Thursday, February 17, 2005

Privatization Advocates Wrongly Suggest Clinton Once Supported Private Accounts

A common GOP spin point in the Social Security privatization debate is that former President Bill Clinton once supported the idea, and is being a hypocrite now by coming out against the plan President Bush is likely to adopt.

The point, repeated by various pundits and even television talking heads like Tim Russert, is patently false. But it keeps being made, especially to the broad audiences provided by television and takl radio.

You know the conservative mantra -- if you say a falsehood enough times, eventually it will be accepted as truth by the uneducated masses. Marketing trumps factual accuracy.


In the midst of his second term, Clinton proposed having the Social Security Trust Fund invest a small portion of its assets in private securities. No private accounts were ever part of that plan. Clinton separately made a proposal for "USA Accounts," a variation of the 401k concept. But that was outside of the realm of Social Security.

In other words, nothing Clinton proposed then resembles what Bush is proposing now.


Some in the GOP have linked the private accounts idea to Clinton to build support. Others have linked it to former president Franklin Delano Roosevelt.

From the Feb. 15 edition of MSNBC's Countdown with Keith Olbermann*:

OLBERMANN: President Franklin Delano Roosevelt and, at minimum, midwife to the Social Security system, would have endorsed President Bush's plan to partially privatize it. Our third story on the Countdown -- that is the claim, anyway, of at least three conservative commentators and several Republican congressmen. But it turns out those guys pretty much just made it up. In a moment, FDR's grandson, himself a former associate commissioner for Social Security, joins us to discuss the fraud.

First, the background. It began on television with Brit Hume of FOX News, taking quotes from the three principles of security for our old people that FDR expressed to Congress on January 17, 1935. Not all the quotes, mind you, just some of them, and out of context. I'm reading from the transcript on the FOX website of Mr. Hume's newscast of February 3rd. "It turns out," Hume said, "that FDR himself planned to include private investment accounts in the Social Security program when he proposed it. In a written statement to Congress in 1935, Roosevelt said that any Social Security plan should include, 'Voluntary contributory annuities, by which individual initiative can increase the annual amounts received in old age,' adding that government funding, 'ought to ultimately be supplanted by self-supporting annuity plans.'"

As promised, I'm joined now by James Roosevelt Jr., now senior vice president of Tufts Health Plan, formerly associate commissioner for Social Security, and, of course, grandson of President Franklin D. Roosevelt. ... The argument is that Mr. Hume more or less twisted this entirely around. Can you explain it in layman's terms?

ROOSEVELT: I think I can. And it's really quite an amazing distortion. What they did was that they took a very simple statement that my grandfather made, which said that Social Security, when it was enacted almost 70 years ago, ought to first of all have a part that took care of people who didn't have time to build up a Social Security account. And the government should fund that out of general revenues.

Secondly, Social Security should have a self-sustaining portion that was funded by contributions from both employers and employees. That's what we know and have known for 70 successful years as Social Security.

And thirdly, those who wanted and who needed to, as many -- almost everybody -- did, to have a higher income and retirement, should have accounts where they could pay in voluntarily, in addition to the guaranteed Social Security benefit.

And then my grandfather said that eventually, the self-sustaining portion of the guaranteed insurance would phase out the government-paid portion. That's because we would have a fully functioning Social Security system as we do today.

What Brit Hume and others have done is take portions of that paragraph and rearrange it so that it says something entirely different from what he intended. ... And he rearranged those sentences in an outrageous distortion, one that really calls for a retraction, an apology, maybe even a resignation.

* Thanks to


Anonymous Anonymous said...

pretty wild distortion.

still, someone needs to weigh the merits of the program as it exists against the various proposals including private accounts....

and what about clintons idea of having the govt invest the money rather than people having their own accounts. would this cut down cost? i doubt it. seems it bring s up the same risk/reward issues that exist under Bushs plan.

all i recalled was that clinton raised the problem that SS was facing in his second term. i dont recall any solution gaining traction, and i assumed that was because neither party wants to touch this political hot potato.

3:06 PM  
Anonymous joe said...

Can't argue with the original blog item, or the post above.

It's hard for me to know what to think about privatization, because it seems like Bush's argument is coming with some false marketing.

I agree with something I read on this site a few days ago -- if the idea is so good, then why can't Bush just give it to the people straight? Why compromise the integrity of the argument with distortions of the truth, like the Clinton and FDR item above?

4:02 PM  

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