OMG!! McCain defends retirement accounts amid stock dive

GREEN BAY, Wisc. - 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.

Private accounts for Social Security are "always an easier sell when the markets are going up instead of going down," said David Wyss, chief economist at Standard & Poor's. "I don't think this is a good week to sell that one politically, but you're looking at the long term here. You're investing your retirement funds for 20 or 30 years down the road."

A headline Friday in the Manchester, N.H., Union Leader, the leading paper in that battleground state, underscored the political challenge. "Pension funds for workers take a hit," read a story about a roughly $500 million decline the past three months in the state's public pension fund.

Democrat Barack Obama opposes the accounts and has warned they could be a precursor to eliminating the government entitlement program. Critics also note that one of McCain's top economic advisers is former Texas Sen. Phil Gramm, a free-marketeer who pushed the idea of a privatized retirement system as far back as 1988.

Obama, a senator from Illinois, has suggested shoring up the program by imposing a Social Security tax of no more than 4 percent on earnings above $250,000; currently, only the first $102,000 in income is subject to the tax. Income in the "doughnut hole" between those figures would not be taxed..........