Social Security Seen as Ripe for Raiding : Budget: Some in Congress doubt that special-interest demands can be resisted. Others believe safeguards can be created.

Lawmakers and budget experts lined up Thursday behind a bill aimed at making it more difficult for Congress to use growing Social Security surpluses to pay for expanded benefits, but many warned that the system’s future solvency would remain threatened anyway.

Some lawmakers are trying to remove Social Security from the budget; but, House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) told a House subcommittee, that would make its trust fund vulnerable to raids by powerful interest groups just as it is beginning to accumulate a multitrillion-dollar reserve.

Rostenkowski cited such special-interest demands as improving Social Security benefits for elderly widows, meeting the claims of “notch” babies and allowing the elderly to earn more without losing benefits. Notch babies are people born between 1917 and 1921 who contend that they have been unfairly deprived of benefits as a result of a previous change in Social Security law.

“Many of these proposals are attractive to both conservatives and liberals,” Rostenkowski said. “Are we going to have the political courage to say no to those proposals which would increase benefits immediately but at the same time further jeopardize our children’s benefits? I’m pretty dubious.”

Although he is opposed to taking Social Security out of the budget calculations used to determine the size of the overall federal deficit, Rostenkowski conceded that Congress is likely to take such a step sometime this year.

At stake in the seemingly arcane debate is whether the $3 trillion in extra Social Security revenues expected to accumulate over the next 30 years--plus the $9 trillion in interest it would earn over that period--will be intact when baby boomers start to retire.

Advocates of removing Social Security from budget calculations argue that the current approach masks the size of the deficit in the rest of the budget and would help spare the program from potential cuts in benefits as part of a future deficit reduction agreement.

However, opponents are convinced that leaving the system within the budget is necessary to prevent lawmakers from dipping into Social Security reserves in the future.

To limit the vulnerability of the Social Security system to future raids, Rostenkowski has proposed a compromise bill that would create additional hurdles before the House and Senate could approve any proposal to tap the Social Security trust fund.

The House could overcome the additional obstacles by a simple majority vote; but in the Senate, any such move would require 60 votes rather than the 51 required to approve most legislation.

Rostenkowski conceded that his plan is nothing more than a “first step” aimed at protecting the Social Security fund, and he acknowledged that it would be desirable to toughen its restrictions further.

Sen. Daniel Patrick Moynihan (D-N.Y.) is the chief advocate of removing Social Security from the calculations used to determine whether the federal deficit exceeds the limits imposed by the Gramm-Rudman budget law. He supported Rostenkowski’s measure as “not a bad idea to establish a safeguard against the temptation to increase Social Security benefit spending.”

However, Moynihan sharply attacked those who said that his legislation would make it practically impossible for Congress to resist such temptations to spend the money on new benefits and other programs for the elderly.

He said that his chief reason for trying to take Social Security out of the budget was to protect it against any reductions in future benefits.

The view that Social Security cuts should be part of any long-term deficit-reduction package “is without merit,” Moynihan said. “The deficit is in the operating budget (that excludes Social Security),” he said. “Curing it is going to require tax increases.”

Several budget experts disagreed with Moynihan, including Robert Reischauer, director of the nonpartisan Congressional Budget Office, and Rudolph G. Penner, the previous CBO director.

Reischauer argued that Social Security should be left in the budget so that it accurately reflects the federal government’s overall effect on credit markets and because such a large program should not be excluded from efforts to reduce the deficit.

“Once one program is given special consideration,” Reischauer said, “it becomes harder to require sacrifice elsewhere in the budget.”

Moynihan’s plan was also criticized by Gwendolyn S. King, the new Social Security commissioner.

“Taking the Social Security reserves out of deficit calculations would expose the funds to immediate pressures for spending,” King said. “Instead of the reserves providing the intended protection for baby boom retirement benefits, the reserves would be placed at greater risk.”

A number of analysts suggested that the current plan to build up a large surplus in the Social Security fund is badly flawed and that efforts to protect it against raids are doomed to fail no matter what protections are imposed.

Instead, they suggested, the current payroll tax should be trimmed so that Social Security returns to a pay-as-you-go approach, retaining only a modest reserve of roughly one year’s payments.

But Penner said that such an approach, which he once supported, would make sense only if Congress could reach agreement on other ways to raise the revenues that would be lost by reducing Social Security taxes.

“The collapse of the budget process this year suggests that such . . . discipline is implausible,” Penner said, “and I now oppose this approach.”