Obama's Social Security Plan: Welfare

Sen. Obama's complex "tax cut" plan involves changing the Social Security system from a retirement plan to a government welfare plan. From the WSJ:

Imagine this: Barack Obama proposes a Social Security payroll tax cut for low earners. Workers earning up to $8,000 per year would receive back the full 6.2% employee share of the 12.4% total payroll tax, up to $500 per year. Workers earning over $8,000 would receive $500 each, with this credit phasing out for individuals earning between $75,000 and $85,000.

Moreover, this payroll tax cut plan would reduce Social Security's tax revenues by around $710 billion over the next 10 years. If made permanent, the Obama tax cut would increase Social Security's long-term deficit by almost 60% and push the program into insolvency in 2034, versus 2041 under current projections.

To fill the hole in Social Security's finances, Mr. Obama would increase income taxes on high earners and pour that money into Social Security. This would be the first time that income tax revenues have been used to finance Social Security, which has always relied on its own dedicated payroll tax to differentiate itself from other government programs. Filling the gap with higher taxes on high earners would further increase Social Security's progressivity, pushing it closer toward a welfare-program approach.

So now young Americans who earn a higher-than-average wage don't just get to throw money down a sinkhole with very low expected returns. They now get to double their tax contributions into SS to pay for those who don't contribute enough.