Social security called a good investment

What is the best investment an individual makes? Social security. At least that's the way John A. Svahn, commissioner of the Social Security Administration, sees it.

Now wait a minute, a taxpayer might say. Isn't the social security system leaking? Unless new funds are pumped into it soon won't it begin to look like the government's version of Chrysler Corporation? Don't the polls show a majority of Americans don't expect to ever get back the money they put into the system?

All true, agrees Mr. Svahn. But looking at the big picture, so to speak, shows a different image of social security.

For example, he pointed out, an individual who invested $22 in the first year (1935) the social security system started, got that back in the first paycheck when they retired. In fact, an individual retiring today at age 65 would get back his or her total investment in the first year they retire since a maximum of $14,700 would have been contributed to the system.

By way of comparision, someone just entering the work force at age 20 will contribute $335,000 in his lifetime. An obvious question: Will he get this back in his lifetime?

Speaking recently at the Women's Economic Round Table in New York, Mr. Svahn and William J. Driver, a former social security commissioner and now vice-chairman of Save Our Social Security, agree they should, if Congress is able to find a way to get the Old-Age and Survivors Insurance Trust Fund (OASI) through to 1990. At that time, scheduled tax increases combined with some demographic changes will start to revitalize the system. Mr. Driver figures that once the short-term funding problems are solved, social security is funded until the year 2025.

Unfortunately, at current outflow rates, the fund will lack sufficient funds for all its obligations in the fall of 1982. Although there are proposals to shift some funds from the Hospital Insurance (HI) Trust Fund and the Disability Insurance (DI) to the OASI, Mr. Svahn says that still doesn't solve the problem. Instead of spending $18,000 more per minute than is taken in, social security will spend $12,000 more per minute than it takes in.

By shifting funds, points out Dr. Carolyn Weaver of the Senate Finance Committee staff, social security will be insolvent in 1984 instead of 1982.

Mr. Driver believes the way to save social security is break it away from its trust funds and let it tap the US government's General Fund. After all, he reasons, some 70 percent of the recipients of social security have no other source of income. Thus, social security can be construed as a social program which keeps 12 to 13 million people out of the poverty level.

Mr. Svahn, however, maintains that breaking social security away from the trust funds will mean the end of the current system. It will get Congress involved, Mr. Svahn reasons. And, once Congress is involved it will set eligibility rules - other than those already in place - in terms of income levels.

Furthermore, asks Mr. Svahn, ''What general funds are the social security system going to tap? Anyone reading the newspapers knows that there is a deficit. So you are just adding to the deficit by breaking away from the trust funds.''

Both Mr. Svahn and Mr. Driver pointed out there are some touchy ''political'' solutions that haven't been tried yet. Federal employees could be taxed and included in the system. ''You hear a lot about this when senators and congressmen visit their home districts, but not that much when they are back in Washington,'' says Mr. Svahn. However, since Congress would probably grandfather-in current employees, only new employees would have to pay for their benefits. Thus, the actual addition in revenues would be slight.

Another ''touchy suggestion'' is to tax benefits. For those who have a low income, the effect would be negligible. However, for those with private pensions and other sources of income, it would result in a greater tax bill. Persumably, the tax would be rerouted to the OASI. Again, this is a politically sensitive proposal.

Still other suggestions include efforts to discourage people from retiring early by awarding them an additional 7 percent for each year they don't draw down on their benefits, or just flat-out raising the retirement age. However, the latter suggestion again is politically difficult.

Obviously, a solution to social security's problem must be found. However, Congress is not expected to tackle the problem until the ''eleventh hour,'' one Congressional source says, possibly hammering out a bill in 1983.