no she did not get 'everything' back as an employee ...she did NOT get back the social security and medicare withholdings as an employee
she did not pay federal income tax on this summer's $3500 of income. she paid social security and medicare which will benefit her when she retires - as @VolvoGirl pointed out earlier.
so the point is that she did not make enough EITHER SUMMER to pay FEDERAL income tax.
However, she had to pay social security tax and medicare tax each summer. Last summer, her employer paid half the social security and medicare tax. Presumably she was paid less because the employer had to pay the tax; this summer she presumably was paid more because she had the pay the tax - that is the way it would work in the perfect economic world.
