Mr. Obama angered liberals last year when he admitted that there was a "Social Security crisis." But at least Mr. Obama's base should be appeased now that his solution to the "crisis" is to soak the rich. One liberal columnist actually noted with glee the fact that this would take us back to top tax rates not seen since the 1970s.

According to the nonpartisan Tax Policy Center, Mr. Obama's new tax would siphon off 0.4% of gross domestic product annually. Combined with Mr. Obama's other tax-hike initiatives, "the total tax on labor would be close to 60 percent. In high-tax states like California and New York, the top rate would be even higher."

Would it help Social Security's financing problems? Mr. Obama has no idea. One of his senior economic advisers admitted to me that no one on the campaign has run any detailed models or performed any rigorous analysis. When one proposes an enormous tax increase, shouldn't there at least be a spreadsheet somewhere?

But the most alarming thing about Mr. Obama's proposal is that the $250,000 threshold, above which the payroll tax would be applied, refers to household income, not individual income. So it's quite deceptive when he claims that the $250,000 threshold will "ensure that lifting the payroll tax cap does not ensnare any middle class Americans."

Suppose your household consists of you and your spouse, each earning wages of $150,000 per year. Currently, you are each subject to the payroll tax up to $102,000 of wages, so together you are taxed on $204,000. Under the Obama plan, you'd be taxed again on another $50,000 of wages.

At the current payroll tax rate of 12.4% – 6.2% from wage-earners and 6.2% from their employers – your household would be looking at a tax hike of $6,200 per year. You probably didn't consider yourself rich before, and you certainly won't after paying that tax bill.

But that tax bill could be higher still. While the payroll tax has always been calculated just on wages from labor, Mr. Obama hasn't decided yet what forms of income will be included in the $250,000 threshold. It's an open question whether it might include interest on savings and capital gains income.

And neither has Mr. Obama said whether the rich – and, truth be told, the middle class – paying his new higher taxes will get correspondingly higher Social Security benefits when they retire. Throughout the history of the Social Security program, there has always been a connection between what you contribute in taxes and what you get back in benefits. If Mr. Obama uncaps the wages subject to tax, but doesn't uncap benefits, then he has severed the link between them. Social Security would stand revealed not as a work-related contributory retirement system, but simply as a tax-funded welfare and income-redistribution program.

And for all that, Mr. Obama's proposal won't help Social Security's long-run solvency problems.

According to the Social Security Administration actuaries, uncapping all wages subject to the payroll tax (not just those above $250,000) doesn't make much difference to the system's long-run solvency. If the increased payroll tax payments earn increased benefits, then only about one third of the system's 75-year shortfall is addressed. Even if there is no corresponding benefit increase, only about half the shortfall is addressed.

Remember, that inadequate result is what you get when all wages are subject to payroll taxes. Mr. Obama's plan – even with his household definition of $250,000 income – would collect far less than that. No wonder Mr. Obama's economic advisers aren't interested in doing any detailed analysis.

Worst of all, even the small contribution to Social Security solvency that Mr. Obama's plan might make is entirely illusory. In fact, the more taxes his plan collects, the worse Social Security's long-term situation gets. That's because all plans based on collecting taxes and saving them in the Social Security Trust Fund for future benefit payments rely on the U.S. government being able to redeem the Treasury bonds that trust fund holds.

There's only one place that the money to redeem those bonds can come from: taxes. So ironically, any tax dollars collected today will have to be collected all over again – plus interest. You like the idea of paying more taxes today for Mr. Obama's Social Security plan? Then just wait 20 years or so, because you'll get to pay more taxes all over again.

Update... Nick Kaster notes another big problem with Obama's plan:

...he [Obama] does not indicate whether the $250,000 threshold will be indexed for inflation. If the higher threshold is not indexed, then the donut hole will grow smaller and smaller in the years to come and eventually disappear. This is because the lower figure is subject to indexing and increases each year. In 2006, the FICA taxation threshold was $94,200; in 2007, it grew to $97,500, and this year it is $102,000. If the higher threshold remains static, more and more middle class taxpayers will be subject to FICA. A tax designed to punish the wealthy will end up ensnaring middle income earners.

You write,

"Throughout the history of the Social Security program, there has always been a connection between what you contribute in taxes and what you get back in benefits."

Your editorial is a model of clarity, and elucidation, but you should have included an adverb with "a connection."

The connection is a weak correlation. At present:

* Those with lower earnings contributions receive a proportionately higher benefit;

* Those with a lifetime of frugality and savings receive a lower benefit due to income taxes reaching to 85% of their benefit, and those collecting Social Security at age 62 or before age 65-67 (depending on Social Security's Normal Retirement Age") who have work earnings may pay over 100% of their Social Security benefit back to the government due to their benefit being reduced by a half of their earnings;

* Those with no contributions may receive a Social Security benefit if due to "poverty", even if due to immigration or a lazy life;

* And, on the other hand, seniors who have children under age 18 will receive 50% higher benefit for each of their children (up to 100% for two children), regardless of the beneficiaree's income or work history (which means there's no connection to earnings or contributions, only to fertility);

* Further, on the other hand, unlike almost all defined benefit and all defined contribution pensions, the widow may receive 100% of the deceased beneficiaree's Social Security benefit for the widow's lifetime.

In other words, Social Security is already a vast redistributive program. Add in that the returns for most recipients would be higher -- not to mention surer -- even if invested in insured government bonds.

Obama's "remedy" is just lots more of the same. It doesn't turn Social Security into a redistribution of earnings and assets. It just makes it even moreso, much moreso.

Almost exactly a year ago, Tom Wolfe, the author of “The Bonfire of the Vanities,” was wandering the floor of the New York Stock Exchange. Dressed in his trademark white suit, he darted around traders and whisked past trading booths, shaking hands and waving, just before the market was about to open.

...the reason, traders whispered, that Mr. Wolfe must be in attendance — was that the Blackstone Group, the big private equity firm, was minutes away from going public, the largest initial public offering in the United States since 2002. ...a CNBC reporter pulled Mr. Wolfe aside to ask him what he made of all the hubbub. Mr. Wolfe paused for a moment to contemplate his answer.

And then, with a wry smile, he delivered a prophetic declaration: “We may be witnessing the end of capitalism as we know it.” Here we are a year later, and while it may not be the end of capitalism, it looks as if Mr. Wolfe got it a lot closer than, say, the investors who plowed money into Blackstone...

As Mr. Wolfe nicely put it, “It sounds like even the firms that aren’t in trouble are in trouble.

"...It has always interested me that the word ‘credit’ comes from the word ‘credere,’ which means ‘to believe,’ ” Mr. Wolfe said. “It only works if people believe in it.” He’s right, of course: one reason the credit markets have tanked is that people don’t believe anymore.

The Department of Justice approved the XM-Sirius merger back in March, correctly observing that the merger did not impede completion in the relevant market and that approval required no conditions.

Speculation in Washington is that the FCC soon may approve the merger with a suite of conditions demanded by groups such as Public Knowledge. I’d say it’s prudent to wait and see because FCC approval comes down to an assumption that Republican Commissioner Robert McDowell, an independent thinker, goes along. The guessing is he will, largely because the satellite radio companies participated in negotiations over the conditions and are willing to accept them. Kevin Martin, apparently, is ready to relent his own obstinacy, without which the ambush against the merger would not have succeeded.

Remind me why the Federal Communications Commission is a good idea? We abolished the ICC; we still have railroads. All that the FCC has accomplished here is mischief.

Look at the ransom the left won:

...* set aside 4 percent of their spectrum capacity (what now amounts to 12 channels) for non-commercial educational programming;

*lease another 4 percent to groups like minorities and women who are underrepresented in broadcasting...

It’s a free country so we can’t complain that activist groups such as Public Knowledge agitate for the special interests of the left, but we ought to bitch and moan that they succeed at their game of policy piracy. Not many know that groups like this get funded by corporations who want to use them as a weapon, or, worse yet, as a form of protection money.

Why is the Bush FCC on the verge of carving up a healthy slice of someone else’s pie for the next generation of Air America? Yet another sad example of the Bush Adminiustration’s failure to operate under a consistent free market philosophy.

I have no interest in this, other than watching Washington acting, once again, like a zoning board in New York, and as a very bad precedent for future FCCs.