THE LONG-TERM cost of the Social Security system as currently designed is likely to be considerably higher than previously projected, a technical advisory panel has concluded. The higher estimate could have a profound political effect. If the panel's assumption comes to be generally accepted, it will greatly complicate the question of Social Security reform, in that larger benefit cuts and/or revenue increases will be needed to keep the system whole.

It will sharpen the fiscal debate as well. The more Social Security and other forms of aid to the elderly are projected to cost, the less room there remains in the budget for other purposes--tax cuts, spending increases, even the maintenance of other programs. The competition between aid to the elderly and other governmental purposes becomes keener. It's keen enough already.

The 12-member panel of economists, demographers and actuaries was chosen by the Social Security Advisory Board. Its members have divergent political views. The chairman was Eugene Steuerle, senior fellow at the Urban Institute. The conclusions were unanimous.

The evidence indicates that life expectancy will increase faster in the next century than the Social Security actuaries have been assuming, the panel found. That's good news--people will live longer--but the fiscal implications are not so cheery. The longer people live, the longer they will collect benefits and the higher the program's ultimate cost. The longevity estimates have implications for Medicare and Medicaid as well--Medicaid because it pays so large a share of the cost of long-term care.

The current official estimate is that Social Security costs will exceed revenues by an average of 2.07 percent of taxable payroll over the next 75 years, and by 6.44 percent in the 75th year. That's how much the tax would have to be raised to cover the uncut cost. The right longevity assumption takes these figures to 2.6 and 7.7 percent, the panel said; the amount of ground that has to be made up over the full 75 years increases by a fourth.

A partial solution would be to index the ages at which early and full retirement benefits are paid, so that it would rise in tandem with longevity. But that would be tantamount to a sizable cut in the benefits the system now promises. Al Gore accused Bill Bradley of abandoning Social Security earlier this year when Mr. Bradley did no more than propose discussion of this issue. President Clinton, while carefully not offering a plan of his own, spent all year fending off a Republican tax increase by saying the parties ought to "save Social Security first." That task just got harder.