Social Security Reform

For the first time, I'm going to take a stand against an Obama policy prescription. I can't say I'm completely wild about Obama's donut hole approach to saving social security, nor am I completely sold that it will work.

The idea is that everyone will pay the payroll tax on the first $100,000 of income, income dollars earned between $100,000 and $250,000 will not be taxed, and then every dollar earned after $250,000 will be taxed. The payroll tax is currently capped around $100,000 without any donut hole.

The payout is structured so that higher income individuals receive less benefits per marginal dollar payed in. This means that those who make $250,000+ will receive minuscule benefits compared to the rest of the population.

I don't understand exactly why he chose this policy. Raising the payroll tax %1-2 or raising the retirement age 1-2 years would be a much better and simpler idea. I am all about taxing based on the ability-to-pay principle (and very progressively at that), but this is going to look like democrats engaging in class warfare. The kicker is, I'm not sure that its not class warfare. Democrats should be the progressive party, not the when-in-doubt-raise-taxes-on-the-rich party.

The good thing is that I'm confident social security experts in the GAO, the SSA, and congress will not let this actually come to fruition. What I'm more concerned about is the Democratic party image moving forward. Let us seek out innovative policy solutions that betray our creativity and resolve to find effective, efficient and comprehensive answers to tough issues.