Close Call for Social Security

A bipartisan commission hammers out compromise measures

For the bipartisan National Commission on Social Security Reform, the race to meet its Jan. 15 deadline for agreement on proposals to save the ailing Social Security system was a photo finish. "You may be collecting your Social Security before we finish this commission, but I assure you it will be there when the time comes," quipped Democratic Senator Daniel Patrick Moynihan of New York as he entered Blair House, the capital's official guest residence for visiting statesmen, where the eleventh-hour negotiations took place. Administration officials, led by White House Chief of Staff James Baker, conferred on and off with various combinations of commission members throughout the panel's last official day of existence. The group finally reached a compromise agreement that satisfied a majority of the commission's 15 members and had the blessings of the President and Thomas P. O'Neill, Speaker of the Democratic-controlled House, several hours short of midnight. Said a tired but pleased Alan Greenspan, a Republican economist and chairman of the commission: "All of us swallowed hard."

The negotiations had become deadlocked over the proper mix of tax increases (generally favored by Democrats) and benefit cuts (generally favored by Republicans). The final days of deliberation had all the hallmarks of shuttle diplomacy. A coterie of four prominent commission members, Republican Senator Robert Dole of Kansas, Moynihan, Republican Congressman Barber Conable of New York and former Social Security Commissioner Robert Ball, huddled repeatedly with Baker, Budget Director David Stockman and other Administration officials to hammer out a package of compromises. Half a block away, at the commission's offices, five conservative members, headed by Republican Senator William Armstrong of Colorado, chairman of the Senate Social Security Subcommittee, held sessions aimed at countering the emerging accord, which, they charged, relied too heavily on new taxes and too little on spending cuts. Greenspan, who had assumed the role of mediator in the panel's past imbroglios, scurried between the two camps, urging concessions. Armstrong, Republican Congressman Bill Archer of Texas and Democratic former Congressman Joe Waggoner of Louisiana were the only members to oppose the final agreement. "Increased taxes account for 75% of the deficit reductions," fumed Armstrong.

The reform package put together by the commission working group and Administration officials would produce $169 billion in revenue, enough to keep the system solvent through the 1980s. A key provision would accelerate hikes in the 6.7% payroll tax, to 7% in 1984; to 7.15% in 1986; 7.5% in 1988; and 7.65% in 1990. This is expected to raise an additional $40 billion in revenue from 1983 to 1989. Late in the negotiations, however, a major snag developed over a companion provision that would give workers an offsetting income tax credit for these extra payments in 1984. "The tax-credit idea is about the poorest part of this proposal," said Senator Armstrong, who denounced it as deficit deepening.