman, Jason. "An Analysis of Using ‘Progressive Price Indexing’ to Set Social Security Benefits," Center on Budget and Policy Priorities, May 2005.

"Fact Sheet: Strengthening Social Security For Those In Need," White House Fact Sheet, 28 April 2005.

"A Summary of the 2008 Annual Report," Social Security and Medicare Boards of Trustee, 3 April 2008.

Davis, Bob, "Campaign ’08: McCain Interview: ‘I’m Always for Less Regulation’." Wall Street Journal, 3 March 2008.