Latest News

Tax hikes on the table for Social Security, key GOP senators say

WASHINGTON—Two senior Republican senators said Tuesday that getting Democratic support is critical to getting any Social Security legislation enacted and they won't rule out tax increases as one possible element of a bipartisan compromise.

President Bush insists there'll be no tax hike, but these leading Republicans aren't so sure.

"I don't know how I can be an honest broker if I say anything is not on the table," said Sen. Charles Grassley, R-Iowa. Grassley is chairman of the Senate Finance Committee, which will draft any Social Security legislation. "Ask me if I like a tax increase: Of course I don't. But if that was the only thing holding it up, would I say no? Well, it kind of depends on what's the shape of it."

Bush is pushing a plan to create individual retirement accounts to supplement traditional Social Security. He would permit workers born since 1950 to invest a portion of their payroll taxes in stocks and bonds in hopes of enhancing their retirement assets. His plan would cost an estimated $2.2 trillion over 10 years once fully operational—costs added to the national debt—and would do nothing to help traditional Social Security achieve financial solvency. Social Security faces a financial shortfall in 2042, according to the system's trustees.

Rick Santorum, R-Pa., the third-ranking Republican leader in the Senate and chairman of the finance subcommittee that oversees Social Security, echoed Grassley: "My sense is that we're going to look at tax increases, we're going to look at benefit cuts, we're going to look at personal retirement accounts."

Santorum said the ultimate solution would require balance.

"You have to ... try to find a solution that I would argue minimizes the tax increases, minimizes the benefit reductions and maximizes the third way of solving the problem, which is personal retirement accounts," Santorum said.

While virtually every Democrat objects to paying for new private retirement accounts by channeling payroll taxes away from Social Security, many support new accounts if they are funded some other way. But 43 Democrats said they wouldn't support any plan that increases deficits substantially. A tax increase, however, could solve both problems, making new accounts possible.

Grassley said that could provide "a big foot in the door" for negotiations.

———

(c) 2005, Knight Ridder/Tribune Information Services.

ARCHIVE PHOTOS on KRT Direct (from KRT Photo Service, 202-383-6099): Charles Grassley, Rick Santorum

Need to map

  Comments