Clintonomics, Drip by Drip : Social Security trial balloon is latest in a series

The latest buzz on the Clinton economic plan: a possible freeze or a new tax on Social Security benefits. Details were fuzzy as Administration officials floated another trial balloon of Clintonomics over the weekend. But at least changes in Social Security are on the table as part of the President’s deficit-reduction plan.

Shared sacrifice--by all segments of American society--is the glue that will keep any deficit-cutting plan together.

In asking the elderly to share the pain of deficit reduction, the Administration is taking on what until now has been the politically suicidal task of challenging Social Security, the most sacred of the entitlement programs. The attempt is laudable, the approach is lamentable.

If only President Clinton would quit teasing the public with a string of piecemeal economic measures. Administration officials have been floating proposals--ranging from a broad-based energy tax to a stimulus program of possibly $30 billion--before the public since Clinton moved into the White House.

The latest tease came this weekend when Deputy Treasury Secretary Roger Altman said the White House is thinking about eliminating the annual cost-of-living increase for Social Security recipients or increasing taxes on some of those benefits.

The new Senate Finance Committee chairman, Daniel Patrick Moynihan (D-N.Y.), blasted the proposal to eliminate the annual increase as a “death wish.” But Social Security merits thoughtful attention precisely because it triggers such emotional and political responses. Budget Director Leon E. Panetta reportedly has proposed the idea of delaying for a year the cost-of-living adjustment in Social Security benefits.

Such a move would save about $15 billion, or 10% of the $145-billion deficit reduction that Clinton hopes to achieve by 1997. Would a cut or a freeze in cost-of-living increases throw millions of the elderly into poverty, as Moynihan suggests?

The Administration also is considering taxing a larger proportion of Social Security benefits of retired couples with annual incomes above $32,000 and retired individuals with incomes of more than $25,000. Now they pay income taxes on half of their Social Security benefits. While questions remain about that approach too, it does appear to contain an inherent measure of tax fairness.

The Social Security trust fund’s surplus is now about $70 billion. That is counted as general income in the government ledger, so it helps reduce the deficit, at least on paper. Is Clinton merely up to some creative bookkeeping?

Administration officials say the President has not made any decisions yet. They ought to be answering some of these questions in the meantime.