Obama gave a speech on Social Security the other night. It was incoherent. He wants to lift the cap on income that is subject to FICA tax. Right now, that is at $102,000. The bargain that was made when Social Security was passed was that it was not a welfare program. It was supposed to be a program that you paid into and, when you retired at 65, it would provide a minimum income. The more you contributed, the more you got back after 65. The income subject to tax was capped and benefits were capped.
If Obama lifts the cap without increasing the benefits paid to those higher income earners, the bargain that was at the heart of Social Security is broken. It becomes one more welfare program. One of the risks is that the consensus that Social Security is fair may no longer apply. Many years ago, high income people tended to vote more reliably than the poor. The Social Security bargain kept the more prosperous citizens on board politically.
Plus, his arithmetic isn’t very good, either.
Tags: FICA, Obama, Social Security