On the March 29 edition of Fox News' Your World with Neil Cavuto, substitute host Stuart Varney repeatedly made a false comparison between the Bush administration's plan to let workers divert a portion of their Social Security payroll taxes into private accounts and the Thrift Savings Plan (TSP), a retirement program for federal employees similar to 401(k) plans. Importantly, federal workers participate in TSP on top of Social Security; the accounts are not financed by Social Security payroll taxes, so contributions to the program do not require matching reductions in Social Security's guaranteed benefit. Throughout the segment, the on-screen text read: "What a deal!!!"
From Varney's interview with Gary Amelio, executive director of the Federal Retirement Thrift Investment Board, which administers the TSP:
VARNEY: Want to save more money for your retirement? Federal workers have been doing it for years. Are the rest of us missing out? Here to tell us about the retirement plan you probably have never heard of, Gary Amelio, executive director of the Federal Retirement Thrift Investment Board, which runs the Thrift Savings Plan. Gary, welcome to the program. Let me see if I've got this right -- if I'm a federal employee right now, I pay Social Security taxes and I get Social Security benefits, and I also have the option of this private Thrift Savings Plan. Is that private Thrift Savings Plan somewhat similar to what Mr. Bush has in mind?
AMELIO: I believe so. The Thrift Savings Plan is a 401(k)-like plan that's available to federal employees, similar to what a private-sector employee might receive from their own employer.
VARNEY: And it's my money that goes into it, and I own it permanently, and it's passed along to my heirs, correct?
AMELIO: That is correct.
VARNEY: Now you've got about 20 years' experience under your belt with this thing. What proportion of federal employees actually go for this optional plan?
AMELIO: Actually, we have 87 percent participation, which is signif --
VARNEY: 87 percent! I'm kind of shocked to hear that because there doesn't appear to be such enthusiasm for the president's private plan.
AMELIO: Well, of course, you're talking about apples and oranges. This is a retirement plan for the federal work force and --
VARNEY: But OK, can I just ask you, look, if you've got all this experience, 20 years experience with this, if one of your federal employees put $1,000 in 20 years ago, and kept on putting $1,000 in a year for 20 years, what kind of rate of return have they racked up in the average fund, the average investment that you just told us about?
AMELIO: OK, there really is no average investor but I can certainly give you some yields. If you look over the last 10 years, the C fund -- the large-cap fund -- has yielded almost 12 percent. The same with the S fund, the international --
VARNEY: Is that per year? Is that per year?
AMELIO: Well, that would be an average -- yes, an average per year, over a 10-year life.
VARNEY: Well, that's spectacular! Now, why shouldn't the rest of us have access to the same kind of savings plan as federal workers have access to? It's voluntary, it's optional.
AMELIO: Well, many employees do have access through their own employer plans.
VARNEY: Is there any government matching money with this Thrift Savings Plan?
AMELIO: There is. There's a match up to 5 percent for employees who were hired after 1985.
VARNEY: So it's exactly like a 401(k) plan in a regular corporation? No difference?
AMELIO: Virtually, that's correct.
VARNEY: What chance do you think that the president will get privatized for the rest of us?
AMELIO: I have no idea. You'll have to ask the experts at the White House and the Hill for that one.
VARNEY: We'll do just that. Thanks so much for joining us, sir.