WASHINGTON -- President Barack Obama revived a 2008 campaign promise on Friday, telling the crowd at an AARP forum that he would be open to raising the level of income on which Americans pay Social Security taxes.
"You know, I do think that looking at changing the cap is an important aspect of putting Social Security on a more stable footing," Obama said, via satellite feed. "And what I've said is, is that I'm willing to work with Republicans and examine all their ideas, but what I'm not going to do, as a matter of principle, is to slash benefits or privatize Social Security and suddenly turn it over to Wall Street -- because we saw what could happen back in 2008 and 2009 when the stock market crashed, and we are still recovering from that."
The president has been down this route before, pledging during his first run for the White House to extend the Social Security payroll tax to income over $250,000. Currently, workers pay the tax on the first $110,000 in income. Everything above that threshold remains untouched.
Removing that cap entirely while leaving benefit levels the same could ensure Social Security's solvency for the next 75 years. But it remains politically difficult, as it would constitute a major tax on a good chunk of middle-class income. Democrats, working off Obama's 2008 idea, have introduced legislation to create a "doughnut hole," with income between $110,000 and $250,000 remaining untouched by the Social Security tax but everything above that subjected to it.
Obama didn't offer specific details on his preferred approach Thursday. But he did signal a shift toward a more progressive posture than what he's exhibited as president. After winning the White House, Obama barely pushed to reform Social Security for purposes of extending its solvency. The one time he did negotiate over the program, during the grand bargain talks with Speaker John Boehner (R-Ohio), he agreed to lower benefits -– by reducing the growth of future cost-of-living increases -- rather than to replenish the trust fund.
Polling has consistently shown support among Americans for raising taxes to secure Social Security for future generations. However, the Congressional Budget Office has warned that requiring high-end earners to contribute more without raising the benefits they could receive would make the program less equitable.
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