Grading PolitiFact: Herman Cain, Social Security and Galveston County

Context matters -- We examine the claim in the full context, the comments made before and after it, the question that prompted it, and the point the person was trying to make.
--Principles of PolitiFact and the Truth-O-Meter

The issue:

(clipped from PolitiFact.com)

The fact checkers:

Louis Jacobson:  writer, researcher
Martha Hamilton:  editor


Analysis:

When PolitiFact does a fact check, context matters.  They examine the claim in full context, including the comments before and after.  They painstakingly root out the question that prompted the claim and carefully consider the point the person was trying to make.

Yeah, right.

Hilariously enough, even though PolitiFact does not pay any attention at all to the question that prompted Cain's claim about the Galveston County retirement option, there remained sufficient context to figure out Cain's point.  But PolitiFact ignored that, too.

Cain's comment, along with the question that prompted the answer (bold highlights indicate the portion used by PolitiFact; bold emphasis added):

DISTASO: Thank you, John.

Mr. Cain, back to you. And while you're fired up there, let's turn to Social Security. Can you be specific regarding ages and income levels? Everyone talks about reform. What is your specific Social Security reform plan in regards to raising the retirement age, at what ages, cutting benefits and what income level means testing kicking in?

Thank you.

CAIN: Let's fix the problem and that is to restructure Social Security. I support a personal retirement account option in order to phase out the current system. We know that this works. It worked in the small country of Chile when they did it 30 years.

That payroll tax had gotten up to 27 percent for every dollar that the worker made. I believe we can do the same thing. That break point would approximately 40 years of age.

Now, young people realize they still got to contribute to the current system for those people that are on Social Security, that are near Social Security.

DISTASO: Are you going to raise the retirement age as president of the United States?

CAIN: I don't have to raise the retirement age, because that by itself isn't going to solve the problem. If Congress decides to do that, that's a different matter.

Here's -- let me give you one another example where this approach has worked. The city of Galveston, they opted out of the Social Security system way back in the '70s. And now, they retire with a whole lot more money. Why? For a real simple reason -- they have an account with their money on it.

What I'm simply saying is we've got to restructure the program using a personal retirement account option in order to eventually make it solvent.

It is powerfully obvious throughout Cain's statements on Social Security that he fixes his focus on the program's solvency.  For that reason, Cain doesn't bother with the details of Distaso's question, based as they are on the premise of the insolvency created by Ponzi financing and shifting demographics.

Cain suggests an alternate financing plan for individual retirement.

PolitiFact:

We’ll give Cain a pass on a pair of minor errors -- it’s Galveston County, not city, and the program launched in 1981, not in the 1970s. Instead, we’ll cut to the bottom line: Has the program meant that participants "retire with a whole lot more money" than they would under Social Security?

The answer to that question varies depending on whether we're talking about benefits or financing.  PolitiFact proceeds to focus exclusively on benefits.

PolitiFact summarizes several paragraphs comparing benefits under Social Security with those under Galveston County's alternate plan with the following:

The takeaway from the GAO and SSA studies is that the Galveston plan can be better than Social Security -- if you’re better off and if you fall into certain specific demographic categories. For many workers, especially those who are paid less, Social Security provides more.

This result doesn’t directly conflict with Cain’s statement, but it does undermine the sweeping certitude with which he said that participants will "retire with a whole lot more money."

Cain's certitude remains entirely intact in terms of financing.  Under Galveston County's system people's retirement plans are fully funded at the time they retire.  Social Security, by contrast, has spent the individual's contributions on benefits for persons already retired.  The government spends any remainder but promises to fund future benefits with the payroll deductions of future workers.

With Cain's point more prominent than a Truth-O-Meter graphic, PolitiFact still missed it:

On the specific question Cain raised -- whether participants in Galveston will "retire with a whole lot more money" than if they were in Social Security -- the answer is, "it depends." According to studies published a dozen years ago, some will, and some won’t. And the outlook today for the Galveston plan’s rate of return -- while not immutable going forward -- is more downbeat than it was in 1999. On balance, we rate Cain’s statement Half True.

Other than in its quotation of Cain, PolitiFact neglected to even mention Cain's focus.


The grades:

Louis Jacobson:  F
Martha Hamilton:  F

The PolitiFact team, in practical terms, completely ignored one of PolitiFact's plainly stated principles.  And since the principle was one of the good and important ones on PolitiFact's list, the team receives failing grades and the "Journalists Reporting Badly" tag.