Social Security: A Debt-Threatened Dream

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COVER STORY

Big deficits for Social Security, small chance for reform

Ronald Reagan last week called it "a political football" kicked around by "demagoguery" and "falsehoods." To one of the President's advisers it is "the most sacred cow we have around here." Democratic Senator James Sasser of Tennessee believes that "it might well be the dominant issue in this fall's campaigns." Even last week Senate Republicans were pitted against House Republicans, to the glee of their Democratic adversaries, and a meeting of a blue-ribbon presidential commission degenerated into a partisan shouting match (see box).

The subject is Social Security, the nation's biggest, broadest and probably most successful social program. To some 36 million people, nearly one American in every six, the Social Security system now provides a monthly check promising that old age, widowhood or disabling injury will not throw them into poverty. To 116 million others who pay Social Security taxes, the system offers assurance that they too will be taken care of when they become too old to work.

But after more than 40 years during which such protection has been taken almost for granted, the nation faces a distressing question: Just how much Social Security can it afford? The answer: not as much as the formulas now written into law would provide in the future.

After decades of overambitious expansion, Social Security is quite simply running out of ready cash to get through the 1980s. Right now it is paying out in benefits $17,000 more than it collects in payroll taxes every minute of every hour of every day. At that rate, the trust fund on which 31.6 million pension checks are drawn every month will be nearly empty by July 1, 1983. Social Security checks would have to be held up until additional taxes could be collected, and that could take weeks, during which the elderly, many of whom depend on those checks for most or all of their income, would fall behind in paying rent, food and fuel bills.

That dismal prospect was central to a political drama that began two weeks ago. Senate Republican leaders met with Administration officials to cobble together some kind of budget for fiscal 1983 that would produce overall federal deficits less gaping than those foreseeable under President Reagan's initial proposals. They agreed on a resolution calling for, among other things, $40 billion in "savings" to be taken out of the $568 billion in Social Security expenditures now expected over the next three fiscal years. The $40 billion represents about the amount by which Social Security benefit payments are expected to exceed tax collections, but the resolution designedly gave no hint as to whether the savings would be accomplished by reducing future benefits, raising taxes, or whatever. Chairman Pete Domenici of New Mexico got the Budget Committee in the Republican-controlled Senate to approve the plan on a partisan 11-to-9 vote.

Democrats, who view Social Security as one of the New Deal's proudest achievements, howled that the Republicans were trying "to balance the budget on the backs of old people." The Budget Committee in the Democrat-controlled House last week passed a competing resolution to trim federal deficits primarily by reducing military spending and raising non-Social Security taxes; it