Edited for the conclusion.
An income of $90,000--even $150,000--is hardly rich if you're trying to raise a family in many areas of this country. Lifting the cap amounts to a whopping 12.4-percentage-point marginal tax rate increase on middle-class households, as well as on small-business owners who don't even get to enjoy the fiction that their employer is paying half. These are some of America's most productive people, and, by the way, they tend to vote Republican.
Rather than proposing such punishment for his own supporters, President Bush might instead have pointed out that Mr. Greenspan went a long way toward rebutting the argument for such a tax increase. The Fed Chairman opined that, as long the phase-in of personal accounts was done gradually, the financial markets would probably yawn at $1 trillion in new borrowing--and maybe more--to cover "transition costs" that are largely an accounting shift anyway. That is, the borrowing would merely be an acknowledgment of liabilities everyone knows are already there. Mr. Greenspan was essentially endorsing Mr. Bush's view that the sooner we start reform the better.
We supported personal Social Security accounts before most Republicans now in Washington were elected, but the early direction of reform is looking more and more worrisome. First, House Ways and Means Chairman Bill Thomas proposes to finance private accounts with a huge new VAT levy, and now Mr. Bush puts his own tax hike on the table. What an unhappy irony it would be if Republicans finally gained control of the levers of power in Washington only to pass the largest entitlement expansion since 1965 (the Medicare drug bill) in Mr. Bush's first term, and effectively repeal his income tax cuts in the second.
My view is that the first business of government is to stay/go out of business; that at every level of politics, starving an already bloated government such as ours will always yield benefits, whereas creating a de facto tax increase will never yield anything but a more powerful government. |