Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, February 7, 1993 TAG: 9302080269
SECTION: EDITORIAL PAGE: F-2 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
SOCIAL SECURITY ON THE TABLE
THE TRIAL balloon went out last week from within the Clinton administration: How about, say, a one-year freeze in cost-of-living adjustments for Social Security benefits?That's not the best way to go. Congressional leaders like Senate Finance Chairman Daniel Patrick Moynihan of New York understandably punctured the balloon.
But the balloon floated the right question to the table: What can be done about the entitlement programs that contribute mightily to the jacking ever upward of federal deficits and the national debt?
Freezing the Social Security COLA for a year isn't the best policy because it would do most harm to the wrong people: elderly Americans who are in, or on the edge of, poverty. For retirees who are doing fine financially - and there are millions - the annual COLA increase in Social Security benefits is pin money. But for retirees subsisting mostly or even exclusively on Social Security, the annual inflation adjustment is vital.
The better answer is to tax Social Security benefits more fully. That way, unlike a COLA freeze, the burden would be placed in accord with the ability to bear it.
Currently, retired couples with annual incomes above $32,000, and retired individuals with incomes above $25,000, pay income taxes on 50 percent of their Social Security benefits. If the tax were levied on 85 percent of such income, the result - a deficit reduction of $15 billion - would be about the same as a COLA freeze.
Tying the level of Social Security benefits to income, so that the poor would get more, also carries some attractions.
But such means-testing would require establishment and administration of an entire new set of rules and regulations; taxing benefits more fully makes use of a tax system already in place. America needs less bureaucracy, not more.
Also, by emphasizing the social-welfare aspect of Social Security over the insurance aspect of it, means-testing carries a greater danger of lessening public support for it.
Other entitlement programs also are ripe for scrutiny. But there are good reasons for focusing first on Social Security.
Reason No. 1 is that it helps establish the point that nothing is sacred; that the deficit and debt situation inherited from the Reagan-Bush years is too grave for anything to be held sacrosanct.
Reason No. 2 is that controlling Medicare and Medicaid costs is intimately linked to the broader question of controlling health-care costs in general. That question, too, must be addressed, but it will take more time.
Reason No. 3 is that Social Security is where much of the money is. Agriculture subsidies must be cut, and veterans' benefits and the like examined, too; still, it is Social Security, Medicare and Medicaid that make up 90 percent of federal spending on entitlements.
Reason No. 4 is fairness. Many of today's retirees are doing quite well, thank you, the result of the great generational shift of wealth since 1980 from the young to the old.
Part of that shift came in the form of sharp rises in the grossly regressive Social Security taxes on workers, so retirees could continue getting benefits far beyond what they had contributed to the system when they were workers. Only now, with the generation just retiring or about to retire, are Social Security benefits commensurate with contributions.
Younger workers are the ones in for the skinning. By the time they retire, their generation will have contributed more to Social Security than it's apt to get back in benefits - and they're also the folks who'll have to bear the brunt of the spiraling costs of servicing that debt.
Unless, of course, the escalating deficit and debt curves can be reversed. That'll take more than making Social Security benefits more fully taxable. Surely, though, putting better-off retirees on a somewhat more equal tax footing with current workers - while retirees who are not well-off are protected - ought to be a part of the answer.