Social Security Will Be Married To Tax Reform
by Steve Soto
As we suggested yesterday, Democrats should be ready to insist that nothing be done on Social Security until tax fairness and health care are addressed first. Sure enough, today’s Post indicates that Ways and Means Committee chairman Bill Thomas is ready to save Bush’s bacon on private accounts by subsuming the debate into a larger piece of legislation that addresses various tax goodies sought by business. In other words, the GOP is ready to walk right into a tax fairness trap.
Read the Post piece and note that Corporate America comes right out and says they want private accounts, a permanent repeal of dividend and capital gains taxes, and pension relief. In other words, the GOP and their corporate buddies are ready to argue with a straight face that after pocketing all of Bush’s first term tax goodies and not producing jobs here at home, they want the wage earners in this country and the US Treasury to shoulder the tax and debt burden of their permanent free lunch. Perfect; that’s a line of reasoning that the Democrats should be able to destroy the GOP with next year.
Chuck Grassley intends to try and embarrass Democrats for not coming to the table to negotiate. Again, the issue for Democrats as I said yesterday is to come out and say what you will support as core principles that are non-negotiable. You will note from the Thomas piece that he is suggesting an expansion of existing IRA’s and other retirement vehicles as well as an increase in the withholding ceiling above its current $90,000. Bush has hoodwinked the media into thinking that he would support such a thing, when in fact he has made it clear the last several days that he will oppose any increase in taxes because he claims it will hurt the economy. Thomas appears willing to move away from private accounts as Bush envisions them if there isn’t enough political support for them, and move towards changes that can gain support. If Democrats are against private accounts because of their fiscal risk, but would support an expansion of IRAs as an alternative, then why not say so? If Democrats are willing to look at alternate benefit indexing methods, then why not say so? If Democrats support what some Republicans like Thomas and others say on the need to raise the withholding ceiling, then why not say so? If Democrats think that any fixes need to include new revenue and to address health care and tax fairness at the same time by reconsidering Bush’s first-term tax cuts, they why not say so?
Sure, some of these positions will cause heartburn for Bill Thomas and Chuck Grassley, and sure, Bush and Rove may deem some of these basic principles nonstarters, but then that becomes their problem. The Democrats will be in the game with the outlines of a plan of their own based on tax fairness and fiscal responsibility, and will be on record that health care needs to also be addressed.
I don’t trust Bush, DeLay, and Rove. But I do think that Grassley is somewhat honorable, and Thomas’s ego is such that he would love to have his name on a landmark piece of bipartisan legislation that fixes Social Security and addresses health care at the same time. Sure, DeLay and Rove would try to roll Thomas into a final bill that abandons what he negotiated with the Democrats, but 1) I’m not sure by 2006 that Bush will have enough political capital on this issue to coerce Thomas to do it; and 2) Thomas and Hastert know that if they did allow DeLay in the end to turn a negotiated bipartisan bill into a screw-the-middle-class, corporate tax giveaway that Democrats would abandon the bill on the final votes in each chamber and make such a betrayal of the working classes and seniors into the perfect issue against the GOP incumbents in 2006.