A strong argument in favor of capped benefits has always been that since there was a maximum amount that could be paid in, it was entirely logical that there ought to be a maximum amount being paid out as well.  Under this new proposal, however, high-income individuals will be paying significantly larger sums into the Social Security Trust Fund, thus disrupting the equipoise of the current system.

It's all about pretending to go beyond "the usual partisan conflicts" and, with a nobility only he can muster up, solve "real problems" with "hard choices".

To Heck, of course, with all the delicate political balances that have sustained SS since the day of FDR. And no matter that the problem he is choosing to gin up is far away and very tractable in any case.

Really, policy for Obama seems like nothing more than the malleable clay he uses to sculpt his own image.

Right now, SS benefits are equal to about 4.2% of GDP, and will stay that way until about 2012.  From 2012 through 2032, the percentage of GDP used for Social Security benefits rises in a (neraly) straight line until it reaches 6.2% of GDP in 2032....and that's about where it sits for the next 50 years or so.

Now, throughout most of this period (until 2029), the Trust fund continues to run an annual surplus... in other words we have until 2029 before we have to start redeeming the debt held by the trust fund.

Fiscal responsibility means that we have to balance the budget and schedule payment of non-SS held debt so that almost all of it is paid off before 2029.  

Why?  Well, right now, Social Security is running a surplus while the general fund is running a huge deficit, thanks to GWB.  What this means is that the SS surplus gets paid into the SS Trust Fund, and then it gets immediately borrowed by Congress to meet general obligations.  In return, Congress deposits U.S. Treasury bonds in the SS Trust Fund, which represents its long-term commitment to pay back the borrowed funds and keep SS solvent.

That's fine as far as it goes, because if we're going to run a general fund deficit, we might as well borrow the money from ourselves rather than China.  Despite all the rhetoric about Congress "raiding" the Trust Fund, the reality is that we'd be stupid to leave it just sitting in cash, earning no interest, and U.S. Treasury Bonds are the safest investment you can make.

But one way or the other, there is a crisis in the general fund that vastly exceeds the trumped-up problems that supposedly exist with Social Security.  We all know the Bush deficits are unsustainable in the long run, and we know it's going to take a lot of pain to get back to balanced budgets and start paying off the debt.

And every dollar that Congress borrows from the SS Trust Fund makes it that much harder to bring our overall budget back into balance.  In other words, because all those U.S. Treasury bonds need to be repaid, all we're doing with this borrowing scheme  is increasing the pressure on the general fund to repay those obligations someday.  The more money raised by SS taxes, the more borrowing will take place; and the more borrowing, the more long-term pressure on the general fund.

To boil it down, if we were running a deficit in Social Security right now, then increasing the payroll tax would help relieve that deficit.  But since there's no deficit right now, all we're accomplishing is helping out the general fund in the short term, while increasing the magnitude of the long-term "crisis" that will ensue if Congress doesn't find a way to pay off its obligations to the SS Trust Fund.

"There. Is. No. Crisis."

"The crisis "frame" was one imposed by the Villagers on the entire debate during the 2005 debate, but it's also a
factual claim with no basis in reality."

"More than that, any politician who really thinks that "fixing" Social Security is some sort of top priority is completely wrong. This isn't a Right/Left thing, it's a reality thing."

"In other words, we need to increase the regressive payroll tax so that we don't need to raise other taxes. And we're doing it to "save" social security.

This is the con, laid out clearly for all to see. This has nothing to do with "saving Social security" and everything to do with increasing the regressivity of the tax code."

The current scheme says everyone pays around $6k if they can afford it (with the assumption that you need to have taxable income of $102k for this to be the case). Everyone below that pays less at a fixed 6.2%. way it would work is that everyone up to $102K pays 6.2%. If that's the right principle but it doesn't yield enough, they should increase the 6.2% rate. If the principle is wrong, change it to make those earning more contribute more but in a gradual way (like the standard federal earned income tax).

Okay, call me crazy, since I'm a republican, but I believe in raising or totally doing away with the salary cap on social security.  I've thought this for a long time.  

I'm sorry if you have to be "burdened" with more taxes coming out of your paycheck for the entire year.  I mean, please, if you make over $250K you can afford to pay into SS.  

I also have some concerns that given Obama's gift for compromise and reach-out, I sense a vulnerability there to the importunings of the privatization crowd - and you can be sure those people will not need a whole lot to get more than their foot in the door.

Yes, I know anything like this has to get through the Congress, but there seem to be enough people in Congress who support Obama that I fear there will not be a solid bulwark against the inevitable bipartisan blather.

1. Give credence to the false Republican meme that Social Security is in "crisis". It is not. Medicare may be in crisis. The general budget may be in crisis when it comes time to pay back the SS trust fund. But SS is NOT in crisis. We spent all of 2005 fighting this one. This by itself should disqualify any such proposal.

2. Turn SS from a broad-based popular social insurance program to a less popular redistribution system from the wealthy to others. What has kept SS in its cherished place is that everybody feels they get treated fairly. We don't want it to be a welfare program.

3. Deepen the future problem when it comes to repaying the SS trust fund. Raising payroll taxes now will only increase the amount of money the general budget can borrow, and thus make that problem worse when we have to deal with it.

At least that is my reading of the AP news article, which is admittedly ambiguous.  Note the words "other retirement issues" below:

"Obama, speaking on other retirement issues, said he would "limit circumstances when retirement benefits can be cut," and increase the wages and benefits workers could protect in bankruptcy court. Companies would have to disclose more about their pension fund investments, he said. He vowed to end "the outrage of executives getting bonuses while workers watch pensions disappear."

Bill Richardson's Star is Falling with a BIG THUD (Not on VP Shortlist, State Legislators FED UP with Him)

http://tinyurl.com/4mogb7

Under his plan, you wouldn't pay SS taxes on amounts between $102k and $250k. But over $250k, and you pay

Small businesses, same thing, but in the form of return of capital.

Other businesses will move overseas etc.

I do like the idea, but I'm not sure that raising the cap should be called welfare. Heck some see it as welfare already, because its new workers that fund the program.

Sen. Barack Obama says if elected, he will require people who make over $250k a year to pay FICA (social security) taxes on the amount in excess of $250k.

(I think he means he will ask Congress to pass such a law.)

Actually, it sounds a lot like we still don't know what he stands for, while we do know what Clinton would do.