In a September 19 Associated Press article, Glen Johnson reported that advisers to Sen. John McCain say that “so-called personal retirement accounts” are an option “to stave off insolvency” for Social Security without noting that the claim is false. Johnson reported that McCain “says all options must be considered to stave off insolvency for the government insurance and retirement program, and top McCain advisers say that includes so-called personal retirement accounts like those President Bush pushed in 2005 but abandoned in the face of congressional opposition.” In fact, the Bush administration itself has admitted that private accounts themselves would do nothing to address Social Security's projected long-term revenue shortfall, as Media Matters for America documented.

As Media Matters has noted, 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 who will receive full benefits (under the plan Bush proposed in 2005, all those born before 1950 would have received full benefits). Vice President Dick Cheney has reportedly acknowledged that the cost of covering this shortfall would be in the trillions of dollars.

In the article, Johnson quoted Standard and Poor's chief economist David Wyss' assertion of private accounts, “I think it's a good idea, but again, it doesn't solve the immediate problem.” But Johnson did not specify the “immediate problem” to which Wyss referred.

Further, Johnson uncritically quoted McCain's false statement that Social Security “will not be there for present day men and women who are working.” In fact, as Media Matters has noted, the 2008 Social Security trustees' report forecast that Social Security will be able to pay full benefits until 2041. According to the same report, the Social Security program will not “go broke” when the trust fund is depleted in 2041, but rather be able to cover between 78 percent and 75 percent of scheduled benefits through the end of the 75-year period the report's long-range projection covered.

From the AP article:

Wall Street turmoil left John McCain scrambling to explain why the fundamentals of the U.S. economy remained strong. It also left him defending his support for privately investing Social Security money in the same markets that had tanked earlier in the week.

The Republican presidential nominee says all options must be considered to stave off insolvency for the government insurance and retirement program, and top McCain advisers say that includes so-called personal retirement accounts like those President Bush pushed in 2005 but abandoned in the face of congressional opposition.

The aides tried to soothe voters concerned about the bankruptcies, takeovers and bailouts on Wall Street by declaring McCain favored only the option of such accounts, just for younger workers, and most likely in a conservative investment vehicle such as bonds.

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McCain calls such a tax punitive and counterproductive. He also says refusing to discuss private accounts amounts to political posturing. He says his willingness to broach the subject is emblematic of his “Country First” campaign motto and harkens back to bipartisan discussions between President Reagan and Democratic House Speaker Tip O'Neill Jr. the last time the system was revamped in 1983.

“We have to have some straight talk for America. The Social Security system is going to go broke. It will not be there for present day men and women who are working. And we have to fix it and we have to do it in a bipartisan fashion,” the Arizona senator said Wednesday during a town hall meeting with running mate Sarah Palin in Grand Rapids, Mich.

He added: “We have to realize that the worst thing we can do is continue to allow these unfunded debts to mount, and to pass on to another generation of Americans a burden that we've imposed on them.”

[...]

By about 2020, more people will be drawing on the system than will be paying into it, and the government projects Social Security could be insolvent around 2040. Those projections change slightly each year.

“I think it's a good idea, but again, it doesn't solve the immediate problem,” said Wyss. “And you also have to make sure you maintain an adequate safety net because you don't want people eating cat food in retirement.”