Despite alarms, social security will last for a long time

Is the social-security system going to go bankrupt, leaving pensioners in the financial lurch? No! the experts say.

Despite all the grousings, despite the rising payroll taxes in 1981 and 1982, despite the fact that proportionately fewer workers will be paying into the social-security system as the US population grows older, social security will still be around (and likely flourishing) right through and well into the next century.

"It's absurb to think that the [social security] system will be abolished," says Martha Derthick, director of the governmental studies program at the Brookings Institution. Rather, says Dr. Derthick, who is a leading expert on the social-security system (and author of the award winning critique, "Policy Making for Social Security"), the question really is "How will the system be changed?" How will it be modified to reach the largest number of recipients, yet do so without imposing an intolerable tax burden on the working age population?

Dr. Derthick, for her part, believes the "system will grow and absorb more private pension programs." At the same time, she believes that there is a strong likelihood that at some point lawmakers will turn to partial funding from general tax revenues, as proposed during the past several years by the Carter administration.

The most likely scenario would be to shift the medicare portion of social-security funding over to general revenues, leaving the pension plan aspects of the system intact.

In fact, the trend is already in that direction, according to many analysts here.

During the past year, lawmakers have taken steps to tighten up the disability aspects of social-security programs.

Moreover, the hefty new tax increases coming into line for the remainder of the 1980s is also certain to trigger calls for greater use of general revenue funding.

In 1981 the payroll tax rate will jump to 6.65 percent from 6.13 percent in 1980. The wage base, meanwhile, will climb to $29,700 from $25,900. There will also be additional tax hikes after that:

Year Tax rate Wage base 1982 6.70% $31,800 1983 6.70% $33,900 1984 6.70% $36,000

Despite the rising tax load, however, no major elected leader has seriously broached the idea of entirely scrubbing the system. In fact, during the recent presidential campaign, both party platforms specifically called for bolstering and continuing the program.

The Republican platform, for example, called the system a "precious lifeline for millions of the elderly, orphaned, and disabled." The GOP platform called for an end to mandatory retirement (prevalent in many firms) and ending earnings limitations upon social-security benefits. It also opposed efforts to tax social security benefits.

Likewise, the Democratic platform opposed taxation of benefits, as well as an imposition of any "caps" (ceiling) on benefit levels. The Democratic platform also was against attempts to raise the "age at which social-security benefits will be provided."

The important consideration in noting these platform positions, say analysts here, is to pinpoint the substantial degree of unanimity among the nation's lawmakers (and presumably the public at large) on social security. For now at least, the system is well integrated into US society, and any major changes would likely precipitate public outrage.

That view is widely accepted on Capitol Hill, as well as among many economists.

According to a key source with the Senate Finance Committee, no significant legislative effort is expected later this year or in 1981 involving the nation's income and pension support system. Social security now touches almost every US family, either as contributors or beneficiaries. The system routinely mails out over 35 million checks monthly.

According to Dr. Derthick of Brookings, there will likely be continuing congressional increases in the payroll tax. There will also be renewed calls, she points out, for absorbing federal workers, (with their own pension plan) into the social-security system. But that is expected to be many years down the road, if at all.

What does seem clear is that the working age population of the 1980s can expect to find social security functioning (and writing those monthly retirement checks) well into the next century.

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