Fact Check On Clinton's False and Misleading Claims on Obama's Plan for Social Security

Clinton's Claims About A Trillion Dollar Tax Increase Would Apply IF the Cap Were Completely Removed...

FactCheck.Org: If The Social Security Tax Were Applied To All Earnings, It Would Be A Trillion Dollar Tax Increase Over Ten Years. "Clinton called Obama's proposal to raise Social Security taxes on earnings over $97,500 per year, the current upper limit on which any tax is levied, a trillion-dollar increase on 'middle class families.'...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 expert Michael Tanner, who says he drew his figures from projections by the Social Security Administration staff. A similar estimate comes from Citizens for Tax Justice, which figures the measure would bring in $124 billion per year." [FactCheck.org, 11/16/07]

...But Barack Obama Hasn't Called for Completely Removing the Cap

Asked About Raising the Cap, Obama said, "You Might Have the Equivalent of a Doughnut Hole"--NOT That He Would Completely Remove the Cap. Asked about his comments that he might raise the cap on social security taxes, Obama said, "I have not specified exactly how we would structure it. Conceivably, you might have the equivalent of a doughnut hole, although this one would be a good one, as opposed to the bad doughnut hole that Bush set up for, for prescription drugs where you have a gap between people who are of middle income and very wealthy people. But, look, I've, I've got a friend, Warren Buffett, you may know, the guy made $46 million last year. This is public information because he's concerned that he is paying a lower tax rate than anybody else in his office. And, you know, he has said, and I think a lot of us who have been fortunate are willing to pay a little bit more to make sure that a senior citizen who is struggling to deal with rising property taxes or rising heating bills, that they've got the coverage that they need." [Meet the Press, 11/11/07]

Obama Has Not "Proposed Eliminating The Cap Entirely." "He has not proposed any specific way to adjust the cap - nor has he proposed eliminating the cap entirely, which would mean all wage income would be subject to the tax. But he has stated in various venues that ‘his inclination...has been for a 'donut' where the uncapping would take place above some threshold income level - probably around 200,000 or 250,000' his economic adviser Austan Goolsbee said in an email. A donut would protect a certain portion of income (e.g., between $100,000 and $200,000) from the payroll tax and could be phased in over decades, Goolsbee said." [CNN, 11/28/07]

Increasing the Cap On Social Security Taxes Would Affect The Top 6.5 Percent of Earners--Not the Middle Class

Lifting the Cap Would Apply to the Top 6 Percent of Workers. "As noted above, the Social Security tax already fully applies to earnings up to roughly $100,000 a year per worker. (A two-earner married couple can owe Social Security tax on almost $200,000 in earnings.) As a result, raising or eliminating the earnings cap would increase taxes on only 6.5 percent of couples and individuals, virtually all of whom make more than $100,000 a year." [Citizens for Tax Justice, 11/30/06]

Clinton's False Attacks On Obama's Social Security Plan Have Been Criticized in the Past

Al Hunt: Clinton Has "Falsely Accused Obama Of Favoring A Trillion-Dollar Tax Increase On Working Class Americans." Al Hunt wrote, "They have also falsely accused Obama of favoring a trillion-dollar tax increase on working-class Americans (that apparently derives from his idea to consider raising the payroll tax on those making more than $100,000 a year) and once supporting the Iraq war. Although every candidate makes misstatements, the various fact-check organizations and detached analysts usually find the Clinton campaign in a league of its own. It's not the depths of the duplicity; compared to other abuses, like the Swift Boat attack lies against John Kerry in 2004, these are benign. The problem is there is a pervasive pattern at a time when voters are clamoring for authenticity." [Bloomberg, 1/28/08]

Gail Collins: "Clinton Needs To Ration Her Obfuscations" Because "It's Not Really Helpful" To Call A Solution For Social Security Solvency "A Trillion-Dollar Tax Increase On Middle-Class Families." Gail Collins wrote, "On Social Security, the underlying message seems to be that Clinton will not support any effort to keep the program solvent by eliminating the cap on Social Security taxes until she gets elected president and sets up a bipartisan commission to provide political cover. The problem with that, as Barack Obama pointed out, is that you don't arrive in the White House with a mandate for anything more daring than appointing a bunch of people to do a study. And when you're talking about taxing income above $97,500 the same way we do income of, say, $30,000, it's not really helpful to describe it as 'a trillion-dollar tax increase on middle-class families.' Clinton needs to ration her obfuscations." [New York Times, 11/2/07]

Reich: Obama Offered A "Sensible" And "Progressive" Solution For Social Security. Robert Reich wrote, "I'm becoming increasingly concerned about the stridency and inaccuracy of charges in Iowa -- especially coming from my old friend...Obama wants to do it by lifting the cap on the percent of income subject to Social Security payroll taxes, which strikes me as sensible. That cap is now close to $98,000 (it's indexed), and the result is highly regressive. (Bill Gates satisfies his yearly Social Security obligations a few minutes past midnight on January 1 every year.) The cap doesn't have to be lifted all that much to keep Social Security solvent – maybe to $115,00. That's a progressive solution to the problem." [Robert Reich, 12/3/07]