Social Security: A Debt-Threatened Dream

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Security statistic of all: since 1970 average Social Security benefits, adjusted for inflation, have risen a remarkable 37%; average weekly wages, adjusted for inflation, have not increased at all. Says Ricardo-Campbell: "We have been taking real income from young people who are heads of households, who don't own a home, who don't have the assets, and giving it to the old people," at least some of whom live in mortgage-free homes and who have accumulated savings." Says M.I.T.'s Thurow: "If real wages go up, real Social Security benefits should go up. But if real wages go down, you can't expect the elderly to be immune from all the problems facing the economy."

Public opinion just might be swinging toward some such solution. Harris polls conducted for the National Council on the Aging last year found that 73% of those questioned generally opposed reductions in COLAS. Those responding to a March Gallup poll, however, voted narrowly in favor of lower COLAS as part of a general hold-down on federal spending, 48% to 44%. The trouble for politicians, of course, is that the only people who are likely to vote for or against a candidate on the basis of that one issue are the aged, and they are still passionately opposed to any tampering with COLAS. This opposition is basically driven not by economic calculation but by plain fear of a poverty-ridden old age—and this fear is an understandably powerful motivation. Like many other retired couples, Evan Francis, 75, and his wife Mildred, 77, of Los Angeles, wrongly interpret any talk of lower future benefits as a threat to the $582 a month they receive from Social Security. Says Evan: "If the Government cuts it off, there would be a revolution in the streets."

A continuing drop in the inflation rate will of course automatically and painlessly reduce COLAS. As President Reagan observed last week: "By the time next year rolls around, there maybe won't be any cost of living increase, because there won't be any increase in the cost of living." It would be risky to assume that this happy state will indefinitely continue: there have been too many periods in the past when inflation dwindled, only to flare up again.

For the longer run, the most plausible idea for reforming Social Security is to reverse the trend toward earlier retirement by gradually raising the retirement age at which full benefits are paid. Advocates note that the same advances in medical science and health care that have been lengthening the lives of the retired would also permit them to keep working for more years. Congress recognized this reality in 1978 when it voted to raise the mandatory retirement age from 65 to 70. If the age for collecting full Social Security benefits were raised to 68 from 65, and the early retirement age to 65 from 62, the savings to Social Security would be tremendous.

The key to any attempt to raise the eligibility age, Social Security experts agree, is to phase in any change slowly, giving workers who are now in late or mid-career time to adjust their retirement plans. The central feature of Reagan's disastrous proposals last May was a reduction for those who retire at 62 from 80% of full benefits to 55%—starting Jan. 1, 1982. The Senators who voted 96 to 0 to oppose his plan protested vehemently that it would be an unconscionable blow to people who