Interesting quote. I'm going to take issue with a couple of points raised but not with the general factual statement, which seems to be true unless I've misunderstood Obama's SS plan. He is indeed changing FDR's original idea radically. I would suggest, though, that some sort of major change is needed in order to make the program viable, not necessarily that change, but something.

Politically, Social Security was one of Roosevelt's best and cleverest moves. Economically, it was one of his stupidest. He knew that perfectly well, but he also knew that if he framed the program as he did, in terms of pay-ins and entitlements rather than government handouts, it would be much harder for a later and more conservative Congress to challenge. That's why he set it up that way. It's the only reason why he did. There were overwhelming reasons not to, but they were all economic rather than political.

It was economically stupid both short-term and long-term. Short-term, when workers (=consumers) were already not making enough money to keep the economy going well, it was a really bad idea to further reduce their spending money with a regressive tax. The recession-within-the-Depression of 1937-39 was the result. Long-term, the program has a very low payout in terms of pay-in, and depends for its stability on most workers never living to collect benefits, and on an ever-increasing pool of young workers contributing to the program to support retired people drawing from it.

In order to correct these long-term problems, we have to do one of two things. Either we turn Social Security into, as you put it, a welfare program, in which wealthy Americans pay to support elderly non-wealthy Americans, or else we change what is done with the money between the time it is paid in and the time it is paid out, i.e., rather than borrow it at no interest to help cover general government expenditures, invest it in profitable ventures (low-risk ones for the most part, I would imagine) so that it works more like a federal 401K. And even if we do the latter, we still need to do something short-term to cover those who have paid into the system during the time when we weren't doing that, so it will need to be a welfare program at least temporarily.

Indeed. And as I said, that's why FDR set it up that way. It was purely a political decision, not one based on principles. We should recall that Franklin Roosevelt was, very probably, the best politician in the entire 20th century in the entire world. Not everything he did made sense in terms of policy, but he rarely put a political foot wrong, and even when he did (such as with the court-packing scheme or the attempt to defeat conservative Democrats in the primaries) he usually managed to recover.

In terms of principle or policy, there is no reason why that method of enacting Social Security was the right way. Only in terms of politics does it make any sense.

No, that makes no sense at all. The only way that someone will cut his "taxable income" is if he can do that on paper without cutting his real income. And if the loopholes exist to let him do that, he's already doing that. (Or if not, he needs to get a new accountant.

The "disastrous economics of the 1970s" had nothing to do with tax rates and everything to do with the oil embargo that began in 1973 and ended in 1981. That temporary loss of cheap oil drove up the price of everything while simultaneously driving the economy into stagnation. When a combination of improved efficiency and new oil sources effectively ended the embargo in the early 1980s, the economy recovered. Reagan got credit for this, just as he did for the liberalization and ultimate fall of the Soviet Union, but he deserved credit neither for the one nor for the other, nor did Nixon, Ford, or Carter deserve the blame for what happened in the '70s.

The idea that tax increases reduce revenue and that tax cuts increase it has been well disproven. This part of the articles argument can and should be dismissed.

Oh, Obama certainly is that, but this is rather like saying that he is thinner than a circus fat man or darker than an albino. Bill Clinton was the most conservative Democratic president since Grover Cleveland. It's about friggin' time we had a Democratic candidate far to the left of Bill Clinton. That's what the Democrats are supposed to be. And this year, they are. Let's see how the country likes the idea.