Tax Fears Help Bush's Plan Win Business Backing
Some of the nation's major business organizations are preparing to enter the fray over restructuring Social Security, spurred by concern that companies could get stuck with the bill if the system faces money shortfalls.
The groups, including manufacturers, restaurant owners and small businesses, say they will spend millions of dollars to support President Bush's efforts to create private Social Security investment accounts. Leaders say the campaign is being driven by fears that, without an overhaul, the government could resort to raising the Social Security payroll tax to bridge any funding gaps.
"It is a job killer, particularly for small businesses," Dan Danner, senior vice president of public policy at the Washington-based National Federation of Independent Business, said of raising the payroll tax.
He said his members "would come unglued at the prospect" of any tax increase as a solution to long-term funding of Social Security.
Although there is vigorous debate over the long-term fiscal health of Social Security, concerns about a payroll tax hike are not far-fetched, according to business groups.
The Social Security payroll tax has been raised 20 times since it was imposed in 1937. The levy, originally 2%, is now 12.4% -- half paid by employers, half by workers.
Bush says the Social Security system faces insolvency without dramatic changes and has placed it at the top of his administration's list of domestic priorities. As a cornerstone of his plan to bolster the program's health, the president wants Congress to allow workers to divert a portion of their Social Security taxes to private investment accounts.
Business groups could play a crucial role in championing the plan, which has met with vehement opposition from many Democrats, organized labor and some seniors groups, who view it as a first step toward shrinking the federal safety net for retirees.
"They will definitely have a war chest now," said Roger Hickey, co-director of the Campaign for America's Future, a Washington-based group that is battling the president's plan.
The support from business is coming at a crucial time. Many of Bush's Republican allies in Congress have expressed reservations about tampering with Social Security, and the financial industry is keeping a low profile, chastened by critics' portrayal of Wall Street as favoring private investment accounts for its own enrichment.
