In the last days of the election campaign, the liberal group Alliance for a Better Minnesota is pouring money into the U.S. Senate race to try to make sure Republican Mike McFadden doesn’t defeat Sen. Al Franken.
The group’s latest spot, which is costing more than $480,000, targets McFadden for his views on how to sustain entitlement programs like Medicare and Social Security.
“McFadden says he wants to raise Medicare’s retirement age and said he would consider privatizing Social Security. Privatizing Social Security means risking our retirement savings in the stock market. That might be good for Wall Street and millionaire investment bankers like McFadden, but not for us.”
For the most part, this ad is correct.
The Alliance for a Better Minnesota is a well-funded group that supports Democratic candidates. It gets most of its money from wealthy individual donors, including Gov. Mark Dayton’s ex-wife, and from unions.
The group’s latest ad against McFadden plays on two themes we’ve seen a lot of this year and in other election years: an appeal to seniors, some of the most reliable midterm election voters, and the proposition that McFadden, being wealthy, isn’t like most Minnesotans. (McFadden’s opponent, Sen. Al Franken, is wealthy, too.)
Earlier this year, McFadden told MinnPost that he would consider raising the eligibility age for Medicare. MinnPost reporter Eric Black had to drag it out of McFadden. Here’s the exchange:
MM: So on Medicare you’ve got two issues: you’ve got a demographic issue and a cost issue. And I think we need to look at the retirement age and what age an individual becomes eligible for Social Security, excuse me, for Medicare.
EB: Obviously look at raising it?
MM: Yeah. Absolutely. And you know, Eric, if we were progressive, when this was put into place when the average lifespan was significantly lower than it is today, you’d almost put it in as a formula, take the average lifespan minus some number of years.
McFadden doesn’t go so far as to say he will raise the Medicare eligibility age as the ABM ad states. But McFadden is clearly open to the idea.
It’s also true that McFadden said he would consider privatizing Social Security. To most, privatizing Social Security means having workers put their Social Security contributions into a personal account and then investing those funds to grow their retirement savings.
Here’s how McFadden responded to a question from MPR News’s Tom Scheck in an interview from July, 2013 regarding the programs sustainability.
MM: “Also, I’d like to see them have more choices in terms of how they think about their retirement plan and how they put dollars away.”
TS: “Does that include perhaps allowing some of that public money to be invested in the stock market, what some people say is privatization?”
MM: “Potentially. Potentially. I’d want to look at that Tom. I think everything needs to be on the table. We need to save these programs. They are important to our seniors.”
In both the case of Medicare and Social Security, McFadden is careful to say that any changes he’d support in the Senate to ensure the survival of both programs wouldn’t affect those who are nearing retirement, though he hasn’t said exactly who would be affected by the changes he’s considering supporting.
Whether privatizing Social Security is a good thing is a matter of debate between conservatives and liberals and has been for decades.
Back in 1997, Dan Mitchell of the conservative Heritage Foundation wrote that, “Replacing the payroll tax with a system of private savings accounts would boost the anemic level of savings in the United States. It also would boost the creation of jobs by sharply reducing the tax penalty imposed on employment.”
Meanwhile, around the same time, two experts at the Brookings Institution agreed that shifting to a private system could boost savings – but it may also be risky and come with disparities.
“The worker’s ultimate retirement benefit would depend solely on the size of the worker’s contributions and the success of the worker’s investment plan. Workers who made larger contributions would receive bigger pensions, other things equal,” the duo wrote.
The Alliance for a Better Minnesota’s ad says that McFadden will raise the eligibility age for Medicare. That’s not quite true, though McFadden has said he’s open to the idea to keep the program alive.
Aside from that nuance, the Alliance for a Better Minnesota’s ad gets McFadden’s record on entitlement programs mostly right. But it’s a matter of reasonable debate whether moving to a privatized retirement system is a good idea.