More On Social Security Reform

Very good Bob Novak column (hat tip to RealClearPolitics) on Social Security Reform. It seems Lindsey Graham, Republican Senator from South Carolina, has tackled those pesky transition costs that Kerry and Edwards kept reminding us of. Graham's solution? Increase the upper limit of income subject to the payroll tax, current capped at $87,900. (Graham says he would reduce the payroll tax rate as revenues grow).

Novak feels that hard as it would be for Republicans to swallow an upper-income tax increase, harder still would be convincing Democrats to go for the Personal Savings Account idea (as Novak cleverly points out, every American invested in the markets is a Republican in waiting). Of course, Bush has clearly expressed a desire to spend political capital, and this is big domestic issue number one.

My take is this: I'm not going to reject Graham's idea out of hand because it is a tax increase. I don't have the relevant figures in front of me, but what if it was packaged like this:

• Make the first term tax cuts permanent
• Raise the payroll tax income limit to $175,000 (about double the current cap)
• Let Americans set aside 3 percent of their Social Security payments to Private Savings Accounts (1% less than Graham's bill)
• After ten years, drop the 12.4% payroll tax to 11%.

I stress again that those figures are just pulled out of thin air - I'm just talking about an approach to sell this along those lines. I think I could go for such an arrangement - how about you?

UPDATE 12/08/04 12:56 p.m. - Here are some very deep thoughts on the subject from deona, posted at JustOneMinute (hat tip to Dicebucket).