No New Taxes

NO NEW TAXES

Mr. PENCE. Mr. Speaker, I rise today to speak about an issue that is not so much on our agenda in these first 100 hours, but I believe it will encompass much of our focus during the course of the 110th Congress. It has to do with the how and why that we will achieve fundamental entitlement reform.

President Bush and many leaders in the new majority in the House and Senate have spoken of the priority of reforming Social Security and dealing with the extraordinary unfunded obligations of our mandates in future years. The President, to his credit, 2 years ago raised the prospect of fundamental Social Security reform. But the American people rejected the President's call.

And I rise today to speak about what I believe the parameters of that debate should be from the perspective of a conservative in the minority who believes in the principles of limited government.

Mr. Speaker, I believe that the American people did not reject the Social Security reform or the personal retirement accounts that the President advanced. I think they rejected the entire debate and how it unfolded. I think they rejected the notion that the predominant goal of Social Security reform was to make the numbers add up or, in the language of the wonks, to achieve solvency in Social Security. Such a yardstick expresses no opinion on how to fix an increasingly bankrupt system, and I believe that as a result it invariably blesses benefit cuts or tax increases as a result.

And while President Bush has spoken to his opposition to tax increases, Treasury Secretary Hank Paulson has repeatedly said, in conversations with Members of the House and Senate, that ``everything is on the table,' raising the specter of the possibility of raising taxes to achieve Social Security reform. And even the President's own Press Secretary, when asked directly whether the White House was ruling out a tax increase to achieve Social Security reform with this newly minted Democrat majority in Congress, the Press Secretary said, ``No, I'm not.'

I believe, Mr. Speaker, this is all code for a willingness within the Bush administration to consider raising taxes in exchange for achieving Social Security reform. Such a tax increase would likely come from lifting or eliminating the cap on the amount of salary and wages subject to the payroll tax. The current income that is subject to the payroll tax is $94,200.

But raising payroll taxes, I would offer, would prove devastating to working Americans, small businesses and the economy as a whole and, worse, if we eliminated the cap on income subject to payroll taxes for Social Security, would only add a brief 7 years to Social Security's financial solvency.

According to the Heritage Foundation, eliminating the cap will increase taxes by $484 billion over the first 5 years. This 12.4 percentage point marginal tax rate increase would hit middle income families struggling to make ends meet, pay for college and save for retirement, and much of the increase would be borne by the 3 million small business owners who pay both the employer and employee portion of the tax hike. These entrepreneurs are the driving force of our economy, Mr. Speaker. And as a result, a tax increase of this nature would result in a 2 to 3 percent reduction in economic growth, causing massive layoffs across the country. And, again, eliminating the cap on income subjected to Social Security payroll tax would only extend the life of Social Security for 7 years.

Now, there are many, even on my side of the aisle, that are flirting with the notion of raising taxes. But, Mr. Speaker, we have been down this road before. It was 1990, when I was a candidate for Congress, when another President Bush teamed up with a Democrat majority in Congress and headed to Andrews Air Force Base all in the name of entitlement reform and deficit reduction, brought the American people the promise of reform in the future, and the largest tax increase in American history.

We must not go down the road of compromise again. I think the administration needs to be clear that any Social Security compromise must reject tax increases of any kind. That means no increase in the payroll tax rate and no change in the cap apart from the current indexing that happens under the law.

I would say, respectfully, to my colleagues and to the President of the United States, we should say to our good friends in the new majority, ``Read our lips. No new taxes.'

It is imperative that we bring reforms like personal savings accounts to this new deal program. I think it is imperative that we make the new deal a better deal for younger Americans, but raising taxes on small business owners and family farmers in the manner of lifting the cap or raising the rate is an idea whose time should never come.

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