Should Nation's Young Be Restless? Social Security Funds May Run Out

DEEPLY divided, a bipartisan commission enters its final deliberations tomorrow on a controversial plan to scale back Social Security and other entitlements for millions of Americans.

The panel chairman, Sen. Bob Kerrey (D) of Nebraska, insists that drastic action is needed now to avert the future bankruptcy of Social Security.

Among other steps, Senator Kerrey and his vice chairman, Sen. John Danforth (R) of Missouri, favor a gradual increase to age 70 in the retirement age for full Social Security and Medicare benefits. They would also means-test all entitlement programs.

Critics, including liberal Democrats and spokesmen for organized labor and the elderly, denounce the plan as a betrayal of America's workers and its neediest citizens. They say it relies too heavily on benefit cuts and not enough on health-care cost containment and tax hikes.

The plan represents ``the most fundamental attack on Social Security and Medicare since their beginning,'' contends United Mine Workers President Richard Trumka, a commission member.

The panel's disagreements highlight one of the most politically charged issues in Washington.

Because of its internal differences, the Bipartisan Commission on Entitlements and Tax Reform tomorrow could end its last scheduled session without fulfilling its mandate. President Clinton charged the panel in November 1993 to recommend ways to hold the federal deficit to the present 2.3 percent of US economic output through 2030.

The Kerrey-Danforth plan would cut the Social Security tax by 1.5 percent and require workers to invest the savings in Individual Retirement Accounts. Social Security, Medicare, unemployment insurance, and certain veterans' benefits would be reduced for high-income recipients. Additional proposals include capping and cutting back programs such as Aid to Families with Dependent Children and food stamps.

To be endorsed by the commission, the plan requires the backing of 20 of its 32 members. Kerrey concedes, however, that the current plan is ``very, very unlikely'' to receive more than five votes.

The dissension reflect early jousting over the 1995-96 budget. The central issue is the deficit. With the 1996 presidential election looming closer, almost any approach is fraught with political risks.

Republicans are promising a balanced-budget amendment and unspecified steps to eliminate the deficit by 2002. They rule out tax hikes. Clinton says he is mulling a middle-class tax cut. Neither side explains how it will reach its goals without deepening the deficit.

``What the commission is pointing out is that none of those choices are easy,'' says Leon Panetta, the White House chief of staff. ``It's easy to talk about the problem, but it is tough to do something about it.''

IN arguing for his package, Kerrey says that entitlement programs and interest on the national debt already make up 60 percent of federal expenditures. Without reforms, they will consume all federal revenues by 2012, he says.

He argues that his measures will not hurt people who are more than 50 today and that their phased implementation will allow those it will affect sufficient time to prepare for its impacts.

Opponents claim that Kerrey has underestimated his plan's impact, with Mr. Trumka saying that it will leave ``millions of elderly Americans without any health- care coverage at all.''

``This package is too heavy on Social Security and Medicaid benefit cuts for the very poor,'' agrees commissioner Bob Greenstein, the executive director of the Washington-based Center on Budget Priorities.

He says that while he agrees with some of the plan, he favors ``more closing of upper-income tax breaks to help address some of the gap, and I would look at small adjustments in the payroll tax.''

Panel member Thomas Kean, a former GOP governor of New Jersey and now Drew University president, says there may be provisions of the plan he could support. But, he indirectly criticizes its authors for restricting input from fellow commissioners.

``My questions really lie in what the consequences are if we do this,'' he says in a Monitor interview.

Even some of the plan's few backers want changes. Pete Peterson, a panel member and hard-line antideficit investment banker, argues for swifter implementation, saying: ``The plan is too delayed.''