House OKs Red-Ink Social Security Bill : Benefits: The proposal doubles the earnings limit for retirees age 65 to 69. It busts the budget pact, but not as much as the Senate version.

In the first major breach of the budget agreement, the House voted overwhelmingly Thursday for an election-year bill to double the amount of money that Social Security recipients age 65 to 69 may earn without losing any of their benefits. The vote was 340 to 68.

The popular measure, an amendment to the Older Americans Act, was sent to the Senate, where it faces an uncertain fate. Opponents said the House bill adds $7.3 billion to the deficit and violates the 1990 budget agreement, which requires that new program costs be offset by revenues.

A similar, further-reaching bill already approved in the Senate, costs even more, $28 billion, opponents of that measure said.

“This is the first time we’ve had a serious breach of the budget agreement,” said Rep. Leon E. Panetta (D-Carmel Valley), chairman of the House Budget Committee. “The members are afraid of that senior constituency and everybody here is running scared.”

President Bush has said that he would veto the Senate-passed benefits bill to remove all limits on earnings by Social Security beneficiaries, but it was not known how he would react to the less-expensive House-approved measure if the Senate goes along with it.

Current law allows retirees in the 65-69 bracket to earn up to $10,200 a year without reductions in their monthly benefits. Above that income level, the payment is cut by $1 for every $3 of earnings over that figure.

The House bill increases the Social Security earnings test by about $2,000 a year until it reaches $20,000 in 1997. It also earmarks about $3 billion for some widows over the age of 80 who first applied for benefits before they became 65.

Those over 70 may earn as much as they want without losing benefits. Those who get benefits before they reach 65 are covered by a separate earnings test and would not be affected by the legislation approved by the House.

Panetta argued that its passage would set a bad precedent by encouraging other sponsors of popular causes to seek congressional approval without finding a way to pay for them. Rep. Herbert H. Bateman (R-Va.) called it “political pandering.”

But Rep. Dan Rostenkowski (D-Ill.), chairman of the House Ways and Means Committee who negotiated a compromise with Republicans, argued that the alternative would be the Senate’s bill.

“The question here is whether we’re going to take a $7-billion hit or a $28-billion hit,” Rostenkowski declared. “Let’s get off the duff here and do something for senior citizens.”

Other proponents said the measure would require that additional income taxes and Social Security payroll taxes from workers in the 65-69 age group who benefit from the change would be earmarked for the retirement trust fund.

Rep. Jim Slattery (D-Kan.) also argued against the measure, saying Congress must find a way to pay the bill before increasing benefits. While the message is popular, he said, it would bust the budget agreement and force younger workers to bear the burden for a small fraction of Social Security recipients who are affected by the earnings ceiling.

Rep. Don J. Pease (D-Ohio) said 50% of the benefits would go to families with incomes above $42,000 a year.