Barack Obama on Social Security Junior Senator (IL); President-Elect

Good health care and tax reform will save entitlements

OBAMA: If we get our tax policies right so that they’re good for the middle class, if we reverse the policies of the last eight years that got us into this fix in the first place and that Sen. McCain supported, then we are going to be in a position to deal with Social Security and deal with Medicare, because we will have a health care plan that actually works for you, reduces spending and costs over the long term, and Social Security that is stable and solvent for all Americans and not just some.

McCAIN: What we have to do with Medicare is have the smartest people in America come together, come up with recommendations, and then, like the base-closing commission idea we had, then we should have Congress vote up or down.

What do we do with the losers of privatizing?

Thus, Obama was able to cut through all the rhetoric and see the key underlying fallacy of Bush's and McCain's proposal to privatize Social Security. If we allow people to invest in riskier assets in the stock market, we will just have more losers who end up gambling with their retirement money and end up with nothing at retirement.

Raise cap on payroll tax for 3% of earners over $102,000

A: Right.

Q: They say for all your promises not to raise taxes on the middle class, that, in fact, you want to raise the cap on the Social Security payroll tax, and you also want to increase capital gains.

A: In terms of raising the cap on the payroll tax, right now everybody who’s making $102,000 or less pays 100% of payroll tax on 100% of their income. There are about 3% to 4% of Americans who are above $102,000 in income every year. So if you want to talk about who’s middle class, me giving cuts to folks making $60,000 or $70,000, and potentially asking more from friends of mine like Warren Buffett. That’s a debate I’m happy to have with John McCain, because it’s the people making $75,000, $50,000, $60,000 who are hurting.

Raise $97K cap on payroll tax exempting earnings under $250K

OBAMA: What I have proposed is that we raise the cap on the payroll tax, because right now millionaires and billionaires don’t have to pay beyond $97,000 a year. Now most firefighters & teachers, they’re not making over $100,000 a year. In fact, only 6% of the population does. And I’ve also said that I’d be willing to look at exempting people who are making slightly above that.

Q: But that’s a tax on people under $250,000.

OBAMA: That’s why I would look at potentially exempting those who are in between. This is an option that I would strongly consider, because the alternatives, like raising the retirement age, or cutting benefits, or raising the payroll tax on everybody, including people making less than $97,000 a year--those are not good policy options

Must capture new revenue; no new Social Security Comission

CLINTON: With all due respect, the last time we had a crisis in Social Security was 1983. President Reagan and Speaker Tip O’Neill came up with a commission. That was the best and smartest way, because you’ve got to get Republicans and Democrats together. That’s what I will do.

OBAMA: That commission raised the retirement age, and also raised the payroll tax. So Sen. Clinton can’t have it both ways.

Stop any efforts to privatize Social Security

• Insecure Retirement Savings: 75 million working Americans lack employer-based retirement plans. Too many companies have dumped their pension obligations, leaving workers in the cold.
• Income Security: With skyrocketing health care, energy and housing costs, too many seniors do not have the resources to live comfortably.

• Commitment:As someone who was largely raised by his grandparents, Obama has first-hand knowledge of how hard America’s seniors have worked. He will honor their lifetime of work.
• Protect Social Security: Obama will preserve Social Security by stopping any efforts to privatize it and working in a bipartisan way to preserve it for future generations.
• Secure Hard-Earned Pensions: Obama will fight to ensure that companies don’t dump their pension obligations.
• Help Americans Save More: Obama will make retirement savings automatic.

FactCheck: Removing $97,500 cap would be $1.3T tax increase

Taxing all earnings would indeed amount to a $1.3 trillion increase over the next 10 years alone, according to estimates by Cato Institute Social Security experts. A similar estimate comes from Citizens for Tax Justice, which figures the measure would bring in $124 billion per year.

Obama defended his proposal by saying it would fall only on the upper class: “Understand that only 6% of Americans make more than $97,000--so 6% is not the middle class--it’s the upper class.”

Cutting benefits & raising retirement age are wrong answers

A: That’s not what I said. I said I will convene a meeting as president where we discuss all of the options that are available. I believe that cutting benefits is not the right answer; and that raising the retirement age is not the best option, particularly when we’ve got people who are still in manufacturing.

Q: But in May you said they would be on the table.

A: Well, I am going to be listening to any ideas that are presented, but I think that the best way to approach this is to adjust the cap on the payroll tax so that people like myself are paying a little bit more and the people who are in need are protected. That is the option that I will be pushing forward.

Q: But the other options would be on the table?

A: Well, I will listen to all arguments and the best options.

The wealthy should pay a bit more on the payroll tax

Privatization puts retirement at whim of stock market

A: I think that lifting the cap is probably going to be the best option. Now we’ve got to have a process [like the one] back in 1983. We need another one. And I think I’ve said before everything should be on the table. My personal view is that lifting the cap is much preferable to the other options that are available. But what’s critical is to recognize that there is a potential problem: young people who don’t think Social Security is going to be there for them. We should be willing to do anything that will strengthen the system, to make sure that that we are being true to those who are already retired, as well as young people in the future. And we should reject things that will weaken the system, including privatization, which essentially is going to put people’s retirement at the whim of the stock market.

Stop any efforts to privatize Social Security

No privatization; but consider earning cap over $97,500

A: I think that it is an important option on the table, but the key, in addition to making sure that we don’t privatize, because Social Security is that floor beneath none of us can sink. And we’ve got to make sure that we preserve Social Security is to do the same thing that Ronald Reagan and Tip O’Neill were able to do back in 1983, which is come up with a bipartisan solution that puts Social Security on a firm footing for a long time.

Stock market risk is ok, but not for Social Security

Take the Administration’s attempt to privatize Social Security. The Administration argues that the stock market can provide individuals a better return on investment, and in the aggregate they are right; historically, the stock market outperforms Social Security’s cost of living adjustment. But individual investment decisions will always produce winners and losers. What would the Ownership Society do with the losers?

That doesn’t mean we shouldn’t encourage individuals to pursue higher-risk, higher-return investment strategies. They should. It just means that they should do so with savings other than those put into Social Security.

Raise the cap on the payroll tax on wealthy individuals

$2000 tax credit for Working Families Savings Accounts

Today, only about half of workers participate in an employer-based pension plan. Participation rates in other savings plans are substantially lower. Only about five percent of people contribute the maximum amount allowed each year to an IRA or 401(k).

Voted NO on establishing reserve funds & pre-funding for Social Security.

1. require that the Federal Old Age and Survivors Trust Fund be used only to finance retirement income of future beneficiaries;
2. ensure that there is no change to benefits for individuals born before January 1, 1951
3. provide participants with the benefits of savings and investment while permitting the pre-funding of at least some portion of future benefits; and
4. ensure that the funds made available to finance such legislation do not exceed the amounts estimated to be actuarially available.

Proponents recommend voting YES because:

Perhaps the worst example of wasteful spending is when we take the taxes people pay for Social Security and, instead of saving them, we spend them on other things. Even worse than spending Social Security on other things is we do not count it as debt when we talk about the deficit every year. So using the Social Security money is actually a way to hide even more wasteful spending without counting it as debt. This Amendment would change that.

Opponents recommend voting NO because:

This amendment has a fatal flaw. It leaves the door open for private Social Security accounts by providing participants with the option of "pre-funding of at least some portion of future benefits."

This body has already closed the door on the President's ill-conceived plan for private Social Security accounts. The opposition to privatization is well-known:
• Privatizing Social Security does nothing to extend the solvency of the program.
• Transition costs would put our Nation in greater debt by as much as $4.9 trillion.
• Creating private accounts would mean benefit cuts for retirees, by as much as 40%.
• Half of all American workers today have no pension plan from their employers. It is critical that we protect this safety net.