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A Project of The Annenberg Public Policy Center

Reid Attacks Angle on Social Security

Democratic Sen. Harry Reid’s reelection campaign on June 11 released an ad attacking GOP nominee Sharron Angle for wanting to “get rid of Medicare and Social Security” — a charge she called “nonsense” in a June 14 interview with Fox News commentator Sean Hannity. It’s true that Angle has proposed phasing out Social Security and Medicare.

The Reid campaign, however, cannot support its claim that her plan to replace government-run Social Security with privately managed investments “cuts benefits for everyone coming into the system.” Future participants might realize benefits that are either better or worse than the current system, depending on their investment decisions and market conditions.

Reid’s ad, titled "What’s Next," shows an elderly couple in their kitchen as the announcer talks about the independence and security that Social Security provides retirees. “But, shockingly, Sharron Angle wants to wipe out Social Security,” the announcer says. Angle is then shown saying, “We need to phase Medicare and Social Security out.” The video clip of Angle comes from a May 19 debate during the Republican primary. The opening images of an elderly couple eating dinner juxtaposed with Angle’s comments about phasing out Social Security and Medicare could easily mislead senior citizens into thinking that their benefits are at risk, but Angle has repeatedly pledged to fulfill contracts with those currently receiving Social Security benefits — as her full response during the debate made clear:

Angle, May 19: What we need to do is fulfill our contract with those seniors who have paid into the system but going beyond that, we need to phase Medicare and Social Security out in favor of something privatized.

Still, there is no question that Angle has proposed a major restructuring and eventual elimination of Social Security. Currently, employees and employers each pay a 6.2 percent tax on earnings (for a total of 12.4 percent) on wages up to $106,800. Under Angle’s plan, new employees entering the workforce would be responsible for investing their retirement funds, rather than relying on the Social Security Administration. Existing employees in the Social Security system could opt into such a private system. In a May 19 interview on Nevada Public Radio’s "State of Nevada," Angle outlined her plan:

Angle, May 19: Whenever I say privatize, I don’t mean governmental privatization, I mean actual free-market privatization. Going forward, what we need is a phased-in private alternative. So for those who are now working but have paid a lot into the Social Security system, they would have their choice of opting into that old system or transferring their stuff to a new system. Those who come online who are new wage earners would only have the private system to work with. So it would be a phased-in privatizing of that.

Angle has been less clear about her plans for Medicare. On her campaign website, Angle refers to both Social Security and Medicare as “broken and bankrupt systems.” She supports continuing benefits to those already receiving them, but she advocates for “free-market alternatives” to replace the existing system.

Angle’s website: Social Security and its attendant Medicare are broken and bankrupt systems because we, as voting citizens, have allowed Congress to transform these systems from insurance programs to and [sic] entitlement programs. The government must continue to keep its contract with seniors, who entered into the system on good faith and now are depending on that contract. (Pat Boone, a champion for seniors and the spokesman for 60’s Plus, has endorsed Sharron Angle’s candidacy.) Free market alternatives, which offer retirement choices to employees and employers, must be developed and offered to those still in their wage earning years, as the Social Security system is transitioned out. Young workers must be encouraged to investigate personal retirement account options.

While the ad is correct in describing Angle as wanting to "get rid of Medicare and Social Security," it’s wrong to say Angle’s proposed plan for Social Security “cuts benefits for everyone coming into the system.” Estelle James, a consultant to the World Bank and a Democratic member of a presidential commission that studied Social Security in 2001, said in an e-mail to FactCheck.org that the impact on benefits would depend upon an individual’s investments and market performance.

James, June 16: If the rate of return is high the person does better than under traditional Social Security, but if the market drops the person does less well.

— by Kelsey Ferguson

Update, June 18: We sought more details on Angle’s plans for Medicare and Social Security beyond her public statements and campaign website, but Angle spokesman Jerry Stacy told us that a more detailed policy proposal for Social Security and Medicare is scheduled for release in a few days.