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And now -- social security

May 11, 1981



If anyone still doubts that a major reordering of political and social priorities is underway in the US -- as reflected in the Reagan administration's impressive budget victory last week -- what is happening to the social security system should more than bring the message home. Congress and the administration are now on the verge of devising ways to trim back the huge outlays under that system and other federal retirement programs.

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The recent recommendation by the Senate to trim $7.9 billion in social security benefits next year is believed to be the first time since the mid-1930s that a branch of Congress has gone on record favoring deep cuts in the system, which has become the most widely backed of all federal transfer programs. Today it accounts for something like 20 percent of total federal outlays. During fiscal year 1982 alone the social security system is scheduled to disburse $140 billion to 36 million Americans.

The need for reform is urgent. And while many older Americans will be concerned about the direction of reform, they should understand that without changes the system itself may collapse. The true danger for Americans is not that reforms will be made, but that they may be short-range or cosmetic in nature rather than thorough and far-reaching. It must be better understood by the public that the restructuring of the system is necessitated by present and future economic conditions, and that intelligent reform will work in the best interests of all citizens. Failure to find solutions will only put off the day of reckoning for persons receiving benefits as well as the proportionately shrinking work force funding the system.

The problem is essentially mathematical. Fewer and fewer workers in the decades ahead will be funding a system for more and more retired persons, and the system, based on the current formula used to calculate payments -- the Consumer Price Index (CPI) --will too often by paying out benefits that actually outpace the inflation rate. There already is concern that one of the three social security trust funds may go bankrupt next year; some analysts see even the other funds eventually doing the same thing.

What is intriguing in the emerging congressional reexamination of social security is the role of the administration. During the presidential election, Mr. Reagan promised that he would not fundamentally alter social security as part of his economic recovery plan. Retirement benefits, he said, were to be part of those "safety net" programs left untouched by federal budget officials. And Mr. Reagan has indicated that he would not seek reform or scarpping of the CPI.

Last week's 49 to 42 Senate vote, however, raises a question about whether the administration may in fact be covertly signaling its support of changes in the system. The Senate vote is a nonbinding recommendation to congressional tax-writing committees that, starting July 1, cost-of-living increases should be based either on average wage increases or on the CPI -- whichever is lower. The Senate would also delay payment of increases from July 1 to Oct. 1 starting in calendar year 1982.

The administration has yet to propose its plan. But a press spokesman has said that $8 billion in cuts will have to come out of such federal bernefits areas as social security disability payments; supplemental security income; veterans', military, and civil-service retirement programs; and the railroad retirement system.

US retirement programs must be preserved. But that mea ns they must be put on a sound financial basis.