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Idea to Raise Social Security Wage Limit Criticized

GOP House Leaders Say President's Proposal Would Amount to a Tax Increase

By Mike Allen
Washington Post Staff Writer
Friday, February 18, 2005; Page A04

The House's top two Republicans swiftly rejected an idea floated by President Bush to raise the ceiling on wages subject to the Social Security payroll tax, with Speaker J. Dennis Hastert and Majority Leader Tom DeLay saying yesterday that they would consider that a tax increase.

Underscoring the fluidity of the debate over Bush's proposal for restructuring the 70-year-old retirement program, DeLay (Tex.) said Congress should look at a more flexible retirement age. But he flatly opposed subjecting more of the earnings of higher-income people to the Social Security tax.

House Speaker J. Dennis Hastert (R-Ill.) rejects President Bush's plan, saying it "would take more money away from people." (Susan Walsh -- AP)

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Social Security

"This Republican House didn't come here to raise taxes," DeLay said on Fox News. "We can solve this problem without raising taxes."

Payroll tax is now collected on only the first $90,000 of a worker's annual income, and raising or eliminating that cutoff could help mitigate expected shortfalls for Social Security. White House officials have long said that such a move could be part of a plan to revise the system but not the whole solution, and Bush repeated this week that he will not rule it out.

However, key allies on Capitol Hill reacted negatively to the idea, underscoring the president's challenge in winning majority support for a plan to deal with long-term solvency problems and to allow younger workers to divert part of their payroll taxes to personal investment accounts.

Hastert (Ill.) said in an interview that the idea of raising the income ceiling was tantamount to a tax increase simply because it "would take more money away from people."

"We are long away from determining exactly how this bill's going to be put together and how you're going to pay for it," he added. "Not there yet."

DeLay went even further in two cable-news interviews, saying that change alone "wouldn't be any reform" and criticizing efforts to raise the income cutoff.

"To everybody that makes over $90,000 a year, it's a tax increase," he said on CNN.

DeLay went on to point out the growing life expectancy for Americans and said he wants to "let people control their own retirement security."

He said he was "not necessarily" advocating an increase in the retirement age. The retirement age for full Social Security benefits now varies from 65 to 67, depending on birth year. "I think we can create a system where people can decide what their own retirement age is, rather than the government making that decision," DeLay said.

At a morning news conference yesterday, Bush said he welcomes just about any idea "except running up the payroll tax rate, which I've been consistent on."

However, as recently as Feb. 4, he said: "Everything is on the table except raising payroll taxes." Republican congressional aides said the addition of the word "rate" seemed to be an unusually precise formulation for Bush, and signaled unmistakably that he views raising the income cutoff as part of a probable solution.

Meanwhile, Federal Reserve Chairman Alan Greenspan declined to characterize the challenge of financing the Social Security retirement system as a "crisis," as Bush has done in recent weeks as he campaigns for support for his plan.

Greenspan, appearing at a Capitol Hill hearing, repeated his support for Bush's idea to create personal Social Security accounts. And he said both Social Security and Medicare must be changed in some ways before 2008, when the first of the nation's 30 million baby boomers begin to retire and claim benefits.

But, when pressed by Democratic critics of the president's plan, he noted that he has never used the word "crisis" to describe the problems involved.

"A crisis, to me, usually refers to something which is going to happen tomorrow or is on the edge of going into a very serious change," Greenspan said. "That is not going to happen in either Social Security or Medicare over the next several years."

Staff writer Nell Henderson contributed to this report.

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