NBC correspondent John Yang falsely asserted, "At current rates, analysts say Social Security will run out of money by 2041." Later, Yang uncritically aired a clip of Sen. John McCain claiming, "The Social Security system is going to go broke; it will not be there for present-day men and women who are working." In fact, the Social Security program will not "run out of money" in 2041; after that point, it is projected that without a change in the law, the program will be able to cover 78 percent of scheduled benefits immediately thereafter, according to the 2008 Social Security trustees' report.
During the October 2 edition of NBC's Nightly News, NBC News correspondent John Yang falsely asserted, "At current rates, analysts say Social Security will run out of money by 2041." Later, Yang uncritically aired a clip of Sen. John McCain claiming, "The Social Security system is going to go broke; it will not be there for present-day men and women who are working." In fact, as Media Matters for America has noted, the 2008 Social Security trustees' report forecasts that, in the absence of a change in the law, Social Security will be able to pay full benefits until 2041, after which it will be able to cover 78 percent of currently scheduled benefits, going down to 75 percent through the end of the 75-year period the report's long-range projection covered. It is not projected to "run out of money." Though Yang referred to "analysts" who have said "Social Security will run out of money by 2041," he did not cite any in his report.
In addition, after airing a clip of Sen. Barack Obama stating, "I don't mind paying a little bit more myself, just so the system is solvent for future generations," Yang reported that Obama opposed McCain's "major reform: allowing some to invest their Social Security funds in the stock market." Yang then reported that "McCain says all options are on the table but is purposely vague on specifics." But, in fact, the "major reform" of "allowing some to invest their Social Security funds in the stock market" is not a "reform" at all in the sense of addressing the projected Social Security shortfall. The Bush administration itself, whose proposal for private accounts was endorsed by McCain, acknowledged that the proposal alone would do nothing to address that shortfall.
During a February 2, 2005, White House background news briefing on Social Security, in answering a reporter's question "whether it would be fair to describe ... the personal accounts by themselves as having no effect whatsoever on the solvency issue," an unnamed "senior administration official" concurred, responding: "that's a fair inference." From the White House background briefing:
QUESTION: Can you give us a second ten-year estimate on the revenue effect? Can you tell us how you would pay for that, in the first ten years' revenue loss? And am I right in assuming that in the way you describe this, because it's a wash in terms of the net effect on Social Security from the accounts by themselves, that it would be fair to describe this as having -- the personal accounts by themselves as having no effect whatsoever on the solvency issue?
SENIOR ADMINISTRATION OFFICIAL: On the second point, that's a fair inference. On the first point, the long-term picture, of course, as you know, is very -- it's a very comprehensive picture. You're looking forward 75 years over all time, depending on how you gauge things. And that can only be done accurately in the context of a comprehensive plan to fix the system. For example, if we were to do projections out beyond 2015, we would have to model what were the hypothetical changes made to fix the system's finances, which are at this time yet undetermined.
As Media Matters for America has documented, Bush proposed allowing workers to divert up to 4 percent of wages subject to the payroll tax (about one-third of their payroll taxes) into a private account, removing it from the money available to pay Social Security benefits for current retirees. Far from addressing a projected shortfall, the diversion would create a large gap between revenue and the funds necessary to cover the government's obligation to current Social Security recipients. This gap would continue until the death of all recipients born before 1950, who, the administration said, would see no change and "receive their full benefits." Vice President Dick Cheney acknowledged that the cost of covering this shortfall would be in the trillions of dollars.
From the October 2 edition of NBC's Nightly News:
BRIAN WILLIAMS (anchor): People haven't had time to think yet through all the long-term issues of this financial crisis, and a big one of course is Social Security, often called the third rail of American politics. Both Obama and McCain want to fix it, but their fixes are quite different. Here is where they stand on this issue, our report tonight from NBC's John Yang.
[begin video clip]
YANG: Forty-four-year-old high school history teacher Peter Vogel thinks he'll collect Social Security when he retires, but he's not so sure about his 9-year-old daughter, Emma.
VOGEL: I do believe it needs to be retooled, rethought about, and that's why I'm really excited about this election cycle.
YANG: At current rates, analysts say Social Security will run out of money by 2041, when Emma will only be in her 40s.
DAVID WALKER (president, Peter G. Peterson Foundation): We ain't seen nothing yet, because it's going to get a lot worse when the baby boomers retire in big numbers.
YANG: The turmoil in the markets has given the issue extra urgency, especially in key battleground states with older populations, such as Ohio, Pennsylvania, and Florida.
There's an old saying about Social Security: it's the third rail of American politics; touch it, and you die. But what's changed this year is that both candidates are saying the system needs to be overhauled, in dramatically different ways.
Barack Obama would shore up Social Security with a payroll tax on incomes higher than $250,000 a year. Right now, Social Security taxes don't apply on earnings above $102,000.
OBAMA [video clip]: I don't mind paying a little bit more myself, just so the system is solvent for future generations.
YANG: Obama's ruled out raising the retirement age of 67 and slowing the growth of benefits. He's also against John McCain's major reform: allowing some to invest their Social Security funds in the stock market.
McCAIN [video clip]: The Social Security system is going to go broke, it will not be there for present-day men and women who are working.
YANG: McCain says all options are on the table but is purposely vague on specifics. He's hinted he'd consider a tax increase as part of a grand compromise.
McCAIN [video clip]: We have to fix it, and we have to do it in a bipartisan fashion.
YANG: Analysts welcome this campaign debate.
WALKER: The key is, are they committed to reform sooner rather than later, and will they work on a bipartisan basis? And both of them seem willing to do that.
EMMA VOGEL [video clip]: Dad, let's go for a bike ride.
YANG: As millions of Americans watch the stock market gyrations and worry about what their retirement ideas will be like. John Yang, NBC News, Washington.
[end video clip]