Obama's Social Security Plan Lacks Details

Democrat Says He'll Work With Lawmakers To Flesh out Proposal On New Tax

(AP)  Barack Obama's bid to place a new Social Security tax on very high incomes is either a bold or foolhardy plan, depending on who critiques it.

But its potential impact is almost impossible to gauge because he is providing few details on basic questions such as what the tax rate might be, what types of income would be taxed and how the taxpayers' benefits would be affected.

The Democratic presidential candidate says he would work with lawmakers from both parties to resolve such matters. Voters generally applaud bipartisan cooperation, but they apparently will go to the polls this fall with only a vague notion of what Obama has in mind.

Obama made headlines June 13 when he called for a Social Security payroll tax on incomes above $250,000 a year. Currently, the tax is levied only on the first $102,000 of each worker's income. That covers the entire salary of most Americans.

Obama would not apply the Social Security tax to annual incomes between $102,000 and $250,000, a move meant to avoid alienating several million upper-income voters. His proposed change would apply only to those earning more than $250,000 a year, or about 3 percent of all taxpayers.

When he outlined his idea in the battleground state of Ohio, Obama said it is unfair for middle-class earners to pay the Social Security tax "on every dime they make," while millionaires and billionaires pay it on "only a very small percentage of their income." He also said the Social Security program needs revamping to bolster its long-term viability.

With Obama offering few details, several news accounts suggested that his proposed tax on very high incomes would be applied just as the existing Social Security tax is levied on incomes up to $102,000.

All workers pay a 6.2 percent Social Security payroll tax on such income. Their employers match it, for a total tax of 12.4 percent. The tax applies only to earned income, not to passive income such as dividends and interest.

In recent weeks, Obama aides have quietly indicated that the proposed tax on incomes above $250,000 might be different in key aspects. The rate probably would be about 2 percent to 4 percent, not 6.2 percent, they said. It's also possible that it would apply to more types of income, including dividends and investments.

As for benefits, the campaign has not said how the proposed tax on very high incomes would translate into new retirement income, if any, for those who pay it.

The campaign "has not put forth a specific plan" for Social Security, Obama economic adviser Austan Goolsbee said in an interview.

Perhaps because so many details are missing, Obama's Social Security proposal has generated relatively little debate on the campaign trail. But any change to the massive program could have far-reaching effects.

Many Americans rely on Social Security for much or all of their retirement income. Some workers, meanwhile, do not realize how much is withheld from each paycheck for Social Security and, to a lesser degree, Medicare.

Nearly three-fourths of all workers pay more in these payroll taxes than in federal income taxes, according to the Center on Budget and Policy Priorities. The center assumes that workers pay the full 12.4 percent in Social Security taxes, contending that employers would devote their half of the total to salaries if they did not have to make the 50-50 match.

Given the dearth of details about Obama's plans, some Republicans have criticized it, using assumptions that Democrats reject. Lawrence B. Lindsey, a former economic adviser to President Bush, argues that high earners would pay the full 12.4 percent tax rate on income above $250,000 while receiving no added benefits.

"A high-income entrepreneur would see his or her federal marginal tax rate rise to 53 percent from 37.7 percent," Lindsey wrote in a June 20 Wall Street Journal op-ed column.

The marginal tax rate is what a person pays on each additional dollar earned. Lindsey wrote that Obama's plans would provide a powerful incentive for the highest-earning Americans to work less, invest less and contribute less to the economy.

Former Oklahoma Sen. Don Nickles, a Republican, agreed. A person who owns two restaurants and makes $500,000 a year would have little incentive to open a third restaurant under Obama's tax plans, and might even close one, Nickles said in an interview. "He's not going to be hiring more people," Nickles said.

Obama economic adviser Jason Furman, responding to Lindsey in a letter published by The Wall Street Journal, said Obama would "work with Congress on a bipartisan basis to design the details" of his Social Security plan, "including the tax rate, how it is phased in over time, the linkage between these tax payments and benefits, and other critical design elements of this plan."

Furman wrote that Obama "has not proposed a 12.4-percentage point tax increase on earnings above $250,000."

[realpatriot1]

Obama''s plan is more detailed than the McCain plan which as late as yesterday was a work in progress. McCain indicated ywsterday that he may raise taxes to fund social security but he hasn''t decided( but he wants to play up to senior voters).

So much for his no new taxes pledge? Give it a couple days and it will change again(once he hears from his special interst supporters).

[ariel133]

As you know I am not a very political person. I just wanted to pass along that Senator Obama came to Bagram Afghanistan for about an hour on his visit to "The War Zone". I wanted to share with you what happened. He got off the plane and got into a bullet proof vehicle, got to the area to meet with the Major General (2 Star) who is the commander here at Bagram.

As the Soldiers where lined up to shake his hand he blew them off and didn''''t say a word as he went into the conference room to meet the General. As he finished, the vehicles took him to the ClamShell (pretty much a big top tent that military personnel can play basketball or work out in with weights) so he could take his publicity pictures playing basketball. He again shunned the opportunity to talk to Soldiers to thank them for their service.

I swear we got more thanks from the NBA Basketball Players or the Dallas Cowboy Cheerleaders than from one of the Senators, who wants to be the President of the United States. I just don''''t understand how anyone would want him to be our Commander-and-Chief. It was almost that he was scared to be around those that provide the freedom for him and our great country.

If this is blunt and to the point I am sorry but I wanted you all to know what kind of caliber of person he really is. What you see in the news is all fake.

In service,
CPT Jeffrey S. Porter
Battle Captain
TF Wasatch
American Soldier

[ariel133]

Making excuses for Obama is what is happening over and over..giving him passes and allowing for him to seem connected to Americans because of his so called "popularity to the masses" is sad. He had time to visit the troops as he had time to play basket ball. Regardless if it seemed "political" that is not the point, it would have showed his true faith in American military, unless of course, it makes him uncomfortable. This is the question people seem to overlook. Would he have written off Rev Wright if he did not win the primary? I really want to know, but hardly guess I ever will. If he loses the GE he will certainly return to him, that is my feeling.

[standlee5]

Obama lacking details. You''re kidding.

[seah5]

Obama never give details, Probably because he has none.

He is just idea''s and most of them are borrowed ideas off of others, added as his own policies and platform.

When Obama is asked details, he stutters or eludes, evades or talks in circles or changes the subject, Or blames someone for something.

Obama is a mind conditioning speech, marketed and sold by a PR team.

The media makes out on him, because he needs to keep his mind conditioning reinforcements Highly active for the program to stay in effect and working on the people. The media makes millions and the people get constant brainwashing. A marketing and PR team Dream come true.

[kstar42]

Obama''s Social Security Plan Lacks Details?

Everything about Obama lacks detail! They just now figured this out?

[ragnar30066]

Duh? Does Obama have any Change in mind that doesn''t lack details?

[likeitis5050]

Another CBS negative article against Obama without contrasting to McCain''''s plan.

ANOTHER? Right. Like all the news outlets are justing itching to bring Obama into the light. Give it a rest. Obama is the chosen one...hasn''t that been made abundantly clear by now?

[juliekay44]

Another CBS negative article against Obama without contrasting to McCain''s plan.

Why is there no coverage about McCain''s plan to reduce payments for Social Security and Medicare? It is part of his balance the budge farce.

July 27, 2008 9:32 AM

ABC News'' Anamarie Rebori reports: Sen. John McCain made clear this weekend that when it comes to fixing Social Security, "everything is on the table," including a possible payroll tax increase.

http://blogs.abcnews.com/politicalradar/2008/07/mccain-social-s.html