Giuliani avoids risk on Social Security

By Michael Kranish, Globe Staff

On Monday, the Globe published a story about Fred Thompson's proposal to save Social Security by cutting benefits for future retirees, a plan that is politically risky but earned him so kudos for acknowledging that a painful solution is necessary. The story noted that other presidential candidates were silent about the proposal, perhaps out of fear of touching the "third rail of politics."

Today, one fellow Republican did respond, but in a fashion that has little political risk for himself. Rudy Giuliani said yesterday he would rule out raising taxes to fix the system. He did not tell the conservative Club for Growth, however, what pain might be necessary to make up for the shortfall in Social Security that will be caused by a flood of boomer retirees.

Earlier this year, Giuliani had cited the model of the 1983 bipartisan Social Security panel, set up by then-President Reagan. Giuliani said he would put five Democrats and five Republicans in a room to solve the problem. Currently, wages are taxed up to $97,500. A number of Democrats have suggested either raising the cap on wages. Analysts have said that either a tax hike or benefit cut is necessary to make Social Security solvent for the long term.

Giuliani told the Club for Growth that his policy on Social Security will be "no tax increase and No. 2, that we come out of it with at least the beginnings of private accounts," he said.

That is similar to a proposal by President Bush that failed to make headway in Congress. In reporting on Giuliani's position, the Associated Press noted that, "Ironically, while Giuliani and other Republicans all strive to be seen as Reagan's political heir, payroll taxes rose as part of the compromise he reached with Democrats in Congress."