Flashback: President Obama's statements on Social Security [View All]

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Protecting Social Security

President Obama believes that all seniors should be able to retire with dignity, not just a privileged few. He is committed to protecting Social Security and working in a bipartisan manner to preserve its original purpose as a reliable source of income for American seniors. The President stands firmly opposed to privatization and rejects the notion that the future of hard-working Americans should be left to the fluctuations of financial markets.

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THE PRESIDENT: Yes. Here’s the situation with Social Security. It is actually true that Social Security is not in crisis the way our health care system is in crisis. I mean, when you think about the big entitlement programs, you've got Social Security, Medicare, Medicaid. These are the big programs that take up a huge portion of the federal budget. Social Security is in the best shape of any of these, because basically the cost of Social Security will just go up with ordinary inflation, whereas health care costs are going up much faster than inflation.

It is true that if we continue on the current path with Social Security, if we did nothing on Social Security, that at a certain point, in maybe 20 years or so, what would happen is that you start seeing less money coming into the payroll tax, because the population is getting older so you've got fewer workers, and more people are collecting Social Security so more money is going out, and so the trust fund starts dropping.

And if we did nothing, then somewhere around 2040 what would happen would be a lot of the young people who would start collecting Social Security around then would find that they only got 75 cents on every dollar that they thought they were going to get. Everybody with me so far?
All right. So slowly we're running out of money.

But the fixes that are required for Social Security are not huge, the way they are with Medicare. Medicare, that is a real problem. If we don't get a handle on it, it will bankrupt us. With Social Security, we could make adjustments to the payroll tax. For example -- I'll just give you one example -- right now, your Social Security -- your payroll tax is capped at $109,000. So what that means is, is that -- how many people -- I don't mean to pry into your business, but how many people here make less than $109,000 every year? (Laughter.) All right, this is a pretty rich audience -- a lot of people kept their hands down. (Laughter.) I'm impressed. (Laughter.)

No, look, what it means is basically for 95 percent of Americans, they pay -- every dollar you earn, you pay into the payroll tax. But think about that other 5 percent that's making more than $109,000 a year. Warren Buffett, he pays the payroll tax on the first $109,000 he makes, and then for the other $10 billion -- (laughter) -- he doesn't pay payroll tax.

So -- yes, somebody said, "What?" (Laughter.) Yes, that's right. That's the way it works.

So what we've said is, well, don't we -- doesn't it make sense to maybe have that payroll tax cut off at a higher level, or have people -- maybe you hold people harmless till they make $250,000 a year, but between $250,000 and a million or something, they start paying payroll tax again -- just to make sure that the fund overall is solvent.

So that would just be one example. That's not the only way of fixing it, but if you made a slight adjustment like that, then Social Security would be there well into the future and it would be fine. All right? (Applause.)

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"Social Security is not in crisis," Obama said. "We're going to have to make some modest adjustments in order to strengthen it."

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