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Social Security Plans Lack Details

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The Associated Press

Published: October 19, 2008

WASHINGTON - Sen. Barack Obama wants to raise taxes on high-income workers to ease Social Security's looming cash crunch. Sen. John McCain favors voluntary private accounts for younger wage earners, saying they can't count on the same government benefits as today's retirees.

Beyond those generalities - and a shared opposition to an increase in the retirement age - the two presidential rivals are long on commitment and short on specifics when it comes to the government's huge retirement income program.

Obama is "committed to ensuring Social Security is solvent and viable for the American people, now and in the future," says his official Web site.

McCain reassured the audience at a recent debate that the program's financial challenges are less severe than those confronting Medicare, the giant health care program for older Americans.

Three years after the collapse of President Bush's plan to overhaul the program, Social Security has played only a modest role in a fall campaign dominated by the economy and punctuated by a decline in the retirement savings of millions.

And with both men shying away from specifics, the exchanges are more rhetorical than substantive.

Obama aired a television ad saying McCain campaigned in favor of Bush's failed 2005 proposal, which the ad characterized as "cutting benefits in half, risking Social Security on the stock market."

In fact, the allegation about cutting benefits was from a study of Bush's plan showing that under one scenario, the benefits of higher-income retirees could be cut in half from what is promised - beginning in 2080 - meaning that most of those affected have not yet been born.

Nor has McCain proposed investing the government's payroll tax receipts in the stock market. But he has previously proposed giving workers the option of diverting some of their Social Security taxes into such private investments.

"I do not and will not privatize Social Security," McCain says. "It's not true when I'm accused of that."

McCain's denials are hard to square with his previous comments. "Without privatization, I don't see how you can possibly over time make sure that young Americans are able to receive Social Security benefits," he said in November 2004. He also supported Bush's 2005 plan, which envisioned smaller-than-promised benefits for future retirees and the option for workers to privately invest a portion of their payroll taxes to provide a supplement to the government benefits.

No matter the politics, there is no dispute that the venerable retirement security program will need a fix. So far, Obama's only specific suggested remedy is a payroll tax increase for those making more than $250,000.

The proposal envisions an increase "in the range of 2 percent to 4 percent," divided between worker and employer. Neither Obama nor his aides have provided additional details.

Under the current tax, workers pay 6.2 percent on their wages up to $102,000 per year, an income level that rises annually with inflation. Employers pay the same amount.

McCain calls regularly for creation of a new commission to study Social Security, with all options on the table.

At the same time, under pressure from conservatives, he stresses opposition to higher taxes.

McCain says he favors giving younger workers an option of diverting a portion of their payroll taxes "and maybe put it in an account with their name on it."

He has yet to say what, if any, sort of reduction that would lead to in government benefits promised for the future, although he alluded to it earlier this month during a debate with Obama.

Three years ago, Bush proposed guaranteeing the benefits already promised to those 55 and older. For younger workers, his plan would have meant smaller benefits than they have been promised, with an option to set up voluntary private accounts.

Democrats united against the plan, and Republicans turned skittish. It failed without ever coming on a vote.

STRONG WORDS

ST. LOUIS - In an outbreak of class warfare, John McCain and Barack Obama swapped sharply worded charges over tax cuts Saturday, each accusing the other of shortchanging middle-income Americans at a time of economic hardship for millions.

McCain, trailing in the polls, fired the first volley, likening his rival to the socialist leaders of Europe and saying he wanted to "convert the IRS into a giant welfare agency, redistributing massive amounts of wealth at the direction of politicians in Washington."

Obama responded a few hours later in appearance before an enormous crowd, saying his Republican rival "wants to cut taxes for the same people who have already been making out like bandits, in some cases literally."

"John McCain is so out of touch with the struggles you are facing that he must be the first politician in history to call a tax cut for working people 'welfare,'" Obama said.

The exchange unfolded 17 days before an election that is trending Obama's way as he bids to become the nation's first black president.

McCain has become increasingly aggressive in debates, personal appearances and - in the past few days - automated phone calls as the polls showed him falling behind nationally as well as in several battleground states. Obama attacks his rival heartily, and backs his rhetoric with a late-campaign television advertising blitz that McCain has so far proven unable to match.

The Associated Press

OBAMA IN TOWN

Sen. Barack Obama is in Tampa Bay today to kick off Florida's early voting period.

Where: Legends Field,

3802 Dr. Martin Luther King Jr. Blvd., Tampa

When: Doors open at 10:30 a.m.

Tickets/RSVP: Tickets are not required, but an RSVP is strongly encouraged. RSVP at fl.barackobama.com.

IN ORLANDO

U.S. Sen. Hillary Rodham Clinton will join Obama for a rally in downtown Orlando, at the Amway Arena North Staircase, 600 W. Amelia St. Gates Open at 3 p.m. Parking is limited and an RSVP is suggested.

For security reasons do not bring bags or umbrellas. No signs or banners allowed.

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