What 1980s hold for US jobs, social security
Social security touches more lives than any other US government program. Thirty-six million US citizens get a benefit check once a month, courtesy of the payroll tax paid by 116 million workers.Skip to next paragraph
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Most of the US population thus has a personal interest in the recommendations of the National Commission on Social Security Reform. How would the commission's package of proposed changes in social security affect retirees? What would happen to workers' taxes?
* Retirees' checks would keep coming right on time, and they wouldn't be a penny smaller. But the annual cost-of-living adjustment, normally tacked on in July, would be postponed until next January. COLA increases would thereafter always begin the first of the year. This would ''cost'' the average single retiree $133 this year, the American Association of Retired Persons estimates. A retired couple would lose $222.
* Single retirees whose incomes are $20,000 or more ($25,000 for joint-filing couples) would have to pay income taxes on half their benefits. Perhaps you're a single retiree whose social security payment is $500 a month. Add in a company pension and income from investments, and you make $30,000 a year. This new tax would cost you $689 a year, the NCSSR estimates. A retired couple making around
* Workers might have a bit more to grumble about on payday, as already-scheduled tax increases are moved forward a year. In 1984, the social security tax would rise to 7 percent. This would cost the average $21,000-a-year worker $1.21 a week, says the commission. Further tax hikes would cost the average worker $1.87 more a week in 1988, and an extra $2 weekly in 1989.
But in 1984 only, workers in effect wouldn't really have to pay extra tax, as they'd be allowed to credit the social security tax increase against their regular income tax.
* Employees of nonprofit organizations would have to join social security. About 15 percent of such workers currently aren't in the system. Newly hired federal workers would also enroll in social security, instead of the Federal Civil Service Pension system.
* If you're self-employed, your social security tax would increase significantly, as you'd be forced to pay the full combined employee-employer rate, instead of the current three-quarters rate.
How interest groups of US citizens feel about these changes depends on where their vested interest lies.
The American Association of Retired Persons (AARP) is ''flatly opposed'' to the proposed changes, says staff specialist Laurie Fiori. The COLA delay, says Ms. Fiori, represents a cut in benefits for the elderly, costing the average single retiree $130 a year.
The AARP is also against the taxation of social security benefits, which hits middle- and upper-income retirees hardest and turns the system ''into a welfare program, pure and simple,'' Fiori claims.
The Ralph Nader-directed Congress Watch, on the other hand, says taxing beneficiaries makes eminent sense. ''The move to tax benefits is an important development that has been thwarted in the past by strong political opposition,'' says Gene Kimmelman, a Congress Watch staff attorney.
Business groups aren't exactly leaping for joy over the prospective changes, as they would have to pay part of a payroll tax increase. The National Federation of Independent Business, a group of small businesses, opposes the plan; the US Chamber of Commerce is still making up its mind, though it has opposed tax increases in the recent past.
''I think the business community will swing behind supporting the plan,'' says a business lobbyist. ''The initial reaction, because of the tax increases, was 'what a terrible plan,' but that was their hearts speaking. Cooler heads will prevail.''
Labor unions generally support the social security package. Lane Kirkland, head of the AFL-CIO, was a member of the commission and agreed to the prospective reforms. But government workers are one labor group that isn't too pleased. They feel new federal employees are being forced into social security for entirely political reasons.