Clinton, Obama spar on healthcare, Social Security

By Susan Milligan, Globe Staff

LOS ANGELES -- Remember that apparently warm embrace at the close of the Democratic debate last week in Los Angeles? The one in which Senators Hillary Clinton and Barack Obama were so mutually respectful that the moderator asked if they'd for a "dream ticket'' together?

Not so much, in the waning days of the campaign.

The Obama team -- accused last week by the Clinton campaign of distributing a misleading mailer about Clinton's heathcare proposal -- shot back at the New York senator's campaign today, accosting the Clinton camp for a mailer sent to Massachusetts households that claims Obama would raise taxes by a trillion dollars.

That's nearly one-third of the size of the federal budget, and a charge Representative Bill Delahunt, Democrat of Massachusetts, calls "absurd.''

"To be candid, it was so absurd, my first reaction was, 'Someone's joking,' '' Delahunt said in a conference call with reporters. "I'm disappointed in the Clinton campaign. It tells me that there is panic inside the Clinton campaign.''

The trillion-dollar figure is based on Obama's proposal to lift the cap -- though not completely -- on the amount of earnings subject to the Social Security tax. Currently, only earnings up to $97,500 a year are subject to the FICA tax, meaning people earning $30,000 a year pay a higher Social Security tax rate than people earning many millions of dollars a year.

Obama has suggested lifting the cap, perhaps putting in a "doughnut hole'' in the equation, so the tax increase would hit only very high-income Americans. Clinton, too, at a rally last year before the primaries, was overheard telling a voter she would consider changing the Social Security tax structure.

But the Clinton campaign's mailer to Massachusetts voters said Obama "wants to raise Social Security taxes by a trillion dollars,'' and Clinton herself has called the idea harmful to the middle class. Obama's economic adviser, Austan Goolsbee, said that number could only be true if the cap were lifted entirely and immediately on all wage-earners -- something he said Obama does not support.

"It isn't Senator Obama's policy, it isn't a trillion dollars, and it isn't on the middle class,'' Goolsbee said.

Clinton campaign spokesman Phil Singer said outside analysts such as the Brookings Institution have backed up the trillion-dollar figure. "Obama's contention is that people who make more than $97,500 are not working people,'' Singer added. "But in many cities, firefighters, police officers and other middle-class people raising families earn salaries at that level and above.''

Massachusetts -- where Clinton held a strong lead in the polls just weeks ago -- is becoming increasingly competitive, and Delahunt believes the Bay State could deliver a majority of votes to Obama on Tuesday.

Obama supporters are hoping for a surge from the endorsements of Senator Edward M. Kennedy, his niece, Caroline Kennedy, and his sister-in-law, Ethel Kennedy. Clinton -- whose campaign sought mightily to persuade Senator Kennedy to remain neutral, has recently taken to making subtle, less-than-laudatory references to her colleague, noting that he wrote the reviled "No Child Left Behind" legislation.

The education law, which Clinton voted for, has come under heavy criticism by Democratic lawmakers, who say the rules are unworkable and onerous for schools with low-income and non-English speaking students.

Delahunt said the Clinton mailer indicates her campaign is very worried about its prospects in the Bay State. "I think the campaign operatives are just thrashing around,'' he said. ``They know the mood is against them.''