Andrew Biggs does an excellent job of dissecting Obama’s rhetoric on the issue. Bottom line: Obama takes the top marginal tax rate to a level it hasn’t been at for more than 20 years, and for the trouble he fills 15 percent of Social Security’s shortfall. If the program’s problems are as trifling as Obama makes them out to be, why does he whiff on the solution?
Biggs also has a nice answer to a bogus statistic:
Sen. Obama says, “Social Security has lifted millions of seniors and their families out of poverty. Without it, nearly 50 percent of seniors would live below the poverty line.”
This is a common talking point, but let’s be clear on what it means: if we forced people to pay Social Security taxes all their lives but didn’t pay them any benefits, yes, nearly 50 percent of seniors would live below the poverty line. But this is a silly standard. If we were truly “without” Social Security, we would also be without Social Security taxes, which individuals could then save on their own for retirement. So the better question would be, “Without Social Security taxes and benefits, what would the poverty rate among seniors be?” The answer is, about the same as the current rate.