Democrats risk tackling Social Security in hearing

September 28, 1994|By John B. O'Donnell | John B. O'Donnell,Washington Bureau of The Sun

WASHINGTON -- Six weeks before they face the possibility of substantial losses in congressional elections, Democrats held a hearing yesterday to talk about the politically charged issue of raising Social Security taxes or cutting benefits to keep the system solvent.

The hearing focused on several bills designed to strengthen the condition of the Social Security trust fund, which finances pensions and disability benefits for 42 million Americans, using taxes collected from 135 million workers.

Proposals to raise Social Security taxes or cut benefits are always unpopular, and the proposals discussed yesterday come at a time when there is a lack of public confidence in Social Security. A poll earlier this year showed that only 3 of 10 Americans believe benefits will be available through their retirement years.

And on Monday, a poll of 18- to-34 year-olds showed that while 46 percent of them have confidence in the existence of UFOs, only 28 percent believe Social Security will exist when they reach retirement age.

"That's the problem we have to address -- the problem of public confidence in the program," said Rep. Jim Bunning of Kentucky, the ranking Republican on the Ways and Means Committee's Social Security subcommittee, which held yesterday's hearing.

In even talking about the possibility of cutting benefits or raising taxes, Democrats seemed to be taking a political risk so close to congressional elections.

Rep. Marjorie Margolies-Mezvinsky, the Pennsylvania freshman who is considered one of the most vulnerable Democrats, was one of four House members yesterday who advocated curbing Social Security benefits. She and Rep. Timothy J. Penny, a Minnesota Democrat who is retiring, spoke about their legislation to increase the age at which retirees would be eligible for Social Security benefits from 65 to 70 and to limit annual cost-of-living increases.

Also testifying for their own bills were Rep. Dan Rostenkowski, the Chicago Democrat, and Rep. J. J. "Jake" Pickle, a Texas Democrat. Mr. Rostenkowski proposed a combination of payroll-tax increases and benefit cuts; Mr. Pickle offered benefit cuts only.

Ms. Margolies-Mezvinsky won her seat in 1992 by a fraction of a percentage point. Republicans have targeted her for defeat since she cast the deciding vote in favor of President Clinton's deficit-reduction package in August 1993.

"I don't think Marjorie views this through a political lens," her press secretary, Josh Becker, said after yesterday's hearing. "What she's doing is protecting Social Security. Everyone agrees it's in trouble."

Asked about political implications of yesterday's session, Rep. Andrew Jacobs Jr. of Indiana, chairman of the subcommittee, said, "We held the hearing for Jake Pickle," who is retiring after 32 years in the House. Speaking through an aide, Mr. Jacobs said the hearing was scheduled to be held several months ago but had been delayed by other committee business.

Both Democrats and Republicans were careful to keep the hearing low-key and nonpartisan. With Congress scrambling to wind up its work for the term so members can go home to campaign, there was no suggestion that it would try to tackle the issue this year, or that the problem must be solved this year.

But no one suggested that changes were not needed, even if there were differences over the immediacy of the problem.

Mr. Rostenkowski criticized "doomsayers," although he acknowledged that Social Security's reserves "are projected to be depleted in 35 to 40 years."

Some experts say the problem will crystallize much sooner as benefit payments gradually equal, then exceed, revenue once today's baby-boomers retire.

Currently, the trust fund collects more than Social Security needs to pay benefits -- about $1 billion a week more. The federal government borrows the excess money to finance its budget deficit.

According to projections of the Social Security trustees, benefits paid out by the pension and disability fund will begin to exceed income in 19 years. At that point, with trust fund revenue unable to cover benefits, the Treasury must begin paying back the money it has borrowed -- with interest.

By, 2029, the Treasury will have paid back the entire amount, and the trust fund will no longer be able to meet its obligations. But others say the critical year is much sooner.

The reason: Beginning in 2013, the Treasury will have to borrow the money it owes Social Security by increasing the federal budget deficit.

"Even if you take the government's own numbers, you have a real problem in 2013," said Bruce D. Schobel, a former Social Security official who is now actuary for New York Life Insurance Co.

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