A Republican congressional proponent of Social Security reform warned President Bush Sunday not to rely on a sharp increase in government borrowing to overhaul the federal retirement program.
Sen. Lindsey Graham of South Carolina said reliance on borrowing to finance an estimated $1 trillion to $2 trillion in transition costs would be irresponsible and could undermine Bush's tax- and deficit-cutting goals.
"What I'm asking of the president, when it comes to the transition costs, be flexible," said Graham, who has proposed a temporary rise in payroll tax contributions to finance Social Security's shift to partial privatization.
"I think it's irresponsible to borrow the whole trillion dollars," he told "Fox News Sunday."
Few financing options
Bush, who has made Social Security reform a top priority of his second term, reiterated his opposition to an increase in payroll taxes to pay for reforms he says must include the creation of new personal investment accounts.
Personal accounts would allow workers to hold a portion of their Social Security payroll taxes as private stock and bond investments.
But by ruling out higher payroll taxes as a means to fund the transition to personal accounts, Bush appeared to leave few financing options aside from new borrowing.
White House officials say borrowing would not endanger the president's other financial goals, which include a pledge to cut the federal deficit in half by fiscal year 2009.
On Sunday, the White House said Bush remained open to suggestions as he kicked off his reform strategy last week in meetings with U.S. lawmakers and Social Security trustees.
"The president has not prejudged any solutions and looks forward to working with Lindsey Graham and other members of Congress to find ways to change Social Security," said White House spokeswoman Suzy DeFrancis.
Graham, who said he has proposed raising the annual salary cap for Social Security taxes from $87,900 to $150,000, said a big jump in borrowing could increase the deficit to more than $700 billion.
"I don't think you can make the tax cuts permanent, have alternative minimum tax relief and borrow the entire transition costs -- which is over a trillion dollars -- and have deficits that we can sustain," the South Carolina Republican said.
Democratic Sen. Jon Corzine of New Jersey, former head of the Wall Street investment firm Goldman Sachs, said personal accounts would undermine Social Security's long-standing role as a provider of stable guaranteed retirement benefits.
"In any given 10- or 15-year period, you can have ups and downs in markets that could leave the retiring group of individuals at that point at great risk," he said on the same program.