Social Security: A Debt-Threatened Dream

• Share

(2 of 12)

said nothing at all about Social Security cuts. Only eleven of the 54 G.O.P. Senators are up for re-election this fall. But every member of the House, Republican as well as Democrat, faces the potential wrath of elderly voters worried about a cut in their benefits. Rebelling against the $40 billion proposal, House Republican Leader Robert Michel of Illinois warned, "You've got to take that off the table before you even start" drafting a budget.

Caught in the crossfire, Reagan artfully dodged the matter at his press conference Thursday night. He said, "The Social Security issue is obscuring the main problem, which is: pass the budget." He assured the elderly that they would go on receiving their present pensions, plus a 7.4% cost of living increase due July 1. Any future changes, he asserted, would have to await the year-end report of a bipartisan commission headed by Economist Alan Greenspan, which he and Congress appointed last December in a transparent effort to defer the issue until after the November congressional elections. The President did concede that there are times when "you could temporarily put a ceiling on a cost of living adjustment," which he correctly pointed out would not be a cutback but simply a reduction in the amount of increase.

In short, the outlook is for more wrangling and no action on Social Security, at least until after a bitter congressional election campaign in which Democratic candidates will portray themselves as saving the system from Republican assaults and many G.O.P. opponents will undoubtedly pledge undying fealty to Social Security.

Reforming the system, however, cannot be evaded, even though the day of reckoning—when Social Security runs out of money—can and probably will be postponed. One way: allow the retirement fund to continue borrowing from the separate disability and Medicare funds, as it is doing this year. But the three funds could all too easily run dry during 1984; not only pension checks but disability payments and Medicare reimbursements to hospitals that care for the aged sick would be delayed. At very best, the system will barely squeak through the 1980s, in constant danger of running short of funds. That narrow escape will occur only if the economy booms, thus raising tax collections more than anyone dares to predict. Even then, Social Security faces a long-range crisis in the early 21st century as fewer and fewer working people have to support more and more elderly.

Politicians have made several attempts to solve the problem, but nothing has worked. Social Security beneficiaries oppose with passion and fury any notion that they should not get at least inflation-matching increases, and they are likely to exact speedy revenge at the polls. Their concern is currently being fed by the prospect that they may be made scapegoats for a financial mess created primarily by the overly generous $750 billion tax cut passed by Congress last year at Reagan's insistence. In fact, Social Security is an obvious target for anyone seeking to hold down federal spending, and thus the deficit, simply because the program is so enormous. Social Security benefit payments have rocketed from $33.8 billion in fiscal 1970 to an estimated $206.5 billion (including Medicare) in the fiscal year starting next Oct. 1. This total amounts to 26% of all anticipated federal expenditures.