Barack Obama on Social Security
President Obama has remained consistent in his views that overall social security is fiscally sound with the exception of the actuarial anomoly caused by the baby boomers. To address this problem, President Obama supports removing the payroll tax cap for anyone earning more than $250,000. He has remained opposed to any form of privatization. Under Presdient Obama, the structure of the Social Security system has changed significantly by altering the system from one that did not take in funds from the general tax fund to one that does.
2008 Presidential Election
Social security was not a particularly hot topic during the 2008 election, especially after the economic crash. However, there were a large number of debates and forums in which Senator Obama and Senator Clinton addressed the issue. Throughout these debates and forums, President Obama's was consistent in his view that social security should not be privatized. He asserted that privatizing the system would open it up to the wil ups and downs of the stock market. He stated that while playing the stock market would allow for some people to increase their savings through playing the market well, some people would inevitably lose their savings in the market and the US would still have to pay for those people.
Another consistent view of President Obama is that social security is not in financial trouble, but needs to be slightly altered to address the large number of people retiring the coming years. To address this problem, Senator Obama stated early in the election that all options should be on the table. As the election progressed, his view to address the problem coalesced to raising the payroll tax cap. To prevent this increase from affecting middle class people, he proposed removing the cap only for those making more than $250,000 a year.
This plan to remove the cap would also change the social security system. The cap is in place because social security was enacted as a system in which each person pays into the system and receives that money back when they retire. The cap represents the highest amount that a person can pay into the system and still receive that money back. Removing the cap would alter that system where some people are required to pay in money that they can never receive back.
Payroll Tax Cuts
Social Security is funded through a payroll tax. This tax consists of the employee and the employer each paying 6.4% of the employees income into the social security trust fund. Under President Obama, a payroll tax cut was implemented that reduced the employee side of the tax down to 4.2%. The revenue lost from the reduction of this tax has been made up by taking an amount of funds equivalent to those lost from the general revenue fund. Thus the social security system has been changed under President Obama from one that in entirely self contained, generating its own revenue and paying out funds from those revenues, into one that is funded in part through general revenue taxes.
2012 Presidential Election
President Obama does not address Social Security as part of his economic plan or within his campaign website except to state that the system is sound and that he will continue to protect it.
The Audacity of Hope
In his memoirs, The Audacity of Hope, Senator Obama discussed why he opposed privatization of social security. He referred to the philosophy of social security as one where we are all in it together while the Bush privatization scheme is a "you're on your own" mentality. He states that while the stock market produces higher gains for those who invest well, in a privatization scheme there are those who invest poorly and loose their own money. He asks what would we do with those people.
The facebook debate took place on January 6, 2006. In that debate, Senator Obama stated that to address social security, we needed to raise the payroll tax. He used the example of Warren Buffett to show that there were people who were capable of paying more into the system.
What we need to do is to raise the cap on the payroll tax so that wealthy individuals are paying a little bit more into the system, if we are going to deal with this problem specifically. Right now, somebody like Warren Buffet pays a fraction of 1 percent of his income in payroll tax, whereas the majority of the audience here pays payroll tax on 100 percent of their income. I’ve said that was not fair.
The youtube debate took place on July 23, 2007. When asked about what to do with social security, Senator Obama stated that raising the payroll tax cap was an option that needed to remain on the table. He also cautioned that the system must not be privatized.
Q: We all know that Social Security is running out of money, but people who earn over $97,500 stop paying into Social Security. The Congressional Research Service says that if all earnings were subject to payroll tax, the Social Security trust fund would remain solvent for the next 75 years.
A: I think that it is an important option on the table, but the key, in addition to making sure that we don’t privatize, because Social Security is that floor beneath none of us can sink. And we’ve got to make sure that we preserve Social Security is to do the same thing that Ronald Reagan and Tip O’Neill were able to do back in 1983, which is come up with a bipartisan solution that puts Social Security on a firm footing for a long time.
The Dartmouth debate took place on September 6, 2007. He was again asked about raising the payroll tax cap and stated that this was the best option.
On October 30, 2007, Senator Obama took part in a debate in a debate at Drexel University. He asserted that social security was not in crisis, but was fundamentally sound. He did note that there was an actuarial problem in the coming years with the baby boomers retiring and stated that raising the salary cap was the best option.
Social Security is not in crisis; it is a fundamentally sound system, but it does have a problem, long-term. We’ve got 78 million baby boomers, who are going to be retiring over the next couple of decades. That means more retirees, fewer workers to support those retirees. We are going to have to do something about it. The best idea is to lift the cap on the payroll tax, potentially exempting middle-class folks, but making sure that the wealthy are paying more of their fair share, a little bit more.
Meet the Press
In a meet the press interview on November 11, 2007, Senator Obama was asked about previous statements regarding raising the retirement age. He states that he would not now support raising the retirement age or cutting benefits.
Des Moines Register Interview
In December 2007, Senator Obama gave an interview for the Des Moines register and discussed social security. He again stated that social security was not in a crisis.
Well, there are no easy answers. I'd separate out social security, where i'd argue that there is not a crisis. There may be an actuarial problem that over the next few years we've got to address. But it's a manageable one. And the problem of medicare and medicaid, which are in crisis, and if we don't deal with soon, we're gonna be making our children and grandchildren poorer. The problem on the health care entitlements is that you have an actuarial problem which sends the costs up a little bit per year, and an extraordinary steep annual increase in costs. And so part of the reason that I feel it is so important for us to move forward on health care, an overarching health care reform agenda, and soon, in the next five years, is that you can't solve medicare and medicaid without solving the large inefficiencies in the system.
In January on 2008, Senator Obama gave an interview to George Stephanopoulos and spoke about social security. Senator Obama noted that everything should be on the table to deal with the issue of social security with the exception of privatization of the system. This contradicts both the notion that there is a no problem with social security and the previous statements that he opposed raising the retirement age.
Philadelphia primary debate
In the Philadelphia primary debate, which was held on April 16, 2008, Senator Obama again reaffirmed removing the cap on those making over $250,000.
Fox Interview - Presidential Series
In an interview on Fox on April 27, 2008, Senator Obama reasserted his desire to raise the cap on social security taxes.
In June of 2008, Senator Obama gave a speech at a town hall in Columbus Ohio. In that speech, he discusses his opposition to privatizing social security. He also notes the actuarial problems created by the baby boomers and the need to raise the payroll tax cap to address the system.
Blueprint for Social Security
During the 2008 election, Senator Obama made a series of campaign videos called "blueprints" that outlined his plans for various items. In the one for social security, Senator Obama gave a summary of his views on social security and outlined them in bullets. In the audio, Senator Obama states that he favors removing the cap on those earning more than $250,000, and that he opposes reducing benefits or increasing the retirement age. He also begins to promote the automative workplace enrollment pension.
- Protect Social Securityrn
- Adjust payroll tax for earnings above $250,000
- No change in taxes for 97% of Americans
- Extend social security without cutting benefits or raising the retirement age
- Eliminate income tax for retirees earning less than $50,000rn
- Completely eliminate income taxes for 7 million seniors
- Secure hard earned pensionsrn
- worker pensions a top priority in company bankruptcy
- increase worker wages and benefits during bankruptcy
- companies must disclose pension fund investments
- no golden parachutes for executive during bankruptcy
- eliminate bankruptcy for medical debt
- Help Americans save morern
- Automatic workplace pensions
- No red tape or complicated forms
- opt out at any time
Blueprint for Fiscal Discipline
As part of the blueprint for fiscal discipline, Senator Obama noted that he would not privatize social security, not raise the retirement age, and pay for social security by "getting the wealthiest Americans to pay their share."
And while John McCain wants to pick up where George Bush left off by trying again to privatize social security, I will never waiver in my commitment to protect that basic promise as President. We will not privatize social security and we will not raise the retirement age. We will protect social security for future generations by asking the wealthiest Americans to pay their share.
2008 Campaign Website
Senator Obama's official campaign website re-iterated his opposition to the privatization of social security and removing the payroll cap on those making more that $250,000.
Obama believes we need to preserve Social Security by stopping any efforts to privatize it and will work across party lines to maintain Social Security’s solvency for generations. Obama wants to make private saving easier, cheaper, & more automatic for middle-class workers. He supported the Save More for Retirement Act, which encourages automatic 401K enrollment. Obama also voted for new rules to force companies to properly fund their pension plans so taxpayers don’t foot the bill.
The origins of social security
In December of 2010, President Obama was answering questions about a tax compromise and the health care reform. In defending his compromises, President Obama attempted to assert that most programs start small and eventually expand. In doing so, he cited social security and stated that the program started as one for orphans and widows. This is not true, and is the exact opposite of the program's original purpose to reimburse those who paid in throughout time.
Continued Opposition to Privatization
In August of 2010, President Obama used his weekly address to restate his opposition to the possibility of privatizing social security.
Amendment - Social Security Reserve Fund
In 2007, congress attempted to pass an amendment to create a reserve fund for social security. This action was prompted by the increasing awareness that the Social Security program may not be financially solvent in the near future. Opponents claimed that the move was an end-around method to privatize social security. The amendment was largely supported by Republicans and largely opposed by Democrats. The amendment failed in a 45-52 vote. Barack Obama voted against the amendment to create a reserve fund for social security.
Barack Obama voted against the amendment to create a reserve fund for social security.
Sponsored and Cosponsored Legislation
A bill to amend title II of the Social Security Act to repeal the Government pension offset and windfall elimination provisions.