Social Security: If It Ain’t Broke. . .

Three of the more expensive programs the federal government administers--directly or indirectly--are the Postal Service, the Defense Department and Social Security.

The Postal Service has declined to such lows of performance that once-unthinkable proposals to privatize mail delivery arouse serious discussion. The Pentagon specializes not merely in such trivialities as coffee makers expensive enough to grace Donald Trump’s breakfast table but--far more dangerously--in fighting vehicles that sink instead of swim, helicopters that crash with sickening frequency and B-1 bombers so infested with technical bugs that they endanger their crews instead of striking terror into the hearts of Soviet generals. Pentagon weapons procurement fiascoes have been frequent enough to embolden Congress to check the endless increases in appropriations that former Defense Secretary Caspar W. Weinberger annually sought.

The last enterprise, of course, is Social Security. Since its inception, it has enjoyed enthusiastic support not only from elderly recipients of monthly benefit checks but from their adult children, who lack both space and resources to house and support their parents. President Reagan’s early attempt to reduce this entitlement was overwhelmingly rejected indeed, by a unanimous Senate vote.

Since then, Reagan has been notably quiet on the subject, except when he pledges yet again his solicitude for the financial welfare of the senior set. Social Security has been so successful that the percentage of the elderly below the poverty line is less than that of the population at large, a statistic that infuriates old-fashioned souls who seem to think that poverty is the natural and proper accompaniment of old age.

Conservatives ought to support Social Security for a reason dearer to their hearts than mere altruism. As a result of 1983’s acceleration of payroll tax increases and slowing of the rate of benefit increases, the main Social Security trust fund is likely to record a $30-billion surplus in fiscal 1989. On generally accepted assumptions, this surplus will balloon to $1.3 trillion by the turn of the century and $12.4 trillion by 2030. The federal deficit would be $30 billion larger without this fiscal year’s Social Security contribution. The young ought to be reassured by the prospective solvency of the system more than 40 years from now.

Yet Social Security is under severe assault from the young, who have been led unwarrantedly to fear that, by the time their own golden years arrive, the cash cupboard will be bare. Vaguely liberal journals such as the Washington Monthly and the New Republic complain that benefits flow to rich folks who don’t need them as well as to the majority who depend upon them. Moreover, say both liberal and conservative critics, Social Security payroll taxes are highly regressive. Currently, a single rate, 7.5%, applies to earnings--but only up to $45,000. Accordingly, an executive rewarded with a $450,000 salary is taxed at one-tenth the rate of a less-fortunate soul at the $45,000 taxable maximum.

A business group headed by former Commerce Secretary Peter Peterson has taken out full-page newspaper advertisements solemnly warning that Social Security entitlements must be curtailed in the interests of the nation’s solvency. We must sacrifice, according to this message, if once more America is to be No. 1 in the world.

I’d be more inclined to take the Peterson group seriously if it advocated higher inheritance taxes and a restoration of progressivity to the personal income tax, say, by taxing large incomes more heavily. It never fails to amaze that business groups exempt investment bankers and overpaid business executives from the sacrifices that they would gladly impose on far less financially endowed fellow citizens.

Many of the conservatives who shed crocodile tears over the regressivity of payroll taxes favor a value-added tax or some other version of a national sales levy. Such taxes are not only obviously regressive, they are also inflationary.

However, there is a simple solution available: Convert payroll taxes into progressive levies and apply them to all earnings, those of $1-million-plus chief executives as well as those of families barely surviving at or below the poverty line. I offer this proposal, without charge, for inclusion in the Peterson group’s next proclamation.

I am no partisan of conspiracy theories. But it is hard to avoid the suspicion that many of Social Security’s critics pursue a concealed agenda. They have cooked up assorted horror stories in order to discredit one of our few genuinely successful universal social programs in order to substitute private retirement substitutes for the prosperous--and grudging welfare for low-income families.

The genius of Social Security is precisely in the social bonds that unite the interests of the poor, the prosperous and the highly influential affluent. Those who attack Social Security--deliberately or otherwise--seek to undermine one of the few institutions that unite instead of divide Americans in widely different financial circumstances. As the old adage in the social welfare community runs, programs targeted at poor people are poor programs.

Turning Social Security into a welfare program guarantees the same stigma as now attaches to Aid to Families with Dependent Children, food stamps, Medicaid and other means-tested initiatives. These programs are vulnerable to the assaults of budget-cutters. Do we really want Social Security to join them? Is the spectacle of a few millionaires cashing Social Security checks so offensive that we should repeal the implicit social contract among the poor, prosperous and wealthy that has thus far preserved our most successful social program?