Obama campaign responds on Social Security

In today's Wall Street Journal, Obama campaign economic director Jason Furman responds to Larry Lindsey's recent op-ed on the Obama Social Security proposal:

There is much to disagree with in Larry Lindsey's June 20 op-ed, "Obama Turns FDR Upside Down." Barack Obama's proposal to extend the life of Social Security is fully consistent with the spirit of Social Security, just as the elimination of the payroll tax cap for Medicare has not undermined support for that program. Mr. Obama's proposal would also help to restore long-run fiscal balance, contributing to a strong and growing economy. It is modeled on a proposal floated by Sen. Lindsey Graham -- a proposal that John McCain publicly said he could support.

More important, Mr. Lindsey is wrong about Sen. Obama's policy on the payroll tax. Mr. Obama has stated that he would like to extend solvency while protecting middle-class families and asking those making over $250,000 to pay their fair share. As president, he would work with Congress on a bipartisan basis to design the details of such a change, including the tax rate, how it is phased in over time, the linkage between these tax payments and benefits and other critical design elements of this plan. He has not proposed a 12.4-percentage point tax increase on earnings above $250,000.

As I've said before, it makes little sense from a policy standpoint to propose eliminating the payroll tax cap with a donut hole between $100,000-$250,000 without first specifying the tax rate above the current cap, whether extra benefits would be paid, whether the tax would be applied to singles or couples, etc., since the effects of the proposal can differ a great deal based on how these questions are answered.

It seems far more likely to me that the original proposal was designed simply to protect Sen. Obama from criticism from the Democratic base for having called Social Security a "crisis" and saying that all policy options should be on the table. Having accomplished that, at least sufficiently to win the nomination, the tax increase is now a liability for the general election and is being pushed overboard with as much plausibility as the campaign can muster.