Social Security: A Debt-Threatened Dream

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had already made plans to retire within the next year.

Texas Democrat J.J. Pickle, chairman of the House Ways and Means Subcommittee on Social Security, at that time was drafting a bill to raise from 65 to 68 the retirement age at which full benefits could be collected, in small steps beginning in 1990 and ending in the year 2000.

In one of the more egregious examples of the partisanship that has dogged all efforts at Social Security reform, House Speaker Tip O'Neill ordered Pickle to go no further. The reason: O'Neill saw an opportunity for Democrats to assail Reagan as an enemy of Social Security, and he did not want the issue clouded by anything that could be interpreted as a Democratic plan to reduce benefits for anybody.

A more reasonable objection to raising the retirement age is voiced by Harvard Economist William Hsiao. Says he: "Armchair professors and bureaucrats who sit behind desks pushing a pencil all day can work until age 68 without any serious difficulty," but manual workers are too worn out by physical labor to stay on the job that long. Others insist that many of the people who now retire at 62 do so less because of choice than because of failing health or inability to find another job if they are laid off in their early 60s. For those reasons, Pickle's bill, while raising the age for full benefits to 68, would have permitted retirement at 64% of normal benefits at any age after 62.

Though Pickle's bill has been sidetracked, the idea of delaying retirement remains a plausible way to ease the burden on the system. Beginning this year, Social Security laws offer a 3% increase in eventual retirement benefits for each year that workers stay on the job past their 65th birthday; some experts suggest raising that bonus to 8% or 10%. House Majority Leader James Wright, another Texas Democrat, talks of substituting income tax credits for each year of continued employment past age 65.

Some other reform proposals that are worthy of consideration but need more exploration before they can enter the political debate:

> Tax Social Security benefits. No one proposes applying income taxes to the half of benefits that are financed by taxes levied on employers, but some economists advocate taxing the half that is financed out of deductions from workers' paychecks. Mickey Levy, in a study done for the American Enterprise Institute, a conservative Washington-based think tank, calculates that three-fifths of all Social Security beneficiaries would pay no tax anyway, because their incomes are too low and their exemptions too high (people over 65 get double the current $1,000 personal exemption from income taxes). Taxes paid by the other two-fifths, he figures, could be recycled back into the Social Security system and would not only ease the current cash squeeze but also help build reserves for the future. However, no politician wants to take on the job of explaining to retired people why any of the benefits they regard as a sacred right purchased by past taxes should be subject to a new tax.

>Cover everybody. At present, some 3 million federal employees do not contribute to Social Security. They belong to a separate civil service system that gives them higher pensions. Bringing them into Social Security would bolster the system's reserves and also end the "double dipping" that permits