Cut social costs -- fairly
The effort to reduce the civilian side of federal deficits must be pushed even though military spending growth is the prime target for pronounced cuts now (see editorial above). Progress can be tested against a benchmark provided by a bipartisan group of former cabinet officials who got together earlier this year. They targeted the 1985 deficit for a reduction of $60 billion beyond military items. Americans ought to accept no less, whether or not they favor this group's particular means.
These means - endorsed by Michael Blumenthal, William Simon, Peter Peterson, Douglas Dillon, and their distinguished colleagues - include: a one-year freeze on cost-of-living adjustments in social security, veterans' benefits, and other major entitlement programs; a 4 percent cap on yearly inflation-indexing in subsequent years; and similar restraint on other subsidies and programs where not essential to the needy. Recognizing the cutbacks already in programs for the poor, these experts called for focusing fiscal reform on programs benefiting middle- and upper-income groups.
This regard for fairness needs to be maintained whatever the deficit-cutting avenues settled upon. Increased efficiencies should still be possible in medicaid and other programs for the needy without sacrificing services themselves. But subsidies of all kinds for individuals and institutions not in need have to be reexamined.
A basic necessity for both cutting spending and increasing revenue is a vigorous attack on unemployment. It is estimated by economists that each added percent of unemployment, lasting for a year, means an extra $13.3 billion in food stamps, jobless benefits, and other assistance - and $20 billion in forgone taxes.
For the long term, there is also much more to be done to increase federal income along the lines of reducing tax subsidies as in the revenue bill endorsed by President Reagan this year. Such entrenched ''tax expenditures'' as deductions for consumer interest not only cut revenues in themselves; they discourage the saving so important to bolster the economy and permit more revenues at lower tax rates. It is politically unrealistic, of course, to expect to do away with tax advantages on which millions of Americans have based their planning, such as mortgage-interest deductions, but this should not stop consideration of cuts in deductions for second homes.
Social security is currently estimated to contribute only - only! - $10 billion to a deficit of some $150 billion. But its funding plight has become symbolic of having to do something about government programs that ''entitle'' persons to higher and higher payments from the general pocket whether they need it or not.
How to make savings within the borders of fairness? Sustaining social security would be two-thirds of the way to solution, according to one estimate, with just one change: raising the retirement age by a mere month each year until in 36 years it would have reached 68 instead of the current 65. This would theoretically mean three more years of paying taxes into the system and three less years of taking payments out.
More immediate results would come from the one-year moratorium on cost-of-living increases mentioned by the bipartisan group. Another approach, seeking to maintain buying power for those on the lower rungs, would be to maintain the cost-of-living indexing but only on some part of the benefits; the first $500 has been suggested.
In a similar vein benefits, or benefits above a certain amount, could be included in taxable income on the assumption that those wholly dependent on social security would still not have taxes to pay. Also, fairness suggests that what already amounts to a ''means test'' for social security should be reexamined. This is the reduction of benefits according to income from employment but not income from investments. Perhaps the allowable amount earned after retirement could be increased - but with some level of investment income also having an effect on benefits.
In all this civilian-side deficit cutting due regard would have to be paid to not leaving anybody in the lurch. The danger is that more and more people will be left in the lurch if the process does not go forward and deficits increase.