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A Project of The Annenberg Public Policy Center

More Social Security Bunk

Democratic ads accuse Republican House and Senate candidates of wanting to gamble away Social Security.


Democrats celebrated Halloween early this year, trying to spook voters with the political boogeyman of risking Social Security in the stock market. Since October 1, we have found 58 ads from Democrats and their allies attacking their Republican House and Senate opponents on the issue. They mislead in several ways:

  • They say benefits would have been "risked in the stock market." While that’s true for younger workers, current beneficiaries wouldn’t have been eligible for private accounts under the plan President Bush supported.
  • The ads often show images of casino gambling and imply that holders of private accounts could lose their entire retirement savings. In fact, the plan proposed in 2005 would have allowed investment only in very broadly diversified funds. A complete loss would be practically impossible.
  • Some claim the opponent "voted for George Bush’s plan to privatize Social Security." Actually, Bush’s proposal was never submitted as a bill to Congress, and so there was no vote


Last week we examined how congressional candidates on both sides of the aisle were trying to fault their opponents for the financial crisis. This article looks at another strong theme running through Democratic ads, the accusation that Republicans want to gamble away pension funds in risky private investments.

In October, we found 58 congressional ads from Democrats and their allies attacking their Republican opponents on this issue. The tactic echoes similar charges made against Sen. John McCain by Sen. Barack Obama’s campaign and by allies, including labor unions and independent expenditure groups. Here we have chosen examples from competitive Senate and House races.

[TET ]

DSCC Ad: "Dues"

Announcer: They paid their dues, raised their families, served their country. They deserve to know that their retirement will be secure. But, Norm Coleman voted for George Bush’s plan to privatize Social Security and cut our benefits by risking them in the stock market. Yes, this stock market. In tough times just another bad idea from George Bush and Norm Coleman. The Democratic Senatorial Campaign Committee is responsible for the content of this advertising. [/TET]
Standard Attack Line
Typical of these ads is one the Democratic Senatorial Campaign Committee ran in Minnesota showing photos of men and women who appear to be in their 60s. The narrator says they "raised their families, served their country" and "deserve to know that their retirement will be secure." It then says that Sen. "Norm Coleman voted for George Bush’s plan to privatize Social Security and cut our benefits by risking them in the stock market."
It’s a grossly misleading ad. Nobody who is drawing Social Security retirement benefits today would have been affected by the plan Bush proposed in April 2005. Nobody born before 1950 would have been allowed to invest a penny of Social Security taxes in the accounts Bush proposed. The persons shown in this ad would be covered by exactly the same Social Security benefits they are now, with or without the Bush plan, and regardless of what is happening in the stock market. For more, read our report here.
The ad also stretches the truth when it says Coleman "voted for George Bush’s plan," which isn’t strictly accurate. The DSCC bases its claim on three votes in 2005, 2006 and 2007 for Republican amendments that called – in very general terms – for the creation of private accounts. But none endorsed the Bush proposal specifically, and none could have resulted in the creation of private accounts without separate, much more detailed legislation. In fact, the proposal Bush put forward received so little support that it was never introduced as formal legislation, and so never came to a vote in Congress.

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DSCC Ad: "Risky"

Announcer: Imagine Roger Wicker had his way and Congress passed his plan to gamble Social Security in the stock market. Bankrupt firms and companies going under and taking your Social Security with them. If Roger Wicker and his Wall Street friends risky scheme to put Social Security in the stock market had passed, it would have been snake eyes for your future. Roger Wicker: too risky for Mississippi. The Democratic Senatorial Campaign Committee is responsible for the content of this ad. [/TET]

Gambling v. Investing

Many of the Democratic ads promote the idea that stock market investment is tantamount to casino gambling. Typical is a Mississippi DSCC ad, which says Republican Sen. Roger Wicker’s "plan to gamble Social Security in the stock market" would have allowed "bankrupt firms and companies going under" to take "your Social Security with them."

Throughout the ad, viewers see a roulette wheel spinning with a Social Security card in the dreaded 00 slot. And the DSCC ad isn’t alone. We found 11 ads with gambling language or imagery. (For a sampling, see below.) But the casino analogy – while it certainly must seem apt to many given the market’s recent plunge – is a rather serious exaggeration.

There is certainly risk in the stock market, and also potential for reward. But the fact is, the plan Bush proposed would not have allowed the sort of pure speculation that is conjured up by images of craps tables and roulette wheels. The only investment options allowed under Bush’s 2005 proposal would have been a few highly diversified funds, like those that members of Congress and other federal employees may invest in through the Thrift Savings Plan. In that system, participants may choose to invest in one or more of six different funds.

Nobody would have been allowed to bet on a single company’s stock. And unless the entire U.S. economy ground to a halt and every single publicly traded company went completely bust, no private account could have been reduced to zero, as images of craps and roulette games suggest. And as we’ve pointed out before, accounts would have been voluntary, and no more than one-third of Social Security taxes would have been allowed to go into private accounts in the first place.

From the DSCC ad in Mississippi DSCC ad Louisiana Senate race
Cazayouz ad in Louisiana’s 6th district DCCC ad in Ohio
DCCC ad in Arizona’s 1st district David Boswell ad in Kentucky 2nd district


We also note that the DSCC ad strains to find justification for tying Wicker to private accounts. It cites a July 2001 vote against an amendment to an appropriations bill that would have prohibited implementing the final report of President Bush’s Commission to Strengthen Social Security. That amounted to a vote to allow the commission to go through with the mandate Bush had given it, which was to come up with plans that, among other things, "must include individually controlled, voluntary personal retirement accounts, which will augment Social Security." The commission issued its final report that December. It laid out three different alternative plans to shore up the Social Security system’s shaky finances, all of which included voluntary private accounts.

The ad also cites a March 2008 article from the Enterprise-Journal (Macomb, Miss.) that reported Wicker "would back an independent commission to reform Social Security, saying there are ways for the program to get a better interest rate than the 2 percent returned by investing in the U.S. treasury."

So while it’s true that Wicker has endorsed the concept of private accounts, it’s a stretch to accuse him of having a specific "plan."

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DCCC Ad: "Lee Terry: Whose Side Is He On?"

Announcer: These days, everyone watches their future tick up and down. But families planning retirement shouldn’t depend on these arrows. It’s why we can’t afford Lee Terry. Terry supports privatizing Social Security, cutting guaranteed benefits and winning windfall profits for Wall Street millionaires. The same Wall Street types that have given Lee Terry’s campaign almost $350,000 dollars. It makes you wonder whose side Lee Terry is really on. The Democratic Congressional Campaign Committee is responsible for the content of this advertising. [/TET]

A 16-Cent "Windfall" for Wall Street
Some ads recycle a spurious claim that private Social Security accounts would create a huge windfall for stockbrokers and Wall Street firms, who in turn are lavishing campaign donations on lawmakers.
For example, in the race for Nebraska’s second congressional seat, the Democratic Congressional Campaign Committee attacked incumbent Republican Rep. Lee Terry saying that he "supports privatizing Social Security … winning windfall profits for Wall Street millionaires."
However, there would have been scant profit for any Wall Street firm had Bush’s 2005 plan been enacted, as we pointed out March 3, 2005, in our article "False Attacks Over "Windfalls" to Wall Street." We dug into the records and broke this bit of news: "Brokers netted only 16 cents in fees to manage a $10,000 retirement account under the federal retirement system on which Bush is modeling his private Social Security accounts." That’s what the government paid the managers of the previously mentioned Thrift Savings Plan to manage the funds of federal employees and members of Congress.
It is true that critics of the private account concept had argued that brokers might take a large cut, but that was based on the notion that holders of accounts would be allowed to invest in individual stocks, generating brokerage fees on many small transactions. That turned out not to be the case. The funds Bush chose as his model are not only widely diversified, but extremely efficient to manage.
The ad also makes an inflated claim when it says Terry received "almost $350,000" from "Wall Street types." According to the Center for Responsive Politics, all the donations Terry has received over his entire career from the "securities and investment" sector amount to $121,625. That’s about 1.6 cents for every campaign dollar he’s raised.

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Lee Terry for Congress Ad: "The Facts"

Lee Terry: I’m Lee Terry and I approve this message.

Announcer: Jim Esch’s ads are a lie. Records show Lee Terry opposed privatizing Social Security. It’s Esch who wants to raise Social Security taxes, raise income taxes and raise business taxes to pay for more Washington spending. Esch’s tax plan would be devastating to families. It’s the kind of thinking that got us into this economic mess. Jim Esch: negative attacks, higher taxes, wrong for us. [/TET]

A False Accusation
The DCCC ad says Terry "supports privatizing Social Security," but Terry countered with his own ad saying that the charge is "a lie" and that "records show Lee Terry opposed privatizing Social Security." So who’s right?
This is not just a dispute over terminology. The fact is Republican Terry once voiced general support for the concept of a "private investment account" within Social Security, but he has more recently retreated from that position and now says he opposes accounts that would allow any investment in stocks or stock funds. He supports only "savings" accounts that would draw interest.
An Omaha World Herald article from four years ago quoted Terry as saying that "his preferred solution" would be allowing workers to put "a portion of the payroll taxes they pay into a private investment account." But since then, Terry has revised his position. According to a form letter to constituents that his campaign says has "been going out for years," Terry proposes creating individual "savings account of sorts that would incur interest." He says the "savings account within the social security fund would NOT be invested in any sort of markets, but yet would remain safe in individual accounts."
The DCCC ad would have been accurate to say that Terry formerly supported private investment accounts. But it puts the matter in present tense – "supports" – and thus misrepresents his present position in favor of interest-bearing savings accounts only.
Terry’s ad attacked his Democratic challenger, Jim Esch, saying he "wants to raise Social Security taxes." And it’s true that Esch marked off that he would support a move to "ensure the viability of Social Security by increasing the payroll tax" when he filled out a "Political Courage Test" form for Project Vote Smart, the voter advocacy organization. Terry refused to fill out one himself, so voters are left to wonder what he would do to shore up Social Security’s finances.

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DCCC Ad: Barletta Social Security

Announcer: What if they had their way? The politicians like Lou Barletta and George Bush. They wanted to privatize Social Security, putting your retirement at risk. Barletta wanted to follow Bush, right into this mess. And with our markets in free-fall, where would our safety-nets be now? In these times, the last persona we should trust is Lou Barletta. The Democratic Congressional Campaign Committee is responsible for content of this advertising. [/TET]

Truth Nose-Dives Again

One Republican is being attacked for a position he never held. Republican challenger Lou Barletta, running against Democratic incumbent Paul Kanjorski in Pennsylvania’s 11th district is accused in a DCCC ad of proposing to put retirement funds at risk in the stock market, which is simply false.

In this one, the DCCC is careful to use the past tense, saying Barletta "wanted" to put Social Security benefits at risk. But it’s still a whopper. In 2002 Barletta spoke in favor of creating private accounts that would be invested only in government securities, not stocks of private companies. Nevertheless, the ad shows him posed against a newspaper headline saying "Stocks nose-dive again," and it says "with our markets in free-fall, where would our safety nets be now?"

The ad brings in a photo of President Bush and says "they" wanted to "privatize" Social Security, as though Barletta had endorsed Bush’s proposal.

The truth is, as the Allentown Morning Call reported in 2002 when Barletta previously ran against Kanjorski, Barletta favored "personal savings accounts [to] invest in bonds or money market funds," not stocks.

Such facts don’t deter the DCCC. When Barletta tried unsuccessfully to get local stations to stop airing ads claiming that he supported "privatization," the DCCC just insisted that it was right. In July, the Scranton Times-Tribune quoted DCCC spokesman Jennifer Crider: "This is his position," Ms. Crider said. "If you look at his record, he clearly did (support privatization)." We’re not sure how Crider defines "privatization," but the record is clear that Barletta didn’t do what this ad claims.

by Justin Bank and Brooks Jackson


"Strengthening Social Security and Creating Personal Weath for All Americans." Report from the President’s Commission, Dec 2001.
Woerner, Timothy, "On the road: Roger Wicker says he will fight for state’s ‘fair share’," Enterprise Journal (Macomb, MS), 25 March 2008.
Cordes, Henry J. "Terry urges action to save Social Security." Omaha World Herald, 2 March 2004.
Slade, David. "Barletta, Kanjorski differ on tax cuts, senior drug plans;Candidates also are on opposite sides of Social Security reform." Allentown (Pa) Morning Call, 3 Nov 2002.
See Rep. Lee Terry’s Letter to Constituents about Social Security