Skip to comments.GOP Senator Under Fire from the Right
Posted on 03/29/2005 12:48:56 PM PST by hinterlander
A Republican senator promoting the idea of a payroll tax increase is under fierce attack by some conservatives.
Sen. Lindsey Graham's proposal to lift the $90,000 cap on payroll taxes to pay for Social Security reform has prompted the conservative Club for Growth to blanket his home state of South Carolina with television ads accusing the first-term Republican of proposing a "huge tax hike" that would hurt families and small businesses.
"Why Lindsey Graham? He is the one Republican who is by far the most outspoken advocate of lifting this cap and raising it very significantly. This would be a devastating tax increase," said former Rep. Pat Toomey, who now serves as the club's president. "He has designated himself in this role as the person who's going to try to bring the Democrats on board. But what has it accomplished? I think what it does is make it very difficult to get Democrats onto a good program, which is a reform that does not include a big tax increase."
Graham offered his proposal last fall in an effort to woo moderate Democrats, who he thought might join with President Bush to reform Social Security. But Graham's plan includes lifting the current $90,000 cap on payroll taxes--a plan conservatives, including the Club for Growth, have derided as a huge marginal tax increase. A Heritage Foundation analysis in February concluded that lifting the cap to $125,000 would increase taxes for 7 million middle-class families.
The ad pinpoints Graham as an obstacle to Bush's effort to add personal retirement accounts to Social Security. The 30-second spot declares: "There are good ideas . . . and there are bad ideas. President Bush wants to let workers save for retirement through Social Security personal accounts. Good idea. Sen. Lindsey Graham wants to include a huge tax hike. Really bad idea. Lindsey Graham's tax hike would hit millions of families, wipe out much of the Bush tax cut, and punish small businesses. Hey, Lindsey: You can't help someone save for retirement by raising their taxes."
Graham's office did not immediately respond to phone or e-mail messages from HUMAN EVENTS.
Conservatives have been troubled that the White House has not rejected Graham's plan outright. Bush has made ambiguous remarks regarding the payroll tax cap, suggesting he views it differently from the payroll tax rate, which stands at 12.4%. "The one thing I'm not open-minded about is raising the payroll tax rate. And all the other issues go on the table," Bush told reporters from six regional U.S. newspapers February 15.
When asked by HUMAN EVENTS about the White House's refusal to rule out lifting the payroll tax cap, Toomey redirected blame on congressional Republicans like Graham. "I think it's very important that we send a message that we don't want to see a bunch of Republicans coming on board and saying let's just raise taxes as a way to deal with this, and put the administration in a position where they have to decide whether to take it or leave it, that's the deal."
The advertising blitz against Graham is part of the second phase of a $10-million campaign launched by the Club for Growth in February. Ads are also being shown in the home states of Senators Ben Nelson (D.-Neb.) and Kent Conrad (D.-N.D.). Both Democrats hail from states where Bush won overwhelmingly in November.
Earlier this year, the Club for Growth targeted Sen. Lincoln Chafee (R.-R.I.) and Representatives Sherwood Boehlert (R.-N.Y.) and Joe Schwarz (R.-Mich.). The three have made public comments suggesting their reluctance to support personal accounts.
He should be under attack by all conservatives...
Let's pass Ryan/Sununu already!! Come on!!
Graham seemed to have a bright future in SC but he must have been masquerading as a conservative. He would be fine as a Maine Republican but he won't last long in SC now.
You have 2 cows. The State takes both and gives you milk.
You have 2 cows. The State takes both and sells you the milk.
You have 2 cows. The State takes both and shoots you.
You have 2 cows. The State takes both, kills one and spills the milk in the sewage system.
You have 2 cows. You sell one and buy a bull.
If we have to have a social securiy system, then everyone who earns money has to pay for it. I don't think there should be any limit at the top end for payroll taxes. I think that everyone should pay the same proportion of payroll to the system. Otherwise, it is a regressive tax that hits disproportionately at the bottom of the income scale. Given that the marginal propensity to consume is higher at the bottom of the income scale, it would seem as if the top is somewhat insulated from taxation. Why is it that those who earn the least end up paying the most? I would rather see a flat rate imposed on every single dollar.
I take it, then, that you would also advocate that high-wage earners (i.e., those earning above the current "cap") be credited for the entirety of their annual wages when it comes to calculating their Social Security benefits?
Why not cut the taxes for people at the low end and middle as a means to ensure that everyone "pays the same proportion?" If you are for a flat tax, why not support that alternative instead of feeding even more money to the tax eaters!? At the same time, we can cut benefits and phase out this ponzie scheme the honest way. Deal?
"Sen. Lindsey Graham's proposal to lift the $90,000 cap on payroll taxes to pay for Social Security reform has prompted the conservative Club for Growth to blanket his home state of South Carolina with television ads accusing the first-term Republican of proposing a "huge tax hike" that would hurt families and small businesses."
Wow. The "Club for Growth" plays for keeps for their masters.
You said: "Why is it that those who earn the least end up paying the most?"
Flat out untrue!
The rich in America are an endangered species, being taxed out of existance by the tax and spend liberals.
We need to promote investment not punish it. Lay off the wealthy please. They are not the problem.
No wonder the GOP is commonly referred to as "The Stupid Party."
Obviously the solution is to double the tax on those making less than $90,000 because they are mostly Democrats.
Or would you prefer..."From each according to his ability, to each according to his needs", hmm?
Graham deserves what he's getting.
Careful, I've been flamed for daring to suggest that Rick Santorum is a moderate in conservative clothing. Seems we have an outbreak of moderation from those who claim to be "real" conservatives.
I think I have to write a check to the club for growth.....if they stand on principle despite pressure, that should be rewarded. I would expect nothing less from Pat Toomey. He's a great American.
"Graham deserves what he's getting."
Why? Some Bushies have floated the same idea, and asked for ideas - all the while not forwarding a specific plan themselves.
The money in this game is the so-called "private" accounts which is what Club for Growth is getting paid to promote.
This move says Club for Growth will destroy dissenters if the socialist stock market scheme isn't chosen as the "cure."
"Club for Growth" is not being pressured - they aren't victims.
That's not altogether accurate. Under current law, the Social Security benefits a person receives are based not on how much the person paid in Social Security payroll taxes during his working life, but instead are derived from a fairly complicated formula that takes into account the worker's 35 highest-earning years. Those 35 years of wages are "indexed" to reflect wage growth, totaled, divided by 35, and then divided again by 12 to produce a monthly figure called the Average Indexed Monthly Earnings (AIME).
To the worker's AIME, a formula is then applied to derive what is known as the Primary Insurance Amount (PIA). It is here that "progressivity" is introduced into the benefits calculation. The basic principle underlying the determination of a person's monthly Social Security benefits is that those benefits should "replace" a certain percentage (much less than 100% surely) of the person's average lifetime monthly wage. The thing is, the formula used to calculate a person's PIA applies three different rates to portions of the person's AIME. In 2003, for example, the PIA formula credited a worker with 90% of the first $606 of his AIME, 32% of his AIME over $606 through $3,653, and only 15% of his AIME over $3,653.
The purpose of this PIA formula is to ensure that Social Security benefits are "progressive," with the basic target being that a lifetime "low wage earner" will have approximately 56% of his AIME replaced by Social Security benefits, while the "average" earner and the "high wage" earners will have 42% and 35% of their AIME "replaced" by their monthly Social Security benefits, respectively.
There is, of course, another way in which the method used to calculate Social Security benefits is "progessive," and it is here that the Social Security wage cap becomes relevant. A person making, say, $250,000 in 2005 will only pay payroll taxes on $90,000 of that wage. When the time comes to calculate that person's AIME, he will only be assumed to have earned $90,000 in 2005 as well.
So, whether or not the Social Security wage cap is "fair" really depends on one's perspective. Since the cap artificially limits the annual wage a person is deemed to have made in a given year for purposes of determining that person's Social Security benefits (which determination is already highly "progressive" based on the PIA formula noted above), why isn't it "fair" that that person only have to pay payroll taxes on the "capped" amount of his wages? It's all in how you look at it, I guess.
Sen Grahm will be senator of SC for as long as he wants. As long as he is conservative on social issues, he wont be challanged. As for Club for Growth, they had a horrible record in the GOP primaries last year, and their only success in any of the primaries last year was Sen. Coburns victory in the Oklahoma primary, and even then Sen. Coburn got most of his support from social conservatives.
Here's Graham's proposals. See if they warrant such an awful attack dog campaign by Club for Growth:
U.S. Sen. Lindsey Graham, R-S.C., would offer workers younger than 55 three options:
Private retirement accounts funded by 4 percent of payroll taxes, up to $1,300 annually. Benefits reduced according to the value of the private account, and benefits indexed to inflation, not wages. Workers with 35 years guaranteed a minimum benefit of 120 percent of poverty.
No private retirement accounts. Benefits would be indexed to inflation, not wages. Workers with 35 years would be guaranteed a minimum benefit of 120 percent of poverty.
No private retirement accounts and no cut in benefits. Workers would pay an additional 2 percent payroll tax, which would continue to increase over time as needed.
Although not part of his plan, Graham also has suggested raising the level of taxable income from $90,000 to $150,000 to cover transition costs.
bingo -- and you're welcome
I wish you were right. Fact is, those of us in our mid-40's have been paying in for twenty years or more at rates far higher than those collecting benefits today. We won't be allowed to participate in the individual savings accounts, the President only promised those 55 and over won't see reductions (so we'll get a haircut), AND we'll see the cap raised during our peak earning years while we are paying for our kids' college tuition. Zero Gain? Try LOSS on every front -- more taxes, less benefits, no savings accounts. Plus we'll have to pay income tax on a return of principal.
This is just for starters. Medicare will be far worse. There just won't be enough resources to keep all of us boomers alive inot our eighties and nineties. I fully expect to be some Gen Xer's grandkid's Soylent Green taco in about forty years.
Trust me, I have no respect what so ever for the Club for Growth, or any of the WSJ wing of the GOP.
They better, I'm a member of CFG, and we will punish Graham and make him miserable for this.
The stock market is socialist?
If any rino dissents, they deserve what they get, no matter the cost, Rino's like Graham need to be brought back in line, and the CFG is just the guys to do it.
Good to know you!
Here's a local article:
"the Washington-based sponsor of the ad says the idea conflicts with conservative ideals of lower taxes and smaller government."
So, they argue for not cutting taxes at all but shuttling the money into the stock market exponentially increasing government control of the economy? Hardly conservative.
"The stock market is socialist?"
Well, maybe not completely. But how much of the stock market will the govt. control under this plan? 20%? 30%? Who controls the chosen stocks? Are overseas stocks forbidden?
Every account idea i've seen is not "private" but government managed. If they want private accounts they'd give us our money back for us to invest.
You can bet the cap for benes will stay, while the cap for taxes will be raised.
Or another benefit will apply.
I am in my mid 40's also and I agree we will probably be the age group that get's screwed. I would prefer that we have the opportunity to opt out now and start saving or not as we see fit.
Yeah, that seems like a fair idea.
The way its being phrased, by everyone involved is incrementalism.
Starts out with funds (which would include overseas stocks, how couldn't they, do you realize how many international or multinational corps come and go?) and bonds, and several different financial tools, individual stocks (ala 401 K plans) are not in any current model, at least directly. So basically, you can't directly invest in a company, but you can indirectly, to minimize risk, but as clear as it day, over time, that would change, and that is still sure as hell better then what we have now.
Banking tools are starting to work their way in, and might be the ticket to getting this done the right way.
A Republican shouldn't be promoting a de facto tax increase in order to sustain what is essentially a socialist program.
I thought Graham was friends with Hillary.
he can only have one friend ?
US Sen Lindsey Graham (RINO-SC). 'Nuff said, IMO. Dump the lowlife.
South Carolina? You sure he's not from Vermont?
Lets donate him to the democrats.
A vested property right in the accounts is a start, even if we are restricted to investing in government bonds. At least we'd have a claim to the underlying assets. I would prefer complete and total privatization, including privately managed accounts similar to IRA's....with a concommitant starving of the Social Security beast, but that will take time. I really think the unstated objective of GWB's private accounts is to do just that, wean the Gen Xer's from SS by allowing them to invest. The fact that his proposed framework did nothing to deal with the 'solvency issue' should tell you that his plan is for SS to naturally wither and die over the course of several years....and that's a good thing.
Let's take what we can get, and when the gen xer's see the difference in returns, SS will be relegated to the dustbin of history.