Medicare the Real Crisis, Not Social Security

Listening to John Edwards, Sen. Barack Obama (D., Ill.), and Fred Thompson, you would think Social Security recipients won't be able to cash their checks in a few years.

But it seems they're uninformed about entitlement reform. Medicare remains the true disaster. The Social Security problem rests on the perpetuation of a myth: that the Social Security trust fund isn't real.

I understand why politicians in this race have chosen to talk about Social Security. They want to have a dialogue with voters, in particular seniors, showing they care about serious issues and plan to try to solve serious problems.

Both Edwards and Obama endorsed hiking the payroll cap tax, which feeds the Social Security fund. The cap adjusts every year, but the present limit is $97,500. On CNN's Late Edition, Edwards tried to differentiate himself from Obama by saying he wants a buffer zone for people earning up to $200,000.

Obama, when questioned directly about how this would raise taxes for 10 million people on NBC's Meet the Press, waffles about the cap:

Well, it -- you know, I have not specified exactly how we would structure [the cap tax]. Conceivably, you might have the equivalent of a doughnut hole, although this one would be a good one, as opposed to the bad doughnut hole that Bush set up for, for prescription drugs where you have a gap between people who are of middle income and very wealthy people.

This sounds similar to Edwards' proposal of excluding some middle-income earners from the tax.

Thompson follows a different route to fix Social Security. As a Republican, he can't say he would raise taxes. He instead would lower the benefits paid to seniors by re-indexing Social Security benefits. Benefits would be based on price formulas, rather than wages, which don't rise as quickly.