Former Massachusetts Gov. Mitt Romney (R) has ramped up his campaign efforts in August, appearing at the Iowa State Fair and at town hall events across New Hampshire. But in his emergence from what Politico dubbed the “Mittness Protection Program,” Romney has encountered voters who aren’t thrilled about some of his policy prescriptions, including his potential support for reforming Social Security by raising the retirement age or changing the way benefits are calculated.
Romney was challenged on Social Security by fair-goers in Iowa and again in New Hampshire last week. Last night, he ran into yet another voter concerned about the program’s long-term viability. But in an effort to explain his opposition to raising the payroll tax cap and his potential support for other proposals, Romney played loose with the facts:
ROMNEY: How about the 20-year-olds? How about those under 55? And in that case the answer is, let’s talk about it. We have one of three ways we can go, mathematically. One, we can raise taxes on people that are under 55. Number two, and by the way, if we don’t change the programs at all, if we leave them exactly as they are, Medicare, Medicaid, and Social Security, for those that are 20, 30, and 40, their payroll tax will have to go up. Do you know what the payroll tax is now? What is it? It’s 15.3 percent. (Interrupted) Let me finish. So the tax is 15.3 percent today. If we don’t change the programs at all, ultimately it will have to rise to 44 percent. I’m not willing to raise the tax on the American young people to that level.
Romney’s tax facts, put simply, are wrong. Individual incomes are only subject to the 15.3 percent tax if a worker is self-employed, otherwise the rate is half that, since employers pay half of the tax. The 15.3 percent number, meanwhile, is used to pay for Medicare Part A, Social Security, and the hospital fund. The actual rate that finances Social Security is 12.4 percent — 6.2 percent each from individuals and employers — and according to the Social Security Administration, raising that rate by 2 percent (one percent each for individuals and employers) would guarantee the program’s solvency for 75 years.
Romney has repeatedly cited the 44 percent payroll tax figure, but according to the report he is using, that rate would not take effect for more than 60 years — in 2075. Even then, the bulk of payroll tax increase would go to finance Medicare, not Social Security, the program Romney was asked about directly (despite Romney’s claim, Medicaid is not paid for by payroll tax revenues).
Though Romney’s stance may fit his and the Republicans’ tax-averse nature, it ignores the easiest way to strengthen Social Security for the foreseeable future. As another Granite Stater brought to Romney’s attention at a town hall last week, raising or eliminating the payroll tax cap would keep Social Security solvent for at least another 75 years, without cutting benefits for current or future retirees. Sen. Bernie Sanders (I-VT), in fact, announced today that he will introduce legislation to lift the tax cap when the Senate reconvenes in September.