Barack Obama (excerpt) on Tuesday, April 19, 2011:
Now, politically, it’s hard to do. Politically, it’s hard to do. For example — I’ll just give you one example of a change that would make a difference in Social Security. Right now you only pay a Social Security tax up to a certain point of your income. So a little bit over $100,000, your Social Security — you don’t pay Social Security tax.
Now, how many people are making less than $100,000 a year? Don’t be bashful. (Laughter.) The point is, for the vast majority of Americans, every dime you earn, you’re paying some in Social Security. But for Warren Buffett, he stops paying at a little bit over $100,000 and then the next $50 billion he’s not paying a dime in Social Security taxes.
So if we just made a little bit of an adjustment in terms of the cap on Social Security, that would do a significant amount to stabilize the system. And that’s just an example of the kinds of changes that we can make. (Applause.)
That is, to the best of my knowledge, the last time a major player in the current debate over the debt ceiling (Sadly I am not charitable enough to call Bernie Sanders and some bloggers "major players") mentioned the simple, unspoken change that would ensure the solvency of Social Security (which isn't currently at risk, and isn't projected to be for a few decades but ohmygodit'sanemergency and we have to cut it now because
the president is a negro this is such a major crisis). The Cato Institute and the ragingly liberal Citizens for Tax Justice agree: lifting the Social Security payroll tax cap raises over $1.2 trillion over 10 years and essentially makes the program solvent in perpetuity. I hate oversimplifications, but this really isn't complex. Lift the cap and the "problem" disappears. Immediately.
The idea hasn't since come out of Obama's mouth, of course. He mentioned it as a hypothetical to make it easier to backpedal (see also: "I'd like to have a public option", "I fully support equal marriage rights for same-sex couples”, “Torture is wrong, and those who did it must be held accountable", etc.) and has made no effort to introduce the idea into the current debate. I mean, why mention something that would only affect about 6% of taxpayers – that's right, if you make $106,000 or more you're in the top five percent of wage earners in the country so maybe
shut the fuck up about your taxes recognize that we're all making sacrifices here – and would actually accomplish the goal that everyone in Congress claims to care about?
Currently we pay 6.2% on the first $106,800 of our taxable income and not a red cent after that. But wait! In 2011 we're paying 4.2% because Obama decided to sign off on a bill with one of those I'm-going-to-kill-myself-if-you-don't-stop-with-these-titles titles, the "Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010" in December of 2010. This legislation cuts the payroll tax to 4.2% for 2011 only (*WINK*), although of course it'll never go back up again – because that would be "raising taxes"! (see: Bush tax cut expiration). But I'm sure this is helping to solve the problem. The problem of Americans paying too much into Social Security.
the president had balls Americans weren't such reactionary dolts our political class was willing to show some initiative, with minimal effort we could probably come up with a pretty appealing way to package a "tax hike" in the form of repealing the cap. Let's say that for every $100,000 in income an individual makes over the current $106,800 cap, he or she is entitled to a 10% larger benefit at retirement age. That would eat away at some of the benefits of lifting the cap, but undoubtedly it would A) make clear that the wealthy would receive something extra in exchange for their larger contributions in absolute dollars, and B) still provide a huge net benefit to the program. Hell, with his current leverage a president could probably make this kind of deal look like the Sale of the Century – lifting the cap in exchange for some retirement age increases and a scaled benefit plan for high-earners. Sure, Eric Cantor wouldn't go for it, but who cares? With some additional candy corn perks for *insert buzzword here* ("small business owners," farmers, the self-employed, etc.) Congress would probably need Tommy John surgery from all the high-fives they'd be giving each other after passing the bill.
But we can't even talk about it, because we can't say "raise taxes." Normal people bandy about the idea all the time, but in the Beltway it remains the idea whose name shall not be spoken. Social Security has long been considered the third rail of American politics – touch it and you're dead, right? – and far too little attention has been paid to the fact that our political class would rather stand on the third rail than even mention the idea of raising taxes. By a small amount. On 5% of the population. With six-plus figure incomes.
So which one is the third rail?