You are right about the hole. Of course, it may be that Obama was not familiar with it. I am not sure Social Security is his policy area. Raising the cap a little bit will keep the system solvent. Blowing the cap away only makes sense if you introduce some type of personal retirement account. Of course, not all such accounts look the same. George Bush is probably thanking his lucky stars that his plan died, as the index funds he would have put everyone's money into tanked. Such funds would have included toxic paper, so they would have tanked big. There is another type of personal account, one I suggested in Labor and Corporate Governance, January 2003 that would not have tanked. In fact, if combined with the piece that the AFL-CIO Investment Office had pulled the following month, there would have been no subprime crisis and no bubble. I proposed channeling money into employee ownership, some into direct ownership and some into a diversified fund - which I later modified to be a mutual insurance fund of employee-owned firms. Such firms would also provide mortgages to their employees rather than having them go to banks with no interest and a shorter payback - maturing when the retirement portfolio matures. In time, this would have taken most major firms private and taken most mortgage paper out of the banks. The Dow would still be down, but tht would be because volume would be down - if there even would be a Dow. I would have raised the cap, or even blown it away, and ended bend points - instead diverting the entire employer contribution to be privatized (which would be higher with higher caps) toward employee-owned shares distributed EQUALLY so that the savings scheme replicates the payout scheme of the current program. The portion diverted from the Employee Contribution would go toward the mutual insurance fund - provided an employee contribution was required at all. A viable alternative would be to lower gross incomes by the amount of the tax and have only a 10% of average full-time income employer contribution (with some fraction for part-timers) and the remaining taxes diverted to a business income tax. Too bad labor didn't go for it, since the ownership scheme could include using the unions to vote the proxies of their members in a non-unitary board. This scheme could start right away, and would be helped along by increased income taxes to more quickly convert the Social Security Trust fund to private accounts. This is the right answer, because it gives both sides something to hate. The right despises socialization of benefits while the left despises privatization. In the end, however, it would work if tried.