Robert Novak

WASHINGTON -- More than the ascension of Nancy Pelosi & Co. was disturbing congressional Republicans last week. They worried that George W. Bush may proceed down the same path that made his father a one-term president. Thus, they ask this question: Will the current President Bush embrace a tax increase that would produce potential economic disaster and guaranteed political catastrophe?

Henry M. Paulson Jr. is a shark on Wall Street but a rookie on Pennsylvania Avenue. As Bush's third secretary of the Treasury, he has engaged in secret bipartisan talks discussing an increase in the current $97,500 limit on personal income subject to the Social Security payroll tax. That would spike up the top marginal tax rate, demolishing supply-side tax principles that Republican administrations have purportedly followed for 26 years.

Paulson certainly has given the impression in those discussions that he is amenable to raising the payroll tax, but a senior White House aide cautions this decision has not yet been made. "There is somebody higher than Hank Paulson, and it is George W. Bush," he told me. Presidential adviser Karl Rove (who was not the aide I just quoted) attended conservative activist Grover Norquist's weekly meeting last Wednesday and offered to bet anyone $5 that there would be no increase in the payroll tax base. But Bush himself has not unequivocally ruled out such a move, as he has in rejecting any increase in the personal income tax.

White House spokesman Tony Snow, an ardent supply-sider as a columnist and commentator who must be personally against a higher payroll tax, dances around the question in public briefings. Congressional Republicans are running into a stone wall from usually cooperative Treasury and Social Security administration officials when they request economic data that would demonstrate the folly of lifting the payroll cap.

But Paulson is the source of most Republican apprehension. He has engaged in private talks with Republican Sen. Lindsey Graham of South Carolina and Sen. Joseph Lieberman of Connecticut, who now calls himself an "Independent Democrat." Graham for more than two years has been seeking Lieberman's participation in a bipartisan Social Security reform that includes a higher payroll tax base.

Robert Novak

Robert Novak (1931-2009) was a syndicated columnist and editor of the Evans-Novak Political Report.

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