A House subcommittee moved yesterday to shore up the tottery Social Security old-age insurance fund and guarantee full payment of benefits for two more years.
By a unanimous vote of the seven members present, the subcommittee approved a motion by Rep. Joseph L. Fisher (D-Va.) to shift a small portion of Social Security tax revenues now allocated to the disability insurance fund -- which is in good shape -- to the old-age and survivors' insurance fund, which otherwise would run out of money toward the end of 1981.
The shift would be only for calendar years 1980 and 1981, but the added money would be insufficient to make certain all Social Security benefits can be paid in full until about mid-1982. The action wouldn't affect the overall tax -- just shift revenues between the two funds.
Social Security subcommittee Chairman J. J. Pickle (D-Tex.) warned, however, that the shift which also was approved two weeks ago by the Senate Finance Committee, only buys a little extra time before the old-age fund will run out of money.
Therefore, Pickle said, to full assent from other members, "In 1981 we will have to face up to this again" and undertake a major restructuring of Social Security to put it on a sounder long-term financing basis.
Pickle said there are "12 ways to do it next year" and he didn't want to go over them in detail. But it is well known to all members of the subcommittee that most of those ways would be painful for someone.
They include alternatives such as cutting out categories of benefits, like survivors benefits for 18-to 21-year-old students who are children of deceased workers; raising the tax; reducing the annual cost-of-living increase so it fails to keep pace with inflation, and using income tax revenues to help pay for medicare.
It is precisely because most of these alternatives either hurt the taxpayer or hurt some class of beneficiaries that both chambers of Congress and the administration are content in this election year to buy some extra time with an interfund transfer. Lasting action would be delayed until the election is over and Congress returns in 1981.
Three years ago when Congress last overhauled the Social Security system with a huge tax increase and other changes, it believed it had made the system financially secure until at least the end of this century.
However, a much higher inflation rate than expected force much higher benefit increases than predicted, while high unemployment has robbed the trust funds of expected revenue.
This is why the old-age insurance fund, by far the largest, will be out of money late next year. The disability and health insurance funds, for the immediate future, are okay. The annual Social Security trustees' report last week made it clear that except under highly optimistic (and unlikely) economic assumptions about inflation and unemployment, the system will face serious financing difficulties during the 1980s.
Democrats and Republicans on the subcommittee agreed yesterday that a major restructuring is needed in 1981 -- no later. Pickle said that while he didn't feel a "spirit of alarm" is justified yet, "we've got to face this matter squarely next year."
Rep. Richard A. Gephardt (D-Mo.) said, "Before next year ends we've got to go back and do the second wave of reform," and Republicans Bill Archer of Texas and Willis D. Gradison Jr. of Ohio indicated they agreed with Pickle that major action is needed next year.
Under existing law, the Social Security tax this year is 6.13 percent for both employers and employes on the first $25,900 of wages. These figures already are scheduled to rise on Jan. 1, 1981 to 6.65 percent and $29.700. The maximum tax, $1,587 in 1980, will rise 24 percent to $1,975 in 1981.
Revenues from these taxes are diveded by law among the old-age, disability and Medicare funds.
The Fisher motion wouldn't change the overall tax rates, merely reallocate the portions earmarked for the old-aged and disability funds. Instead of getting only 4.33 percent in 1980, the old-age fund would get 4.52 percent, with the added money coming out of the disability fund. In 1981, instead of getting 4.525 percent, the old-age fund would get 4.70 percent with the extra money coming out of the disability fund.