Obamanomics

Matthew Hoy
By Matthew Hoy on June 16, 2008

Way back when the solvency of Social Security was more on the front burner of American political discussion, I criticized New York Times columnist Paul Krugman for changing his description of Social Security from one week to the next depending on political expediency. One week Social Security was a welfare program to help the poor, blue-collar retirees survive and not a retirement fund. The next week he would argue that it was a retirement fund and not a welfare program.

The truth is, it's a little of both -- but as it's currently designed, it's no longer financially viable.

Last week, Sen. Barack Obama proposed a Social Security doughnut hole -- he would re-instate the payroll tax that funds Social Security on all income above $250,000. Currently, the payroll tax disappears at about $100,000.

What this would accomplish is probably a bunch of nothing. What you pay into Social Security determines what you get out of it when you retire -- unless you're under 40 years old, in which case you probably aren't going to get anything. By taxing income made above $250k, unless the rules are changed, the government is merely taking more money in today but it will be (theoretically) obligated to pay out more down the line.

If that wasn't disingenous enough, Obama then had this to say:

“Imagine if your security now was tied up with the Dow Jones,” he said, alluding to the recent slide in stock prices. “You wouldn’t feel very confident about the security of your nest egg.”

OK, let's try that. I started paying FICA in June 1989 when I got my first job at the Alpha Beta grocery store in La Mesa, Calif., the Dow Jones Average was at 2,440.06. Last month, it closed at 12,638.32. That return on investment is a heck of a lot better than I'll ever see from Al Gore's Lockbox.

Talk about inconvenient truths.

0 comments on “Obamanomics”

  1. Am I the only one who noticed that Obama's curious "doughnut hole" very neatly includes the Congressional salaries? Without looking it up, I think they range from about $155K to $185K.

    Every time they either raise taxes or institute another burden on hiring, etc., they always exempt themselves.

  2. Yes, but more importantly the doughnut hole includes those two-income college professors making $80k-$110k a year. The man knows who his supporters are.

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