The Reagan administration vigorously defended its proposed Social Security benefit cuts yesterday, asserting that the old-age trust fund will dry up without them.
"We are facing the most serious crisis in the 46-year history of the Social Security system," Secretary of Health and Human Services Richard S. Schweiker told the House Social Security subcommittee. "The facts and figures show that the old-age and survivors insurance system will not have enough on hand to pay benefits after mid-1982."
Budget director David A. Stockman also was gloomy. "The question before the Congress is whether the 36 milliion Americans who currently depend on the Social Security system can count on any check at all less than two years hence," he declared. "The most devastating bankruptcy in history will occur on or about Nov. 3, 1982."
The administration announced its controversial proposals two weeks ago. It recommended reducing benefits generally for those who retired in the future; reducing them especially for those who seek to retire before age 65, so as to encourage them to work longer; and making it harder than now to qualify for disability benefits.
Then last week, as opposition continued to build, the administration seemed to back off a little, saying all the proposals were negotiable. Schweiker and Stockman, even while defending the ideas, continued to make that point yesterday. "Our proposals are not carved in stone," said Schweiker.
In response to questions, Schweiker said:
"We're willing to consider" as an alternative way of saving money cutting the future cost-of-living increases in benefits, but only if this is "part of a bipartisan compromise." The president earlier resisted this kind of cut.
The administration would be willing to phase in the extra-sharp benefit reductions it is proposing for people retiring before age 65, instead of putting them into effect all at once next year. And it might also settle for smaller cuts than it proposed; its original suggestion was that a person retiring at age 62 should get only 55 percent of the full amount he would be due if he waited to age 65. Social Security Subcommittee Chairman J. J. Pickle (D-Tex.) expressed satisfaction with these remarks and declared: "I do not think this committee is going to enact any change in early retirement without a phase-in."
Rep. James M. Shannon (D-Mass.) said that under the administration proposal, a worker making the average wage, who retired at 62 in 1987, would be eligible for a benefit equal to only 19 percent or 20 percent of the salary he had earned in the year prior to retirement, barely enough to live on, compared with about 33 percent under current law. Administration officials questioned the Shannon figures but acturial tables based on the administration's own figures appeared to corroborate his statement.
Both Schweiker and Stockman repeated that the administration does not want to solve the Social Security funding problem by raising the Social Security tax any more than already provided by law or using general revenues to replenish the trust funds.
Pickle said that under the administration proposals, the number of active workers protected by disability insurance would drop from about 95 million to 65 million or 75 million, a substantial loss of protection.
Stockman said the old-age and disability trust funds need $84 billion more than is now in sight over the next five years in order to pay all benefits and build their reserves to 40 percent of one year's benefits.
The alternatives, he said, are to borrow from general revenues and raise income taxes to compensate the Treasury, which could mean $404 more income taxes yearly for a $30,000 family; raise the Social Security tax; cut the cost-of-living adjustment about in half; or make the cuts suggested by Reagan.
Borrowing from the Medicare trust fund, which now is flush, would be an illusory solution, Stockman said, since by the late 1980s it will start declining rapidly and will be hundreds of millions in the red by the year 2000.