The Geezers Have Won -- Again

August 05, 1994|By TRB

WASHINGTON — Washington. -- Whatever happened to the generational war? A year or two ago, the op-ed pages seemed to be filled with representatives of Generation X complaining about the economic hand they had been dealt by their elders. Where did they all go? Law school, I fear.

The Xers were especially angry about Social Security. It was ''a generational scam,'' declared the authors of one youthful manifesto.

They had a point. When it came to Social Security, today's elderly -- ''greedy geezers,'' one magazine called them -- seemed to have cut themselves an awfully cushy deal, securing retirement checks that far exceeded the contributions they had made when they were working. Younger Americans, meanwhile, would be lucky to get back what they were paying into the system.

Times change. We don't worry about Social Security anymore. We worry about ''entitlements.'' Of course, Social Security is by far the biggest ''entitlement,'' bigger than No. 2 (Medicare) and No. 3 (Medicaid) combined. But it is the exploding cost of those two health-care programs, Mr. Clinton tells us, that threatens the solvency of the state. So reform of health care is in; plain old Social Security reform is out.

Unfortunately, plain old Social Security is going broke. When the system was last ''fixed,'' in 1983, it was declared to be secure for 75 years. That estimate proved wildly optimistic. Almost every year, the system's actuaries advance the date of bankruptcy. By 1993, the crash date had been moved up to 2036. In this year's report the date of ''exhaustion'' date jumped seven years, to 2029.

Another ''fix'' is needed. Enter the Bipartisan Commission on Entitlement and Tax Reform -- better known as the Kerrey Commission, because President Clinton was forced to create it to win Sen. Bob Kerrey's vote for the 1993 budget. The panel has two chairmen (Senator Kerrey and Sen. John Danforth), 30 members, a vague mandate and an awkward rule requiring 60 percent approval of any recommendations. But, thanks to Social Security's coming implosion, it also has an obvious, achievable mission.

The experts are already lining up behind a package of Social Security rescue measures similar to those in a bill introduced by Rep. Dan Rostenkowski (remember him?). Mr. Rostenkowski wants to speed up a scheduled increase in the retirement age from 65 to 67. He would also boost payroll taxes by a few percentage points starting in about 2020, and fiddle with the benefit formula to reduce the checks of 21st-century retirees with high lifetime earnings.

As Social Security reforms go, these are relatively easy. The benefit cuts and tax hikes don't bite until way off in the future. That ''would give people adequate time to plan and adjust their behavior,'' Robert Reischauer, head of the Congressional Budget Office, told the Kerrey Commission. And because the pain is postponed, it's at least conceivable that these reforms will pass Congress. Of course, for the same reason, they will do little to reduce today's deficits. Yet by promising a bit of long-term budget relief they might help President Clinton defuse any crude right-wing anti-spending crusader. It all sounds awfully responsible.

Wait a minute. What about the Xers? By putting off the pain, Rostenkowski-style reform again places the burden of rescuing Social Security on the generations still working, the same generations who bore the brunt of the ''fixes'' adopted in 1983, the same generations who are already getting the lousiest deal from the system.

Generational justice seems to demand that politicians do something irresponsible, something they almost never do, namely take benefits away from retirees who are already receiving them. There is a humane way to do this: a ''means test,'' which would deny benefits only to the affluent. The Concord Coalition, an anti-deficit group headed by former Senators Paul Tsongas and Warren Rudman, has proposed shaving the checks of anyone with an income of more than $40,000. The higher the income bracket, the more benefits would be lost (though even the richest retirees would get to keep 15 percent of their checks).

As a long-term solution, the Concord plan has some problems. Most obviously, it might discourage savings, since retirees with investment income would risk losing benefits. But that flaw is minimized if means-testing is used only as a short-term device for reclaiming benefits from today's elderly, who have already done most of their saving. Unlike some other reforms (cutting cost-of-living increases, for example) means-testing wouldn't impose any hardship on retirees who really needed their checks.

Of course, this sort of means-testing won't happen. It's highly unlikely that the Concord plan, or any big benefit cut for current retirees, will obtain the necessary 60 percent majority on Senator Kerrey's commission. If it did, Congress or President Clinton would kill it. Social Security isn't going broke tomorrow, after all. That sort of thing is 25 years away. ''It would be jumping the gun,'' one expert assured the commission, ''to actually reduce benefits now . . . as if we really knew what the situation would be for such a far off period.'' The geezers have won.

TRB is a column of The New Republic, written this week by Mickey Kaus.

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