Two basic perceptions make Social Security sacrosanct. The first is well understood: the elderly vote, and with great regularity. The second is more assumption than fact: that if we attempt any savings on Social Security, benefits will be reduced to the elderly who are eking out an exisence. That is certainly not the fact.
But this assumption is at the root of the controversy created by the Senate Budget Committee's recommendation to save $40 billion in Social Security over the next three years. The following are 11 ways to save $44 billion over the next three years, and they show that reasonable changes can be made without inflicting hardship on those in need:
1) Foreigners who no longer live in the United States should receive no more from the Social Security system than they paid into it. Social Security was designed to provide retirement assistance for Americans, not to subsidize foreigners who work in our system for awhile, then move back home. This limitation would not apply to Americans who retire and live abroad. Over three years the savings would be $2.4 billion.
2) To discourage so-called double-and even triple-dipping in government retirement plans, we should increase the number of quarters (three- month periods) necessary to qualify for Social Security benefits. Today, a person has to work only 31 quarters (73/4 years) to qualify for benefits. That allows a government worker to earn one, sometimes two, pensions and then briefly work in the private sector and qualify for Social Security. By increasing the number of quarters needed to qualify from 31 to 120, the Social Security system would save $6 billion over three years. A credit for time spent raising children would be included.
3) Under the present rules, someone who earns $1,360 in one quarter of the year gets credit for the full year--even if he doesn't work the rest of the year. Change this rule, so that a person must work in a quarter to get credit for that quarter. The savings would be $60 million over three years.
4) Require all new government employees--federal, state and local--to pay into Social Security. This would result in $3.4 billion in new revenues for the trust fund over the next three years.
5) Self-employed people pay less Social Security on their wages than a worker and employer combined. The self-employed pay about 70 percent of what the worker and employee together pay. Increasing that to 85 percent would raise Social Securty revenues by $4.7 billion over the next three years.
6) Give incentives to those people who want to work beyond 65. Many people don't want to retire; they enjoy working and stay in better health if they do work. If a person retires at 66, he or she should receive an extra 5 percent (105 percent of the regular Social Security benefits); at 67 an extra 11 percent; at 68 an extra 18 percent; at 69 an extra 26 percent; and if a person retires at age 70, an extra 35 percent.
If only 1 percent of the people delayed retirement, the savings and additional amount paid in Social Security taxes in 1983 would be $130 million, and $800 million over the next three years.
7) Tax Social Security payments if the recipient has any other income exceeding $20,000 ($25,000 for couples). Additional revenues for the next three years would be $11.6 billion.
8) If the cost-of-living adjustment were given on Oct. 1 (the beginning of the government's fiscal year), not July 1, there would be a one-time delay of three months and an amazing $9.2 billion savings over three years.
9) Social Security monthly benefits are based on a schedule of the worker's average monthly earnings. The schedule is: 90 percent of the first $230; 32 percent from $230 through $1,388; 15 percent over $1,388. $230 and $1,388 are the "bendpoints." The bendpoints rise every year by the percentage that average national wages go up. For a four-year period only, index "bendpoints" by one-half of the wage index. This would do more to balance out the Social Security system in the long run than anything mentioned so far. Although this change saves nothing in 1983, it would save a total of $2.1 billion in 1984-86.
10) If a working parent dies, minor children receive survivors' benefits without regard to the family income or the income of the surviving parent. If the family income exceeds $25,000, then the minor children should not receive survivors' benefits. This would save $2.2 billion in three years.
11) Currently people over 72 who keep working (going down to 70 in two years) receive benefits no matter how much they earn. People under 72 lose $1 of Social Security benefits for each $2 of income they earn over $6,000. Raise the age to 75 and leave it there. This would save $815 million in 1983 and $3.2 billion in the 1983-85 time period.
There are many other changes that could be proposed, but these 11 changes alone would save over $44 billion in years, 1983 to 1985, more than suggested by the Senate Budget Committee plan. These are reasonable changes that shouldn't adversely affect needy Social Security recipients.
Social Security is a promise worth keeping, not only to those who now receive it, but to their children and grandchildren as well.