Giuliani rejects raising taxes to avert Social Security crisis

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Republican presidential hopeful Rudolph W. Giuliani yesterday ruled out raising taxes to fix Social Security's looming crisis, saying he would form a bipartisan commission that he would tell to look at private accounts.

"I would rule out a tax increase for that purpose or for any other purpose," he told the Club for Growth, a free-markets advocacy group. "I think a tax increase would be very damaging to the American economy."

That's a reversal from three weeks ago, when he refused to rule them out in an interview with the Associated Press. "I would look at whatever proposal [a bipartisan panel] came up with and try to figure out how we can come up with a bipartisan way to do it," the former New York mayor said at the time.

Mr. Giuliani and fellow Republican presidential candidates Fred Thompson and Mitt Romney spoke to the club yesterday, with both Mr. Thompson and Mr. Giuliani saying they made mistakes in supporting the campaign-finance laws sponsored by their rival, Sen. John McCain, which have dramatically restricted the way interest groups can operate politically.

Mr. Giuliani was unabashedly apologetic, saying it was "a big mistake" and calling for a new system based on transparency rather than limits on groups' fundraising and spending. Mr. Thompson, a former senator from Tennessee, while contending the law has turned out poorly, defended the underlying concept.

"I still think the provisions dealing with soft money are good things," he said.

Mr. Romney, a former Massachusetts governor, vowed to resist tax increases for Social Security, saying he would turn to indexing benefits for inflation, raising the retirement age and introducing private accounts.

He vowed to veto excessive spending, promised a thorough review of government spending and said he would eliminate capital-gains taxes and taxes on dividends for those with incomes of less than $200,000. The rate currently is 15 percent.

Mr. Thompson went after his opponents' records on taxes, saying that while he was in the Senate fighting for tax cuts, his rivals were opposing them, and in some cases raising them in the guise of increased fees.

Mr. Thompson also criticized fellow Republicans for adding a prescription-drug benefit to Medicare in 2003, one of President Bush's signature domestic achievements, saying they blew a chance to win reforms and long-term cost savings at the same time.

While saying a drug program belongs in Medicare, Mr. Thompson said his party should have insisted on major changes to the rest of Medicare as part of a deal with Democrats.

"I would have voted against it," said Mr. Thompson, who retired from the Senate the year before the program passed. "As a leader of this country, there is no way you can justify it without insisting you get substantial reform."