The Therapy Sessions
Tuesday, December 07, 2004
Forget ideology. Let's save Social Security
A taxing idea for Social Security
Republican Sen. Lindsey Graham of South Carolina startled the capital's conservative network last month with a speech on Social Security reform at the Heritage Foundation. His call for private accounts was sound conservative doctrine, but he proposed financing it with a huge payroll tax increase for upper-bracket Americans. This was heresy, conservatives said, by Strom Thurmond's successor.
Graham responds this is the only way President Bush's priority reforms will be passed. He states two axioms his fellow conservatives will not address. First, Social Security -- the government's most popular program -- cannot be saved without ''some sacrifice.'' Second, the personal accounts Republicans want cannot be passed without bipartisan cooperation -- meaning a high-profile Democratic co-sponsor.
Graham is proposing a bargain of historic proportions. To reform Social Security, each party must do something unthinkable. Democrats would have to swallow personal accounts declared anathema by the AARP, organized labor and every sector of the party. Republicans would have to go along with a tax increase falling heavily on their base.
I think this is the best way out of a terrible problem. To do nothing with Social Security is suicide, and it will devastate my future and (more importantly) my children's future.
Their ignorance of this threat has cost the Democrats my vote for for more than a decade.
I am loathe to raise taxes on anyone, but I don't see why the payroll tax only taxes the first $86K of income. In effect, Donald Trump pays the same payroll tax that a sales manager pays.
Democrats, naturally, should hate the payroll tax structure: it is a regressive tax that falls mainly on the poor and middle class. I have never understood why they haven't made an issue of this.
Republicans should also hate the payroll tax: it means that the poor pay almost no income tax, and thus, they generate no federal revenue. But the poor certainly seem eager to direct federal spending to themselves.
Private accounts are a good idea, but they will need to be financed. The payroll tax, justly levied, can do this.
Everybody loses, but in the long term, everyone wins.