An article in Monday's editions reported that the administration will propose phasing out Social Security benefits for full-time students aged 10 through 21. The paragraph should have read aged 18 through 21. CAPTION: (NEW-LINE)Picture, SEN. EDMUND S. MUSKIE... "budget restraint" mood on Hill
President Carter is planning to ask Congress later this month to make modest reductions in some Social Security benefits for future years to help hold down spending and ease the burden on the payroll tax.
The changes, which officials say will be outlined in Carter's budget message Jan. 22, would amount to $550 million in fiscal 1980, which begins Oct. 1. and as much as $3 billion by fiscal 1984. Carter is counting on enactment of these proposals as part of the fiscal 1980 spending plan he is scheduled to send Congress. That document calls for total spending of $504 billion and a budget deficit of just over $29 billion.
However, it is not known whether Congress will go along with Carter's changes. Congress has rejected a few of the proposals in previous years, and Capitol Hill leaders have signaled they want to avoid any new Social Security fights.
The proposals, which would apply to future years and not affect Social Security recipients in 1979, include:
Repealing the special retirement advantage given low-income workers; instead, workers would be eligible for the Supplementary Security Income program, which makes benefits contingent on proof of income level. A major attraction of this change is that it would shift financing of this benefit from the payroll tax to general income tax revenues. The net savings would be $70 million in fiscal 1980 and $230 million is fiscal 1984.
Eliminating the lump-sum benefit of $255 paid to survivors of Social Security recipients and their estates, amounting to a savings of $220 million in fiscal 1980 and $350 million in fiscal 1984.
Phasing out Social Security benefits for full-time students ages 10 through 21. Officials say the payments aren't based on need and often are paid to well-off families. Officials estimate that about 784,000 persons receive such benefits, with the payment averaging $154 a month. Phasing out the payments would save $170 million in fiscal 1980 and $1.8 billion in 1984.
Revising regulations that allow younger persons who apply for disability insurance to boost their benefits by not counting low earning years. Savings would be$30 million in fiscal 1980 and $300 million 1984.
Asking Congress to repeal a 1977 provision that lowered from 72 to 70 the age at which a retiree may earn as much as he or she wants without losing Social Security benefits.
The administration also will seek to limit the maximum disability benefit paid to any one family -- a measure expected to save $60 million. The White House considered capping old-age and survivor benefits as well, but discarded it.
The disclosures came as Senate Budget Committee Chairman Edmund S. Muskie (D-Maine) reiterated his warning that Carter's pledge to hold the budget deficit below $30 billion is "an overpreoccupation with numbers" and may not succeed in Congress.
Appearing on "Meet the Press" (NBC, WRC), Muskie said that while Congress "is in the mood to exercise budget restraint" this year, Carter's $30 billion deficit limit could be breached if a recession occurs.
He also expressed reservations about Carter's proposal for a "real wage insurance" tax rebate that would guarantee workers who stay within the 7 percent wage increase guidelines partial compensation if inflation outstrips their pay raises.
Muskie also asserted that U.S. recognition of the People's Republic of China "is not an abrogation" of the mutual security pact with Talwan because the action followed the procedure for terminating the treaty as outlined in the document.
Carter's proposals in the Social Security area are relatively minor. The administration had been considering moves to roll back scheduled increases in payroll taxes, but abandoned them after congressional leaders indicated they weren't interested.
Carter tried in 1977 to get Congress to overhaul the way the Social Security system is financed, but the lawmakers rejected his plan and raised payroll taxes. A move last year to undo the 1977 action was defeated in the House.