Former Gov. Linda Lingle would gradually raise the payroll tax cap for Social Security so workers with higher incomes would pay a greater share, a position that mirrors the approach U.S. Rep. Mazie Hirono, her Democratic opponent for U.S. Senate, would take to help stabilize the federal retirement program.
Lingle, a Republican, said she was persuaded by the recommendations of two bipartisan deficit-reduction panels that the $110,100 cap on wages subject to payroll taxes should be increased. They are the National Commission on Fiscal Responsibility and Reform, and the Bipartisan Policy Center’s Debt Reduction Task Force.
An estimate by the National Academy of Social Insurance suggests that gradually raising the cap to about $215,000 over five years would cover 90 percent of all earnings — instead of 84 percent today — and meet more than a third of Social Security’s funding gap.
Lingle said she would also consider a gradual one-year increase in the retirement age to claim full Social Security benefits starting in 2027. Hirono opposes increasing the retirement age.
“I think it makes a lot of sense,” Lingle said of raising the payroll tax cap. “I think, from a mathematical point of view, it would be one of the key things to consider. It’s always been one of the options that I’ve been looking at.”
Lingle did not mention raising the payroll tax cap on Social Security as a priority during the primary. Her conversion, announced in a statement Sunday along with a new television advertisement about protecting Social Security and Medicare for seniors who are close to retirement, comes as Republicans are meeting at their national convention in Tampa, Fla.
Democrats have said that former Massachusetts Gov. Mitt Romney and U.S. Rep. Paul Ryan, R-Wis., the GOP’s candidates for president and vice president, are a threat to the entitlement programs. Ryan, chairman of the House Budget Committee, had proposed privatizing Social Security in the past, but he did not include that in his latest budget plans.
Lingle’s announcement puts her and Hirono closer together on Social Security, which could minimize it as a campaign issue in Hawaii.
“It may be surprising to hear Republican Linda Lingle suddenly singing a new tune on Social Security and Medicare — until one realizes that the Republican National Convention is about to get under way, where the Romney-Ryan ticket that Lingle supports has plans to essentially end Medicare as we know it and privatize Social Security,” Hirono said in a statement. “The very best way to protect Social Security and Medicare for our kupuna is to prevent Linda Lingle and the national Republican Party from winning the White House and the four seats they need to seize control of the United States Senate.”
Lingle said she believes it is reasonable to raise the payroll tax cap so it covers 90 percent of all earnings — as it did in 1983 — but would do it gradually because of the effect of higher payroll taxes on workers and the businesses that pay matching shares. Conservative groups such as the Heritage Foundation have criticized raising the cap as a “hefty tax increase” that could particularly hurt the self-employed and small businesses.
“One of the things we want to avoid right now at all cost is any kind of a shock to the economy,” Lingle said.
Hirono has called for raising the payroll tax cap as an issue of equity that would shift more of the burden to the wealthy. The cap is adjusted annually based on average wage growth, but the wages of higher-income workers, particularly the top 1 percent, have grown at higher rates than other workers. The Social Security Administration estimates that 6 percent of workers earn more than the $110,100 cap and would be subject to higher payroll taxes if the cap is raised.
Both Lingle and Hirono have cited their elderly parents — Lingle’s 87-year-old father, Hirono’s 88-year-old mother — as examples for why Social Security and Medicare should be preserved.
Lingle, aware of national politics, blamed “election-year posturing by Washington politicians of both parties” for leaving seniors worried about the future of the entitlement programs. But Democrats believe Lingle is attempting to distance herself from the national Republican Party, which will be assailing Hawaii-born President Barack Obama this week in Tampa.
Her announcement on Social Security and Medicare followed a statement on Friday reaffirming her support for abortion rights. Lingle, who is not attending the convention, said she sent a letter to Republican National Committee Chairman Reince Priebus and the leaders of the GOP platform committee to consider the diverse views within the party before adopting a platform plank against abortion.
