Obama's Social Security welfare

[jreeves]

Social Security as a "Welfare Program"

The United States already collects far more Social Security taxes from high earners than other countries do. While payroll tax rates are often higher in other developed countries, the level of wages to which these rates apply is generally lower.

The current U.S. wage cap equals around 2.9 times average earnings, far above the 1.9 times average among OECD countries. In Canada and France, payroll taxes are levied only up to the average wage; in the UK, to 1.15 times the average wage; and in Germany and Japan, to 1.5 times.[6] Social Security is already more progressive than the typical OECD country's pension program, and Obama's plan would make it more so.

This aspect of Obama's proposal presents perhaps the greatest potential cost: the effect on the character of the program itself. Unlike traditional welfare programs, Social Security has never been strongly progressive. In fact, as originally conceived by Franklin Roosevelt's Committee on Economic Security, high earners would have been exempt from the program, meaning there would have been no redistribution from these individuals to lower earners. Social Security currently has a modest tilt toward low earners, but not enough to impose a stigma on the poor or a work disincentive on the affluent. Many believe the system's relatively low progressivity has helped retain the program's political support over time. In the aphorism of Social Security's founders, "a program for the poor is a poor program."

While Social Security benefits are progressive up to the wage ceiling, the cap prevents Social Security from imposing a confiscatory burden on high earners. As of 2005, roughly 84 percent of total wages are subject to Social Security taxes. While down from around 90 percent in the early 1980s, this level is slightly above the program's historical average of 83.3 percent.[7]

President Clinton considered lifting the wage ceiling modestly but was skeptical of plans that would, in his terms, "soak" high earners with taxes many times what they could expect to receive in benefits. Eliminating the wage cap outright, Clinton said in 1998 at an event promoting Social Security reform, would "tremendously change the whole Social Security system. . . . We should be very careful before we get out of the idea that this is something that we do together as a nation, and there is at least some correlation between what we put in and what we get out," Clinton said. "You can say, 'well, they owe it to society.' But these people also pay higher income taxes, and the rates are still pretty progressive for people in very high rates."[8]

 

[jreeves]

Social Security as a "Welfare Program"

The United States already collects far more Social Security taxes from high earners than other countries do. While payroll tax rates are often higher in other developed countries, the level of wages to which these rates apply is generally lower.

The current U.S. wage cap equals around 2.9 times average earnings, far above the 1.9 times average among OECD countries. In Canada and France, payroll taxes are levied only up to the average wage; in the UK, to 1.15 times the average wage; and in Germany and Japan, to 1.5 times.[6] Social Security is already more progressive than the typical OECD country's pension program, and Obama's plan would make it more so.

This aspect of Obama's proposal presents perhaps the greatest potential cost: the effect on the character of the program itself. Unlike traditional welfare programs, Social Security has never been strongly progressive. In fact, as originally conceived by Franklin Roosevelt's Committee on Economic Security, high earners would have been exempt from the program, meaning there would have been no redistribution from these individuals to lower earners. Social Security currently has a modest tilt toward low earners, but not enough to impose a stigma on the poor or a work disincentive on the affluent. Many believe the system's relatively low progressivity has helped retain the program's political support over time. In the aphorism of Social Security's founders, "a program for the poor is a poor program."

While Social Security benefits are progressive up to the wage ceiling, the cap prevents Social Security from imposing a confiscatory burden on high earners. As of 2005, roughly 84 percent of total wages are subject to Social Security taxes. While down from around 90 percent in the early 1980s, this level is slightly above the program's historical average of 83.3 percent.[7]

President Clinton considered lifting the wage ceiling modestly but was skeptical of plans that would, in his terms, "soak" high earners with taxes many times what they could expect to receive in benefits. Eliminating the wage cap outright, Clinton said in 1998 at an event promoting Social Security reform, would "tremendously change the whole Social Security system. . . . We should be very careful before we get out of the idea that this is something that we do together as a nation, and there is at least some correlation between what we put in and what we get out," Clinton said. "You can say, 'well, they owe it to society.' But these people also pay higher income taxes, and the rates are still pretty progressive for people in very high rates."[8]

Yet another example of Obama taxing the middle class. He would eliminate the Social Security tax cap, forcing the middle class and rich to be burdened with prolonging the inevitable failure of Social Security.

 

[jreeves]

Social Security as a "Welfare Program"

The United States already collects far more Social Security taxes from high earners than other countries do. While payroll tax rates are often higher in other developed countries, the level of wages to which these rates apply is generally lower.

The current U.S. wage cap equals around 2.9 times average earnings, far above the 1.9 times average among OECD countries. In Canada and France, payroll taxes are levied only up to the average wage; in the UK, to 1.15 times the average wage; and in Germany and Japan, to 1.5 times.[6] Social Security is already more progressive than the typical OECD country's pension program, and Obama's plan would make it more so.

This aspect of Obama's proposal presents perhaps the greatest potential cost: the effect on the character of the program itself. Unlike traditional welfare programs, Social Security has never been strongly progressive. In fact, as originally conceived by Franklin Roosevelt's Committee on Economic Security, high earners would have been exempt from the program, meaning there would have been no redistribution from these individuals to lower earners. Social Security currently has a modest tilt toward low earners, but not enough to impose a stigma on the poor or a work disincentive on the affluent. Many believe the system's relatively low progressivity has helped retain the program's political support over time. In the aphorism of Social Security's founders, "a program for the poor is a poor program."

While Social Security benefits are progressive up to the wage ceiling, the cap prevents Social Security from imposing a confiscatory burden on high earners. As of 2005, roughly 84 percent of total wages are subject to Social Security taxes. While down from around 90 percent in the early 1980s, this level is slightly above the program's historical average of 83.3 percent.[7]

President Clinton considered lifting the wage ceiling modestly but was skeptical of plans that would, in his terms, "soak" high earners with taxes many times what they could expect to receive in benefits. Eliminating the wage cap outright, Clinton said in 1998 at an event promoting Social Security reform, would "tremendously change the whole Social Security system. . . . We should be very careful before we get out of the idea that this is something that we do together as a nation, and there is at least some correlation between what we put in and what we get out," Clinton said. "You can say, 'well, they owe it to society.' But these people also pay higher income taxes, and the rates are still pretty progressive for people in very high rates."[8]

Here's the link....
http://www.aei.org/publications/pubID.27704/pub_detail.asp

 

[ReillyT]

Yet another example of Obama taxing the middle class. He would eliminate the Social Security tax cap, forcing the middle class and rich to be burdened with prolonging the inevitable failure of Social Security.

He hasn't proposed eliminating the cap altogether.

I don't think he has indicated exactly how he would alter the cap, but has given a couple of suggestions. One would be raising it (but not eliminating it), and the other would be creating a doughnut hole, which would eliminate the cap at higher levels of income (around $250k), but maintain the cap at for amounts earned between the current cap and the elimination threshold.

 

[AllieBaba]

Thanks goodness he won't be our next prez. He'd bankrupt us and trainwreck the economy.

 

[rayboyusmc]

[Thanks goodness he won't be our next prez. He'd bankrupt us and trainwreck the economy./QUOTE]

What the hell do you think Bush has done? Get a life. Jobs tanking. Recession here. China owns US. Not much left for Obama to screw up.

I believe that from what I could find, middle class still is under 100,000 income. Raising the bracket for social security to 200,000 would not negatively affect the middle class. It would affect the lower upper class and upwards.

 

[jillian]

Thanks goodness he won't be our next prez. He'd bankrupt us and trainwreck the economy.

unlike the imbecile in the white house now, right?

do you read current events at all??

 

[AllieBaba]

Yes, I do. Which is why I know our president isn't responsible for the economy taking a nose dive.

You think this is bad, you're in for a nasty, nasty shock if a dem gets in the white house and starts setting up huge, cumbersome programs that will leach the life out of the middle class.

 

[rayboyusmc]

Yes, I do. Which is why I know our president isn't responsible for the economy taking a nose dive.

I see, Bush is the president and is not responsible for the mess were in, but if a Democrat gets in he/she will be responsible if it gets worse?

I have some really good beach property here in Florida to sell you Ali.

 

[AllieBaba]

If Bush had enacted policies which raped our taxpayers and built up huge programs, then I'd say he was responsible. But I haven't seen that.

I guarantee if a president pushes for big government spending on new programs, that president is the one who will be held accountable when we crash and burn.

 

[ReillyT]

If Bush had enacted policies which raped our taxpayers and built up huge programs, then I'd say he was responsible. But I haven't seen that.

I guarantee if a president pushes for big government spending on new programs, that president is the one who will be held accountable when we crash and burn.

What about big spending on current programs? What about big spending on a war? What about big spending on new programs (No Child Left Behind)?

Who do you hold accountable?

 

[Dogger]

A right-wing think tank providing material from a right wing rag. Yawn.

Social Security has greatly reduced poverty and dependency for the elderly and disabled.

Right-wing criticism of the program, like other right-wing proposals for changing the social safety net, have worked consistently on paper, and failed consistently in the real world. Just like the other economic extreme of communism.

Show me one economy where unfettered capitalism hasn't produced mass poverty and concentration of wealth. Show me one where an adequately funded safety net hasn't increased the middle class and improved the quality of life for millions.

 

[AllieBaba]

What about big spending on current programs? What about big spending on a war? What about big spending on new programs (No Child Left Behind)?

Who do you hold accountable?

Sorry, "no child left behind" can't even begin to compete with universal health care, and neither can the war, actually.

 

[ReillyT]

Sorry, "no child left behind" can't even begin to compete with universal health care, and neither can the war, actually.

Oh... I am sorry. Since the program isn't big enough for you no one needs to be held accountable?

You're right. The war and UHC wouldn't be comparable. Only the first was necessarily a monumental fuckup.

 

[AllieBaba]

Hmmmm..how about holding the assholes who insist on continually raising the minimum wage accountable? Or the assholes who won't let us use our own oil? Or the assholes who won't allow us to refine our own oil? Or the assholes who insist on paying farmers to grow food for non-food purposes? Let's hold the assholes who think all teachers need raises and a union responsible. Or the assholes who insist we shoulder the burden of the health care of every illegal alien in the country...

 

[ReillyT]

Hmmmm..how about holding the assholes who insist on continually raising the minimum wage accountable? Or the assholes who won't let us use our own oil? Or the assholes who won't allow us to refine our own oil? Or the assholes who insist on paying farmers to grow food for non-food purposes? Let's hold the assholes who think all teachers need raises and a union responsible. Or the assholes who insist we shoulder the burden of the health care of every illegal alien in the country...

I have no problem with most of that (at least as it would be objectively described), so I have no one to hold accountable on these counts.

So who do you hold accountable for current levels of government spending?

 

[AllieBaba]

I actually don't have a problem with the current level of government spending.

 

[Dogger]

Hmmmm..how about holding the assholes who insist on continually raising the minimum wage accountable?

I have no problem with most of that (at least as it would be objectively described), so I have no one to hold accountable on these counts.

So who do you hold accountable for current levels of government spending?

Why are you opposed to stimulating the economy?

A study of small businesses by the Fiscal Policy Institute found that a higher minimum wage stimulates job growth.

However, this report examined recent state-by-state trends for small businesses employing fewer than 50 workers and found that employment and payrolls in small businesses grew faster in the states with minimum wages above the federal level than in the remaining states where the $5.15 an hour federal minimum wage prevailed.

This report also found that total job growth was faster in the higher minimum wage states. Faster job growth also occurred in the retail trade sector, the sector of the economy employing the most workers at low wages, in the higher minimum wage states.

The simplistic introductory economics prediction that an increase in the minimum wage will result in job loss clearly is not supported by the actual job growth record. Rather, faced with an increase in the minimum wage, small businesses may have benefited from some combination of higher productivity through improved worker retention and savings on recruitment and training. There may also be a “Henry Ford” effect at work: if you pay workers more, they can buy more, boosting the overall economy, especially among small retail businesses.

See Executive Summary, on page 3

If you want to stimulate the economy, forget tax cuts. Put more money in the hands of working people.

 

[jreeves]

He hasn't proposed eliminating the cap altogether.

I don't think he has indicated exactly how he would alter the cap, but has given a couple of suggestions. One would be raising it (but not eliminating it), and the other would be creating a doughnut hole, which would eliminate the cap at higher levels of income (around $250k), but maintain the cap at for amounts earned between the current cap and the elimination threshold.

Obama's idea, which he described on the op-ed page of Friday's Quad City Times as being "one possible option" and not a formal plan, would raise more than $1 trillion over 10 years by subjecting income of more than $97,000 to a 12.4 percent tax. Half of the tax would be paid by employees and half would be paid by employers.

http://abcnews.go.com/Politics/story?id=3638710

So much for no plan and a partisian article aye??? More taxes on the middle class and further constricting economic growth.

 

[Jon]

Let's hold the assholes who think all teachers need raises and a union responsible.

You DON'T think teachers need raises? If you don't, I can see why you support Bush. It takes a moron to support one.

Teachers are one of this country's most vital assets. They teach the future leaders of this country the tools they will need to run it. In short, they ARE our investment in the future. If you don't think that's important, get the fuck out of this country.