Obama remarks to AARP

Sen. Barack Obama will speak today to AARP's Life@50+ National Expo in Washington, DC. Here are a few excerpts from his remarks concerning Social Security:

And securing your future starts with protecting Social Security – today, tomorrow and forever.  Now, John McCain said that the way Social Security works is, and I quote, "an absolute disgrace."  Wrong.  For millions of Americans, it's the very difference between a comfortable retirement and falling into poverty.  More than half of seniors depend on it for more than half of their income.  And as the first baby boomers become eligible for benefits this year, there are steps we can take to secure its future for generations to come.

That doesn't mean embracing George Bush's failed privatization scheme, as John McCain has.  Privatizing Social Security was a bad idea when George Bush proposed it, and it's a bad idea today.  It would take the one rock-solid, guaranteed part of your retirement income and gamble it on the stock market.  That's why I stood with AARP against this plan in the Senate, and that's why I won't stand for it as President.

But his campaign has gone even further, suggesting that the best answer to the growing pressures on Social Security might be to cut cost-of-living adjustments or raise the retirement age.  I will not do either.  There's another option that is fairer to working men and women without putting the burden on those who have already earned it.

Right now, the Social Security payroll tax is capped.  That means most middle-class families pay this tax on every dime they make, while millionaires and billionaires only pay it on a very small percentage of their income.  That's why I'll work with members of Congress from both parties to ask people making more than $250,000 a year to contribute a little bit more to keep the system sound.  It's a change that would start a decade or more from now, and it won't burden middle-class families.  In fact, 99% of Americans will see absolutely no change in their taxes – 99%.

Pretty standard stuff on Social Security though, as always, I wonder how it will all add up.

Obama goes on to discuss his proposal to eliminate income taxes on all seniors earning less than $50,000:

Now, even if we keep Social Security strong for future generations, it's still not enough to help seniors on fixed incomes who are struggling with the rising cost of everything from gas to groceries. That's why I'll make retirement more secure by eliminating income taxes for retirees making less than $50,000 per year.  This would completely eliminate income taxes for 7 million seniors. 

Actually, there are currently very few seniors living on truly "fixed incomes." This phrase gained prominence in the 1960s and 1970s, when Social Security benefits were adjusted for inflation only periodically. A large increase in inflation could entail a significant reduction in the buying power of retirees' pensions. Today, however, Social Security benefits are adjusted annually for changes in the Consumer Price Index. While rising prices would have a temporary impact on seniors' purchasing power, Cost of Living Adjustments would account for price increases each year. (And, in the view of many economists, over-adjust for inflation on a regular basis.) My admittedly biased view is that Obama's tax proposal for seniors is more geared to impressing a group with which Obama polls poorly than addressing a problem that truly stands out more than those for other Americans.