Lawmaker (Thomas) Links Overhauls on Social Security and Taxes

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http://www.nytimes.com/2005/01/19/national/19social.html?oref=login


January 19, 2005
Lawmaker Links Overhauls on Social Security and Taxes
By EDMUND L. ANDREWS

WASHINGTON, Jan. 18 - In a sign of the battles that lie ahead on Social Security, the top Republican tax-writer in the House said Tuesday that President Bush's plan partly privatizing the old-age program ought to be the "starting point" in a broader debate.

"The president proposes and the Congress disposes," said the lawmaker, Representative Bill Thomas, the California Republican who heads the House Ways and Means Committee. "I won't rule anything in. I won't rule anything out."

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Another idea, promoted by a handful of Republicans, is that the government raise the ceiling, now $90,000, on income subject to payroll taxes. Mr. Bush has repeatedly declared his opposition to an increase in payroll taxes, but White House officials have never entirely closed the door to an increase in that ceiling. Mr. Thomas said Congress would have to consider the possibility.
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1. New Doubts On Plan For Social Security (Thomas)

Thomas (R-CA)- saying the partisan fight about overhauling the entitlement program would render Bush's plan "a dead horse", said that as an alternative, he will consider changes such as replacing the payroll tax as Social Security's financing mechanism and adding a savings plan for long-term or chronic care as "an augmentation to Social Security payments." -... also said he wants to consider revisions to the tax code simultaneously with debate over Bush's private-account proposal. The White House had indicated a preference to put off revisions to the tax code until next year.

http://www.washingtonpost.com/wp-dyn/articles/A19257-2005Jan18.html

washingtonpost.com
New Doubts On Plan For Social Security
House Republican Says Bush Plan Is Doomed, Seeks Review of System
By Mike Allen and Jonathan Weisman
Washington Post Staff Writers
Wednesday, January 19, 2005; Page A01


House Ways and Means Committee Chairman Bill Thomas (R-Calif.) predicted yesterday that partisan warfare over Social Security will quickly render President Bush's plan "a dead horse" and called on Congress to undertake a broader review of the problems of an aging nation.

Thomas, one of Capitol Hill's most powerful figures on tax policy, is the highest-ranking House Republican official to cast doubt on the president's plan for creating individual investment accounts. He said that as an alternative, he will consider changes such as replacing the payroll tax as Social Security's financing mechanism and adding a savings plan for long-term or chronic care as "an augmentation to Social Security payments."

"What I'm trying to get people to do is get out of the narrow moving around of the pieces inside the Social Security box," Thomas said at a forum on Bush's second term sponsored by the National Journal. "If we miss this opportunity . . . I think we will have missed an opportunity that may not present itself for another 20 years."

Bush's plan for allowing younger Americans to divert a third or more of their payroll taxes into private investment accounts to enhance their long-term benefits has drawn fire from Democrats, who say it is a risky step toward partial privatization of Social Security. Many Republicans have expressed reservations about the political wisdom of Bush's vision for restructuring the nearly 70-year-old retirement and income security program, and Thomas's comments will fuel the controversy.<snip>

The chairman's staff said the "dead horse" comment was a reference to Thomas's expectation that Democrats would continue to harp on what they view as politically damaging elements of the plan even if they have been modified.

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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.

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