What To Do about Social Security

February 13, 1994

President Clinton has appointed a a Bipartisan Commission on Entitlement Reform that he insists will "grapple with real issues . . . not caps or gimmicks." The commission may do just that but don't count on this president, at least in his present term, to grapple with the sacrosanct granddaddy of all entitlement programs -- Social Security.

While Mr. Clinton ducked this issue in his State of the Union address, the new federal budget book concedes that "in the very long run, Social Security costs are projected to increase sharply -- mostly as a result of the retirement of the baby boom population, but also because of increased life expectancies, and hence longer periods of retirement." But it goes on to say, "This is a long-term Social Security issue, not a short-term budget issue; it should be answered with careful study, not precipitous, politically motivated action."

We challenge that statement. First, any curtailment of benefits to the affluent can hardly be "politically motivated." It is a loser. Second, no more studies are needed. The new budget estimates the lifetime net tax rate of future generations will amount to 82 percent, as compared to 35.4 percent at present, unless something is done.

Maybe the 47-year-old president can fend off Social Security realities for as long as he is in office. But by the time he reaches retirement age its reserve fund will be going down. Herein lie the seeds of inter-generational conflict unless retirement ages are raised and entitlements are means-tested to curtail payments to affluent citizens.

Despite last year's rise in taxes on retirement benefits, the problem is unsolved. Young folks now realize that down the road loom large increases in Social Security taxes and/or large decreases in retirement benefits. The Concord Coalition is confronting elderly audiences with the stark realities of what they are doing to their grandchildren.

The new commission was supposed to report this May. But because of White House delays, its results will not come until December -- after 1994 congressional elections. This will be comforting to incumbents. It also is in line with the president's comment in December to a Philadelphia conference on entitlement spending: "Let's not make our middle-class squeeze any worse than it is."

Just what is that "middle class"? In 1990, $8 billion in Social Security benefits were paid to people in families with incomes of more than $100,000, according to the Concord Coalition. The government is also paying out $81 billion a year in all types of entitlements to citizens in families with incomes of $40,000 or more.

The problem is not just Social Security. It is Medicare and Medicaid, where supposed savings in the Clinton health care reforms will go to new medical entitlements. It is in government pensions and farm subsidies and welfare payments.

While Mr. Clinton is loath to concede the full depths of this problem, one of his successors will someday have to move more boldly and broadly.

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