‘Slow Down’ Is the Bipartisan Buzz for Social Security

As President Bush continues his efforts to raise anxiety across the country about the Social Security program, more and more members of Congress, both Democrat and Republican, are starting to speak uniformly on the need for patience in working towards a solution. Even House Speaker Dennis Hastert (R-IL) and Federal Reserve Board Chairman Alan Greenspan urged caution and called for further debate in approaching Social Security reform this past week. In an interview last week with the Chicago Tribune, Hastert said he was unsure how long the debate over reform should last and refused to lay out a timeline for when major legislation would be passed, saying it could take six months or perhaps two years. He warned, “You can’t jam change down the American people’s throat.” Greenspan expressed a similar sentiment in testimony last week before the Senate Banking Committee. He said the transition to private accounts would need to be done, “in a cautious and gradual way” since it was unclear how financial markets would react to as much as $2 trillion in additional debt that creating the accounts would cost taxpayers over the next ten years. “I would be very careful about very large increases in debt,” he added. Perhaps in reaction to these additional challenges to his plan to carve out private accounts in Social Security this year, Bush announced he would consider raising the income cap on Social Security payroll taxes currently set at $90,000. Some members of Congress support raising the cap, including Sen. Lindsay Graham (R-SC), who has urged the White House to consider raising it to as high as $200,000. Bush has previously stated firm opposition to raising the tax rate but until now has remained silent on the cap. The president’s announcement opened the door to the possibility of dramatically increasing Social Security revenues. Estimates by Social Security actuaries show that by lifting the cap completely, it may be possible to close the entire funding gap in the program over the next 75 years. The door seemed to remain open for only a day though, as House Majority Leader Tom DeLay (R-TX) expressed opposition to the idea of increasing the cap the next day. Delay said subjecting more earnings to the payroll tax would be the same as a tax increase and would be unacceptable. Hastert, who wanted to distance House Republicans from the idea, joined him in opposition to the proposal. The quick and negative reaction from DeLay and Hastert underscores the increasingly difficult time Bush is having promoting his plan to overhaul Social Security, which he has made his number one domestic priority. The president has acknowledged his troubles, saying last week his plan was “going nowhere” unless he could convince Congress and the American public that action was required immediately. That has been the central challenge for the president at the beginning of his second term and it will continue to be as the debate over Social Security moves forward this year.
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