Why reform is tough

"It wasn't as easy [to reach a deal] as people remember it," says Eric Patashnik, a University of Virginia political scientist.

The root cause of Social Security's problem was the same then as today: a declining number of tax-paying workers per retiree, thanks to a growing number of older Americans. But the added twist of the time was that this problem was turbocharged by stagflation. Fast-rising prices were making the cost of Social Security soar, while a stagnant economy meant revenue remained relatively flat.

The Reagan administration was relatively eager to address the problem. However, a presidential trial balloon proposing deep cuts in benefits for early retirees proved highly unpopular - so much so that it was repudiated by the GOP-controlled Senate by a vote of 96-0.

Burned, the Reagan team handed Social Security off to a 15-member presidential commission headed by economist Alan Greenspan, who is today the chairman of the Federal Reserve.

The commission itself remained deadlocked through much of 1982. But eventually an inner group of negotiators, meeting in secrecy under White House auspices, helped craft a deal. Previously scheduled payroll-tax increases would be rolled forward, among other things. The age for full retirement benefits would be pushed back from 65 to 67.

One lesson here, say historians, is that a few people of will and knowledge can overcome a larger atmosphere of partisanship and mistrust. The commission included such prominent Republicans as Senate Finance Committee chairman and presidential aspirant Sen. Bob Dole of Kansas, and Democrats such as Robert Ball, a longtime commissioner of Social Security. A core group from both parties knew they had little choice but to hammer out a compromise - and they did.

"It was a high point of almost all of these peoples' careers," says Dr. Berkowitz of George Washington University.

But this statesmanship was powered by panic, in a sense. Both sides concluded that without action by early 1983 Social Security would have started to run a slight deficit by midsummer. Back then, the system had not piled up a large trust fund surplus - meaning there was a possibility that payments to seniors would be disrupted.

From this may come a second lesson: You need a consensus about what's broken before you can argue about the repairs. Today Republicans generally describe the situation as a crisis requiring urgent action. Democrats say it's not that bad, and add that personal accounts are irrelevant to the issue of program solvency, anyway. "In 1983 there was a bipartisan agreement on the problem. Right now we don't see that," says Dr. Patashnik of the University of Virginia.

The final lesson may be that when it comes to difficult social issues, divided government works. Democrats controlled the House in 1983, and had a stake in helping cobble together a Social Security solution. Out of power today, they may have less incentive to compromise.

"Divided government can make both parties believe they have ownership of a problem," says Patashnik.

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