http://www.msnbc.msn.com/id/6979993/
The following is an exerpt of a lengthy article published this afternoon by the Associated Press and placed on the net via MSNBC
PORTSMOUTH, N.H. - President Bush says he has not ruled out raising taxes on those who earn more than $90,000 a year to help bolster Social Security’s finances.
Under the current system, payroll taxes are paid only on the first $90,000 in wages. Bush has repeatedly said that he opposes raising taxes, but his advisers have been intentionally vague about whether he would also rule out subjecting a greater share of pay to the existing tax. Asked directly, President Bush said that he would not rule out raising that cap, though he does not want to see the payroll tax rate go up. The rate is now 12.4 percent of pay, split between workers and employers.
Some have suggested that taxing a greater share of earnings would be a good way to either help bring the system into long-term solvency, or to help pay for the transition to private investment accounts that Bush is pushing. White House spokesman Trent Duffy said Bush will consider this option along with many others proposed. Some critics of Bush's plan have sought to raise the tax ceiling to $150,000.
Sen. Charles Grassley, R-Iowa and chairman of the Senate Finance Committee, said Sunday he expects any reform would include a ceiling above $90,000. Under the current system, payroll taxes are paid only on the first $90,000 in wages. That ceiling rises each year with inflation — last year it was $87,100.
According to one economic analysis, if Congress did nothing but lift the cap entirely and therefore subjected all wages to the tax, Social Security would be financially balanced for 75 years, though the system would again face trouble after that.
The White House has said the aim now is to sell Americans on the idea that there is an immediate Social Security problem, even though the system doesn’t run out of money for decades, in hopes that they will put pressure on their representatives in Washington. Bush aides say the time for the legislative nitty-gritty of writing bills and negotiating with lawmakers will come after this intense public relations phase.
President Bush wants to make certain that workers age 55 and over understand that their Social Security benefits will not change under his proposal for private accounts. Political advisers see that as crucial, especially to protect Republicans who fear that Democrats will use their tangling with the popular retirement benefit against them in the 2006 midterm elections. The president portrayed his plan as both good for the Social Security system and as a crucial step in building ownership for more Americans.
He did not mention that investing in stocks and bonds means workers with private accounts risk seeing their assets shrink, nor did he talk about lower benefits or the enormous transition costs of the accounts, estimated in the trillions of dollars. He did
acknowledge that the private accounts “don’t fix the system.”