From “For Our Grandchildren,” “a Social Security education project”:
As with most things in politics, there’s what the campaigns say is going on and what’s really going on.
What’s REALLY going on is that Sen. Obama wants to exempt low income workers from Social Security payroll taxes, and reduce payroll taxes for middle income workers, but still pay everyone their full benefits in retirement. He’ll pay for all this — a cost of over $700 billion over 10 years — by increasing income taxes on higher earners and shifting the money to Social Security.
Most people wouldn’t agree with this. Social Security isn’t a welfare program; you only get benefits tomorrow if you’ve paid taxes today. Moreover, Social Security is progressive, so low earners are already getting more in benefits than they’ll pay in taxes. Sen. Obama wants to take this even further. When people are getting benefits they haven’t paid for that’s called welfare, and most people don’t think Social Security should be shifted into a welfare program. That just not how the system has worked. Even President Franklin D. Roosevelt, architect of the program, stressed the need for a strong link between contributions and benefits.
So that’s what’s really going on. What Sen. Obama describes is a set of income tax credits based on their payroll tax liabilities that people can deduct against their income tax returns, and even if they’re not paying any income taxes these credits are refundable so they’ll still get money back.
It’s confusing, and it’s most likely meant to be. If Sen. Obama wants to exempt low-income people from paying Social Security taxes, but still pay them Social Security benefits, then he should admit that’s what he is really trying to do.