Monday, August 25, 2008
Obama's plans on social security and windfall profits taxes not necessarily helpful to seniors
As we head into the Democratic Convention in Denver, it’s apparent that Barack Obama’s plan to “save” social security leaves a lot of stones turned. There are lots of op-eds and even AP stories around on this, but a typical account seems to be Charles Babington’s in The Huffington Post, July 28, 2008, “Obama’s Social Security Plan Vague on Details,” here.
Apparently Obama would leave a doughnut hole on wage taxation (remember the term from Medicare Part D? – well, it’s back!) From $102,000 to $250,000 in wages, the payroll tax would not apply. Then it would come back, might be steeper, and might apply also to investment income.
Now, there has always been a philosophical, “moral” question as to whether Social Security is an “annuity” or is a “welfare” program. FDR started it out as the latter, because the earliest beneficiaries had contributed nothing. That anomaly, propagated, makes paying for the “bridge” to any (Republican or “libertarian”) privatization plan an issue. Obama is clearly looking at is as a tool to redistribute wealth.
True, he may have backed away into vagueness, as to the rates on upper income wages, and as to how serious he is about "all income." The Washington Post goes into this on Aug. 25 with the editorial "Social Security on Ice: The presidential candidates appear eager to avoid a serious debate about how to fix it," link here. Social Security had always been based on "work-related" wage income, and the Annual Earnings Test (for early retirees) reflects this. Would that change, too?
There is something else. He wants to target oil companies, to help pay the gasoline bills of “working families.” Oil company stocks are critical not only to pension funds but also to the personal retirement plans of many seniors. He seems to have forgotten that altogether.