Before Cuts, Pierce Myths on Social Security

During the presidential campaign, George Bush repeatedly denied charges by Democratic rival Michael S. Dukakis that, if elected, he would cut Social Security benefits in order to reduce the federal budget deficit.

There is every reason to believe that Bush meant what he said. Now that he has been elected, however, a whole parade of people--many of them Democrats--are pressing him to change his mind.

Those urging him to put Social Security “on the table” have included Rep. Dan Rostenkowski (D-Ill.), the chairman of the House Ways and Means Committee; former Presidents Jimmy Carter and Gerald R. Ford; Robert S. Strauss, prominent Democrat and co-chairman of a commission appointed to study the deficit problem; the General Accounting Office, and the headof the National League of Cities.

Some tinkering with Social Security may be unavoidable, given other national needs and Bush’s adamant opposition to a tax increase. However, action should be based on fact instead of myth.

Something does have to be done about the budget deficit.

The national debt has hit $2 trillion and is still going up at the rate of $150 billiona year. That debt, along with the trade deficit, acts as a severe drag on the U.S. economy and its ability to generate prosperity for Americans now and for years to come.

The Gramm-Rudman law, which aims at eventually balancing the budget, requires that the deficit be reduced to about $100 billion in the next fiscal year.

All Americans, elderly and otherwise, have a stake in meeting that goal--and a responsibility to share the burden of bringing it about.

Bush claims that the target can be met without raising taxes or cutting into Social Security. Some respectable economists agree, citing projections that the deficit can be eliminated by 1993 just by holding the overall growth of federal spending to under 4% a year.

Wrongly, though, most experts don’t buy it. Wall Street and world financial markets don’t, either. Hence the calls for higher taxes and the inclusion of Social Security in budget-cutting efforts.

Senior citizens’ political muscle ensures a certain resistance to such pressures. However, the case against substantial meddling with Social Security rests not just on political realities but on economic and social realities as well.

The first thing to understand is that Social Security didn’t cause the budget deficit. In fact, the Social Security fund, fed by payroll deductions and matching employer contributions, is currently producing a surplus. (The reserve is needed to meet demands on the fund further down the road.)

Fact No. 2 is that not all Social Security beneficiaries are old. Of the $220 billion paid out last year, $80 billion went to other than retirees--mostly the families of disabled, deceased or retired workers, including 3.3 million children.

Even the money going to retirees serves a broader social purpose. Aside from providing buying power that helps keep the economy moving, it lightens the load on the other family members who otherwise would have to support their elderly parents at the expense of other family needs.

Polls indicate that a majority of younger Americans understand this and, therefore, oppose cuts in benefits.

Far too much has been made of the supposed affluence among today’s elderly.

It’s true that the incomes of Americans over 65 have greatly improved during the last two decades. But that improvement started from a low base.

The median income for elderly households is still well under the national average. More than 3 1/2 million older Americans live in poverty, and 2 million-plus others are teetering on the edge.

Finally, older people already are sharing the burden of bringing the budget deficit under control.

Half of Social Security benefits are taxed when older couples have total incomes of more than $32,000. And the broadened Medicare benefits voted by Congress this year are mostly financed by income-tax surcharges on affluent persons over 65.

Changes in Social Security could be avoided without a general tax increase if there were restraints on other federal spending and higher taxes on gasoline, cigarettes, liquor and oil imports.

But if a political consensus on deficit reduction requires some give on Social Security, it would not be unfair to remove the special income-tax reduction allowed persons over 65. Limiting inflation adjustments in Social Security benefits to the average pay increase received by the work force is worth considering. There is merit, too, in the idea of requiring the estates of the wealthy to repay the government part of the benefits that they received under Medicare in their final years.

No one should imagine, though, that balancing the budget on the backs of older Americans is either a practical or a moral choice.