Share this story
Close X
Switch to Desktop Site

That $40 billion sideshow

Saving social security is too important an issue in itself to become a politicians' sideshow in the budgetmaking process. Unless something is done, according to federal figures, there will be reserves for less than nine weeks of benefits by the end of 1983, or a mere 29 days by the end of 1985.

Something can be done -- about this immediate problem as well as the long-range needs of a system facing statistics like this: the number of beneficiaries per 100 taxpaying workers will rise from last year's 31 to 50 by the year 2025 after the ''baby boom'' generation has retired.

About these ads

But constructive action demands a bipartisan willingness to consider social security on its own rather than as a budgetary diversion. It started to become the latter when President Reagan and the Republican majority on the Senate Budget Committee called for $40 billion in social security savings without saying how. Then Democrats conveniently interpreted savings as heartless cuts in benefits and dropped budget-balancing for elephant-baiting. Then the President and his supporters had to deny they meant $40 billion in cuts, certainly not in present benefits.

Republican Senator Heinz went so far as to introduce a resolution removing the social security trust fund from the federal budget. A bold gesture. And perhaps not a vain one if it serves as a reminder that, whatever the condition of the rest of the budget, the future of social security is a kind of free-standing challenge that has to be addressed.

Mr. Reagan roused hopes early in his term when he bit a small social security bullet (reducing some benefits) -- but quickly spit it out under political fire. Then he proposed the sort of bipartisan commission that could lift social security out of the realm of rhetoric. But its report was put off until after this fall's election. Think of how much more productive the current social security debate could be if that report had been delivered April 15, as congressional leaders once appeared to favor.

We have written before about the range of remedies the commission has to consider: taxing benefits, assuming those wholly dependent on them would not reach a taxable income level; raising the eligibility age; increasing payroll taxes; calculating individual benefits according to individual contributions, with a floor for the needy provided from general revenues; financing the medicare portion from general revenues; switching to a welfare system funded by general revenues.

As for the immediate question of solvency raised by the Republicans' $40 billion of savings over three years: this assumes that the present borrowing of one social security fund from another cannot continue indefinitely. There will have to be either higher payroll taxes, restraint of future benefit increases, different eligibility requirements, new sources of financing, or some mixture of these. According to one calculation, a change of 3 percent in either taxes or benefits would reach half the goal.

In the long term, it has been projected that the system could operate without radical change if the combined employer-employee tax rate rose from the present 11 percent of taxable payroll for the pension portion of social security to 17 percent in the next century -- still less than the 20 percent in some European countries now.

Are Americans prepared to pay this much to continue a humane and useful system? They at least need to be seriously offered the alternatives by their leaders.

About these ads

And they should know of the potentially ameliorating factors in the outlook. Though the proportion of elderly dependent Americans is expected to increase, the proportion of young dependents is expected to decline. When these two groups of dependents on the middle generation are calculated as a ''dependency ratio,'' the figure peaked in 1965 and has been declining ever since. It is expected to continue to decline until 2005 and then go up to a plateau that still remains lower than in 1965.

Also there are economic and actuarial calculations that extend the working lives of Americans both because of the necessity for them in the labor force and their capacity to work longer.

In short, a combination of things could result in social security carrying on to meet the nation's needs without undue strain. But finding the right combination means getting together on the matter rather than playing football with it.

Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.