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New Doubts On Plan For Social Security

"Thomas was accusing the White House and many Democrats of being stuck in their ideological corners, and he wanted to broaden the debate," Sperling said.

White House officials have said they believe that Social Security legislation must pass this year if it is going to be enacted in Bush's second term, but several lawmakers said Thomas's ideas sounded like a multi-year endeavor. Thomas said he will start with the idea that the legislation can be completed in a year.

Rep. Bill Thomas said partisan warfare will render Bush's plan "a dead horse." (File Photo)

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Social Security is funded by taking 12.4 percent of a worker's wage and sending that money to current beneficiaries. An additional payroll tax funds Medicare. Thomas said the payroll tax can be "a problem or a culprit in trying to create more jobs."

"There are other ways to achieve revenue increases that -- in fact, by changing the tax code -- enhance business's competitiveness, rather than retarding it," he said.

The tax is considered regressive because it is levied on the first $90,000 of income and higher earnings are untaxed, meaning that poorer people pay a higher percentage of their income to Social Security than rich people. Thomas would not say what alternative he favors, but the most obvious would be through a higher income tax.

Even some White House economists are speaking of "thinking outside the box" on Social Security financing, said a White House official, who spoke on the condition of anonymity because the president's plan has not been unveiled.

Thomas was asked several times if Bush's plan for personal accounts would be an essential part of the package. He did not directly answer, although he said the bill would have to be attractive enough so that Bush would sign it.

Staff writer Charles Babington contributed to this report.

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