Labor calls for borrowing to bolster social security funds

The social security system has real but correctable funding problems that have been ''deliberately overstated'' by its trustees, the AFL-CIO is telling members of Congress.

Labor's representatives on Capitol Hill are urging the House and Senate to ignore what they call alarming and misleading reports and act on ''manageable'' short-term problems.

Social security system trustees, members of President Reagan's Cabinet, recently reported that the system faces critical short-range problems in the 1980s, that it will build a surplus by about 1990 that should continue until about 2020 or 2025, but that serious long-range problems could develop after that.

The AFL-CIO concedes that the situation ahead for social security generally is as the trustees say.

Over the short term, the system must deal with the drain-off of billions of dollars in reserves since 1975. Old Age and Survivors Insurance funds have fallen from about $36 billion to $22 billion between 1975 and 1981. With the continuing large pay-out, there are warnings that funds may run out in the next year.

The AFL-CIO criticizes what it calls the alarmist presentation by the trustees. According Bert Seidman, the federation's social security director, the tone is intended ''to indicate that the system is essentially in very great fiscal trouble and that the only way to deal with that problem is to cut benefits.''

The White House last year requested cuts in benefits but later backed away under intense political pressure from Capitol Hill.

Instead of calling for immediate reductions, the administration said it would leave consideration of benefit levels to a presidential commission on social security reform.

Experts say that to head off social security's fiscal crunch, either the pay-out must be reduced substantially or there must be a new infusion of money.

Condemning proposals to cut benefits to keep the system in the black, Mr. Seidman says that Congress can correct ''very real short-term fiscal problems.''

The AFL-CIO says the fund can be bolstered by borrowing from reserves in social security's Disability Insurance and Hospital Insurance funds or from general revenue.

The loans during the 1980s could be repaid, the federation says, when the social security fund is expected to turn around about 1990--the result of increases in the social security tax already voted by Congress, and by changes in demographics when fewer workers are scheduled to retire and more are expected to join the labor force.

AFL-CIO, according to Seidman, would prefer actual contributions from general revenue to the social security system, a procedure that he says is used by other countries to help finance similar programs.

However, he notes that there is resistance in Congress to such an approach and that a simple borrowing authority has the best chance of passage.

Borrowing from the general fund over the next few years would worsen the nation's deficit problem. But AFL-CIO says this could be dealt with by ''doing something about the completely unjustified tax bonanza for the rich and for large, profitable corporations.''

Looking ahead into the years from 2020 on, Seidman says projections depend on ''imponderable factors that nobody can foresee now.'' When the social security program was set up in 1935, problems now being encountered could not be foreseen and, he adds, problems 50 years in the future are just as unpredictable.

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