Beyond distortions and misinformation on President Bush's proposal for Social Security, coverage of Bush's April 28 press conference on CNN and Fox News featured additional Social Security falsehoods. On CNN, host Wolf Blitzer allowed Sens. Norm Coleman (R-MN) and Charles Grassley (R-IA) to falsely claim that Social Security faces an unfunded liability exceeding $10 trillion. Rep. Anne Northup (R-KY) made the same claim without challenge in a post-press conference edition of Hannity & Colmes after co-host Sean Hannity made a baseless assertion of his own -- that privatization in Chile and Galveston, Texas, have been "successful stories." Similarly, former Republican presidential candidate Steve Forbes claimed on the May 1 edition of CNN's Late Edition that workers who entered into the Galveston system "are getting 50 percent to 200 percent more in benefits than they would have with Social Security."
In fact, the $10 trillion figure has been debunked by the American Academy of Actuaries, and the privatized systems in Chile and Galveston have provided lower retirement benefits for low- and middle-income workers than the guaranteed benefits in the systems that they replaced.
Misleading claims regarding privatization in Chile and Galveston, Texas
Galveston and two other Texas counties opted out of the U.S. Social Security system in 1981, creating a system of private annuities that President Bush has touted in various appearances, most recently in an April 29 "town hall" meeting in Falls Church, Virginia.
But reports by the Government Accounting Office (GAO) and Fairness and Accuracy in Reporting, as well as testimony by Brookings Institution senior fellow Henry Aaron, point out serious shortcomings in the Galveston program. The GAO report determined that only higher-wage earners' benefits and initial disability benefits would increase under the Galveston plan, while all other groups would receive lower benefits than under Social Security.
A recent Democratic congressional analysis, in coordination with the nonpartisan Congressional Research Service, also found the Galveston model lacking. As the report, released by Sen. Barbara Boxer (D-CA), noted:
Americans at every income level are clearly better off with Social Security's guaranteed, inflation-protected benefit. The only exception is high income earners. And that is true only initially; over the course of retirement, even higher income earners are better off with Social Security.
Even a Galveston newspaper opposed implementing the model nationwide: An April 24 editorial in the Galveston County Daily News stated: "We're open to changes in Social Security but don't think the Galveston Plan is the best model for change."
Further, several Texas news reports have cast doubt on whether the Galveston model is even comparable to Bush's proposal for private accounts. As the Dallas Morning News noted on April 27, the Galveston model differs from Bush's proposal in that it has a "safety net" for workers who become disabled, die, or receive poor returns on their private investment accounts. Similarly, an April 27 Houston Chronicle editorial argued that the two plans are "apples and oranges" with "different aims and results."
As Media Matters for America previously documented when Hannity and New York Times columnist John Tierney touted the Chilean pension system, that country's program of private accounts has been less effective for poor and middle-class workers than the pension program that preceded it.
False claims regarding a $10 trillion unfunded Social Security liability
On CNN's pre-press conference coverage, Blitzer failed to correct Grassley's claim that "we have overpromised, by $10 to $12 trillion, what we can deliver for our children and grandchildren." Earlier that evening, Blitzer failed to correct Coleman as he distorted the numbers to an even greater degree, claiming: "We have a $15 -- $10 to $15 trillion unfunded liability from Social Security." Similarly, following Bush's press conference, Northup asserted on Fox News that "there's a $10 trillion unfunded liability."
The Social Security trustees' determination of a $10.4 trillion unfunded liability over an "infinite horizon" is misleading, according to the American Academy of Actuaries, the country's leading association of insurance and demographics experts:
[T]he new measures of OASDI's [Social Security's] unfunded obligations included in the 2003 report provide little if any useful information about the program's long-range finances and indeed are likely to mislead anyone lacking technical expertise in the demographic, economic and actuarial aspects of the program's finances into believing that the program is in far worse financial condition than is actually indicated.