In a July 8 Washington Post article, staff writer Perry Bacon Jr. falsely suggested that a proposal to let younger workers divert a portion of their payroll taxes into private investment accounts would address “the long-term solvency” of Social Security. Bacon wrote: “McCain's aides said he favors a bipartisan approach and is open to working with Congress on finding a solution to the long-term solvency of the New Deal-era program, indicating he could support an array of ideas such as raising the retirement age, reducing scheduled increases in benefits and allowing younger workers to put money they currently pay for Social Security taxes into personal savings accounts.” Bacon added that “President Bush floated a similar idea for private accounts in 2005, but polls found it had little public support.” But contrary to Bacon's suggestion, private investment accounts would not address the long-term solvency of Social Security. Indeed, while Bacon referred to Bush's “similar idea for private accounts,” he did not mention that the Bush administration admitted that private accounts themselves would do nothing to address Social Security's projected long-term revenue 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 has acknowledged that the cost of covering this shortfall would be in the trillions of dollars.

From Bacon's July 8 Washington Post article:

Sens. Barack Obama and John McCain are both proposing dramatic changes to Social Security, taking on the financially fragile “third rail of American politics” that Congress and recent presidents have been unable to repair.

McCain's aides said he favors a bipartisan approach and is open to working with Congress on finding a solution to the long-term solvency of the New Deal-era program, indicating he could support an array of ideas such as raising the retirement age, reducing scheduled increases in benefits and allowing younger workers to put money they currently pay for Social Security taxes into personal savings accounts. President Bush floated a similar idea for private accounts in 2005, but polls found it had little public support.

Obama has been even more specific. The Democrat from Illinois has proposed raising taxes on upper-income Americans to address projected shortfalls in Social Security, but his plan has been greeted with skepticism, even from some in his own party.