by Robert B. Bluey and John Gizzi
House Majority Leader Tom DeLay (R.-Tex.) sent President Bush a stern warning this week not to raise taxes by lifting the $90,000 cap on payroll taxes to pay for Social Security reform. On February 15, Bush said he had not ruled out lifting the cap–a move that would impose a massive marginal tax hike on everyone making more than $90,000.
“There’s a lot of balloon floating around here that goes on, and hopefully that was a trial balloon,” DeLay commented to HUMAN EVENTS Tuesday. “There are several things involved here. Number one, it is a tax increase. Number two, it will hurt the economy. And number three, it won’t substantially fix the problem.”
When asked to respond to DeLay’s remark, the White House gave no indication that DeLay’s opposition had changed Bush’s mind about at least considering the option of increasing the income cap on payroll taxes. “The President’s views are clear on this issue,” Press Secretary Scott McClellan told HUMAN EVENTS. “There is a common understanding that there is a problem facing Social Security. He is reaching out to people.” McClellan added, “We welcome all suggestions and [Bush] has made it clear to you all that he is not going to comment on every idea expressed.”
Americans for Tax Reform President Grover Norquist told HUMAN EVENTS that raising the cap would require Bush and nearly all congressional Republicans to break the Taxpayer Protection Pledge they signed. “That’s what Republicans did in 1990 and it was devastating to the party in mid-term elections,” Norquist said.
On February 15, Bush signaled he was open to hiking the income cap on the payroll tax when he inserted the word “rate” into his standard vow not to raise payroll taxes. Since then, he has dropped the word “rate” from references to the payroll tax.
The payroll tax rate is 6.2% for workers and 6.2% for employers. The payroll tax income cap stands at $90,000 this year. By ruling out only raising the rate and not ruling out raising the income cap, Bush has signaled he might be willing to compromise with Democrats and enact a tax increase.