If this article is correct, the Obama team has a lot of explaining to do.
In particular, they need to tell us whether their guy doesn’t have the chops to understand Dean Baker and Paul Krugman, or if he is serving some other, darker interest. And don’t give me any bull about how virtuous it would be to raise the cap on SS taxes: it all depends on the narrative. If you get to a more progressive tax system by flashing false alarms about Social Security, you feed the beast under the guise of clipping its clawnails.
6 comments:
Given Andrew Samwick's interest in this, I wandered over to Vox Baby to see if he has weighed in on this. Yes and no. Nothing on the policy side of this - only to say he'd not cross over to vote for Senator Clinton but he could vote for Senator Obama. So what is the Obama plan? To let Dr. Samwick design the "reform" package. Could be worse - could be the Fred Thompson "solution".
Obama's plan doesn't sound like much of a plan other than to increase the in flow of additional FICA taxes. I'll go him one better. Let's take the cap off income level, lower the rate and aim for the same total taxes paid. That would be a prgressive approach
to resolving the social security crises. It all depends on how one defines the crises.
By the way, I'm curious to know. Do the reports of eventual shortages in the system, when ever they may occur, take into account that the government will actually pay back the Trust Fund monies that are currently fundiing the income tax reductions enjoyed by the upper .05%ers? If pay back to the Trust is in the cards, will that be accomplished by raising income taxes across the income sectrum? That would basically result in the working class paying back the debt that benefited the wealthy. Does anyone's plans to resolve the "crises" take this into account?
Jack - a plan to address the massive General Fund deficit? I WISH someone would tackle that one. Seems the GOP side only want to add to it with more DoD spending and lower income tax rates. Maybe Obama picked the wrong part of the fiscal situation to go after.
Last I heard Dean Baker talk, he said that only minor tinkering was needed. Lifting the cap, which is what Obama seems to be suggesting, would do it. The problem is that his remarks might feed into the wild scare tactics about SS going broke.
Well this may fall into the 'Preach to the Converted' category.
We don't need to lift the cap, certainly we don't need to lift the cap when Social Security is projected to run $200 billion a year surpluses for the next decade. If you really think there is a politically viable way to slap a 6.2% or 12.4% (depending on the incidence) tax increase on top earners well lets have at it. On the income tax side.
It makes we want to tear my hair out. On the one hand we have people insisting that simply letting a few points of tax on top marginal rates expire is some political minefield, on the other hand some of the same people think you can just slap people making more than $97,500 with an additional 6/12% increase and have that be somehow politically viable. While it is quite possible that politicians don't understand that raising the cap is the equivalent of reversing both Bush I and Bush II tax cuts on the upper middle class, and just possible that economists don't get it, be assured that the accountants do. Raising the cap would mean taking most of the 28% bracket to 34.2% and all of the 33% bracket to 39.2% and blow an additional 6.2% hole in payroll budgets for every top academic and professional organization out there. And all for a program that is currently in the black.
We can debate the long term solvency of the Social Security system endlessly (I am now ten years in) but the notion that wage earners making over $100,000, which would include much of the policy and academic elite and every member of Congress would actual rollover and accept this kind of tax increase is political idiocy of the highest order.
'Lift the cap'. Well it sounds easy. Much as the mice's plan to save themselves by putting a bell around the neck of the cat so as to get forewarned. But as the fable concludes; "Who bells the cat?"
Leave the cap alone. It provides political insulation for Social Security, it is what makes Social Security into an insurance plan funded by workers for workers as opposed to a welfare plan exposed to political machinations by the interests of capital. God help us from our friends.
GDP growth at historic trend plus some realistic immigration numbers (see Tables V.B2 and V.A1) save Social Security as is. You could look it up. In fact please do. 2007 SS Report: List of Tables
http://www.ssa.gov/OACT/TR/TR07/trLOT.html
As usual Bruce is right here. Nothing needs to be done. Obama is trying to impress the moronic and ignorant commentariat of people like David Broder. He has unfortunately fallen under the spell of Chicago economist Austan Ghoulsbee (oops! Halloween mistake, I mean "Goulsbee").
Barkley
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