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Tax Cuts Lose Spot On GOP Agenda

In the next 75 years, the government will fall $3.7 trillion short of meeting Social Security's needs and nearly $28 trillion shy of Medicare's growing demands, according to the Government Accountability Office. The nonpartisan GAO estimates Bush's plan to provide prescription drug coverage to seniors is responsible for more than 25 percent of Medicare's projected shortfall.

Many Republicans said Bush's decision to increase spending in the first term will make it much harder to reduce taxes in the second. After overseeing a large expansion of government over the past four years, especially for the Pentagon and other agencies involved in fighting terrorism and the war in Iraq, Bush is pushing a Social Security plan that Vice President Cheney said would cost "trillions of dollars" in the short term. Many Republicans are expressing reservations about the plan to carve private Social Security accounts out of the current system because it would drive up deficits unless benefits are slashed or taxes raised.

President Bush promotes his plan to retool Social Security during a town hall meeting at the University of Notre Dame in Indiana. (J. Scott Applewhite -- AP)

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This has put Republicans such as Voinovich and Graham in the uncomfortable position of having to abandon, to some extent, their anti-tax inclinations and infuriate some in their party in the process. "If you are serious about Social Security, you are going to have to say no to other things," Graham said.

"The spenders are fighting back," said Grover Norquist, president of Americans for Tax Reform, which advocates lower taxes. "The deficit is the word they use because they think it sounds more acceptable than saying they want to spend more money."

Senate Finance Chairman Charles E. Grassley (R-Iowa) said at least six Senate Republicans have signaled opposition to extending the cuts. "They could keep it from getting done," he said. "But I think most people would like to make them permanent."

Grassley, who supports the Bush plan, said the Republican decision to produce a five-year budget -- instead of the traditional 10-year model -- has prompted some lawmakers to think about delaying action for a few years. "You can only extend tax cuts for a couple of years, so is it really worth dealing with this year?" he asked.

Of most concern to Norquist and other longtime advocates of lower taxes are calls by Graham and others to consider raising taxes to help finance Social Security changes, Bush's top domestic priority. Graham proposes subjecting more of a person's income to the payroll tax, which funds Social Security. Under current law, $90,000 is subject to the tax. If the cap were raised to $140,000, millions of Americans would be hit with a $3,000 tax increase, or $6,000 if they own a business.

To help pay for other programs, Bush, in his budget plan, proposed raising "user fees" for airlines, explosives makers and others, which some conservatives consider akin to tax increases.

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