Tilting at the Anomaly

JAMES J. KILPATRICK

March 01, 1991|By JAMES J. KILPATRICK

WASHINGTON — Washington. Thousands of elderly Americans are caught these days in the snares of an anomaly. Four Republican senators are determined to cut them loose.

An anomaly, for the record, is a deviation from normal practice, an unexpected and inconsistent break with custom. That is exactly what Congress has imposed upon Social Security retirees who wish to augment their monthly checks by returning to work.

The American ethic teaches us that work is good; but the Social Security system teaches these oldsters that work is bad. In theory, the person who works should have something to show for his labor; but taxes and penalties imposed upon the elderly can leave little or no profit whatever. Psychologically, it is said, oldsters are better off when they are active and occupied; but the punitive nature of the present system compels many persons to curtail their activity and to limit their occupation.

This nonsense has gone on long enough. To their credit, Senators Bob Packwood of Oregon, Bob Dole of Kansas, Slade Gorton of Washington and John Heinz of Pennsylvania will push legislation to relieve the unfairness. President Bush supports the move. Last year the Senate Finance Committee approved a step in the right direction. This is an idea whose time has come.

Under present law, a retiree between the ages of 65 and 69 may earn up to $9,720 a year -- about $187 a week -- without incurring the wrath of the Social Security Administration. To be sure, the individual pays income taxes and Social Security taxes on those wages, so that the government benefits from his labor.

But for every $3 earned above $9,720, the worker is penalized by having $1 snatched away from his monthly Social Security check. That is a tax rate of 33.3 percent. Retirees under age 65 lose $1 for every $2 they earn beyond $7,080, a tax rate of 50 percent. This is not a work incentive with great appeal.

One other point: The penalty applies only to income derived from wages or salaries. Investment income doesn't count. The retired house painter who wants to work gets clobbered. The wealthy professional is free to follow the market in stocks and bonds.

Many seniors, says Senator Packwood, find idleness intolerable. Many need additional income to support their families. ''Many more of them simply want the chance to continue being a productive member of society.'' For them, the rocking chair has no appeal. They have the experience and the skill to make a valuable contribution. It is patently unfair -- it is anomalous -- to penalize their industry by taking some of the fruits away. Says Senator Heinz: ''The present policy is a direct contradiction of the work ethic that our nation believes in.''

''What we have,'' says Mr. Heinz, ''is age discrimination. It amounts to nothing less than the callous, unfeeling, short-sighted and unfair punishment of millions of older Americans who simply want to continue to work for mental, physical, emotional or fiscal health reasons.''

He offers a pragmatic argument for phasing out the penalties: It costs the Social Security Administration an estimated $200 million a year to police the earnings test. More than half of all overpayments are attributed to erroneous calculations.

The Pennsylvania senator cites the case of John Rooney of Phoenixville. In 1990 Mr. Rooney earned $560 more than the limit on earnings. In December the Social Security police sought to recover the overpayments, but through some foul-up the agency withheld $1,600 from his monthly benefits.

The Republican senators would like to repeal the earnings limitation altogether, but summary repeal would cut into the enormous surplus now piling up in the mythical ''trust fund'' maintained by the Social Security Administration. It is more probable that agreement will be sought on a bill to raise the earnings limit gradually to $11,400 by 1994 and to wipe it out entirely in 1996.

The penalty system was imposed largely at the behest of organized labor. Union leaders complained that every job filled by a retired person was a job taken away from a younger, dues-paying union member. If that reasoning ever made sense, it makes no political or economic sense now.

When this recession ends, skilled labor once more will be in demand. Retirees have every right to seek an equal opportunity. seems little enough to ask.

James J. Kilpatrick is a syndicated columnist.

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