FOX News managing editor and chief Washington correspondent Brit Hume used an out-of-context quotation by Senate Minority Leader Harry Reid (D-NV), which the Republican National Committee (RNC) recently unearthed, to claim falsely that Reid once favored President Bush's proposal to let workers divert Social Security payroll taxes into private investment accounts. In fact, the context of Reid's 1999 comment clearly indicates that Reid was not advocating private accounts; rather, he was promoting then-President Clinton's proposal to empower the Social Security trustees to invest a portion of the trust fund in the stock market. Clinton's plan would have allowed the money to earn a potentially higher rate of return, enabling the system to maintain its guaranteed benefit. By contrast, Bush has proposed substantial cuts in guaranteed benefits -- in conjunction with private accounts -- on the assumption that these accounts will compensate for the guaranteed cut.
From the "Grapevine" segment of February 3 edition of FOX News' Special Report with Brit Hume:
HUME: Last night, Harry Reid likened the president's proposal to allow Americans to divert a portion of payroll taxes into personal security investment accounts to, quote, "gambling." But in 1999, the Nevada Democrat proposed something very similar on our own FOX News Sunday, saying, quote, "most of us have no problem with taking a small amount of the Social Security proceeds and putting it into the private sector." We'll show you that later in the program.
Later in the show, Hume showed the "FOX All-Star panel" a clip of Reid's 1999 comments, juxtaposing it with Reid's February 2 comment that "President Bush should forget about privatizing Social Security. It will not happen." Hume commented: "I suppose one would say if you were Harry Reid, 'Well, that was then when he thought it was a good idea, or at least an acceptable idea, and this is now when he does not.'" A January 24 RNC "Research Briefing" highlighted the same 1999 Reid quote.
But the context of Reid's 1999 remark makes clear that he was referring to Clinton's then-recent proposal to let the trustees invest a portion of the fund into the stock market. During the 1999 broadcast of FOX News Sunday in which Reid made the remark, then-host Tony Snow responded by asking the show's Republican guest, Senator Pete Domenici (R-NM), "Should the government be putting it [Social Security trust fund assets] into the stock market or should people be doing it?" Domenici explicitly rejected "the idea in the president's budget" -- which both he and Snow evidently understood Reid to be advocating -- and argued for "personal investment accounts" instead.
From the February 14, 1999, edition of FOX News Sunday:
REID: Social Security has been a great program, the most successful social program in the history of the world. Let's not denigrate the program. It's worked great. We need to make sure it continues to work great. And most of us have no problem with taking a small amount of the Social Security proceeds and putting it into the private sector. The vast majority we should continue to [inaudible].
SNOW: Senator Domenici, you just heard that. We're talking about investing some Social Security money. Should the government be putting it into the stock market or should people be doing it?
DOMENICI: Oh, no, no. The idea in the president's budget, which he claims is a step toward making Social Security solvent when his overall program does little or nothing, almost everybody will agree -- when he set something there so we could actually do something real hoping we might work together. But essentially, hardly anyone agrees that we should have a federally appointed board invest Social Security money in the stock market, from [Federal Reserve chairman] Alan Greenspan to hundreds of economists say that would be putting the government into the marketplace and it would be terribly detrimental over time. But the issue is not to invest all of Social Security in the stock market or to leave it up to the people to gamble. The issue is personal investment accounts for a small portion of Social Security.