A member of the commission reporting today suggests a way out of the impasse
Barring a miracle, today's meeting of the National Commission on Social Security Reform will fail to produce a specific solvency plan to save the Social Security system. Many of my colleagues are now suggesting that, even without clear guidance from the commission, Congress will be able to work a compromise solution through the normal legislative process before the July 1, 1983, expiration date for its current borrowing authority.
This kind of wishful thinking is dangerous. In fact, the chances are slim that the House will be any more successful in resolving this issue than the commission has been.
As long as the White House and leaders in Congress believe the normal legislative process can produce a timely solution, there will be little inclination to press for serious top-level negotiations. But negotiations between the president and congressional leadership are urgently needed if a bipartisan agreement is ever to be reached. Without such an agreement in advance, we risk a congressional deadlock on Social Security for the duration of the new Congress.
The necessary groundwork for a top- level agreement has been laid by the national commission. The commission has reaffirmed that the basic structure of the existing system is appropriate, and has ruled out drastic solutions that would alter or dismantle this structure. It has agreed that Social Security coverage should be extended to new federal and all nonprofit employees, and there is a general consensus that the remaining solutions will require a combination of options affecting taxpayers and beneficiaries alike. And most important, consensus on the size of both the short-term and the longe-term problems has been reached and the options costed out, providing a vital yardstick against which to measure the adequacy of any solvency legislation.
The system needs $200 billion in revenues or savings to survive this decade. The basic choices involve accelerating scheduled payroll tax increases, slowing the growth of benefits or adding to the burgeoning general fund deficit. The right solution almost certainly lies in a balanced, fair and affordable mix of these options.
The political pitfalls of getting such a balanced package through the normal legislative process, however, are likely to be insurmountable.
It is commendable that House Ways and Means Committee Chairman Dan Rostenkowski has announced his intention to initiate Social Security hearings in February and bring a bill to the floor in March. And many Republicans, including myself, are sorely tempted to sit back and let the heavily Democratic House make the hard choices on Social Security so that it is the Democrats who carry the Social Security monkey in the 1984 elections. Indeed, many feel this is appropriate retribution for Democratic demagoguery on the issue in the 1982 elections -- the more so since it was successful demagoguery. Yet for this very reason it is hard to imagine that many House Democrats would be inclined to vote for a reasonable and balanced package.
The commission's failure to report any bipartisan package of specific remedies should be a warning sign to both President Reagan and House Speaker Thomas P. O'Neill. The commission is composed of able members who have negotiated in good faith and with a remarkable absence of partisanship. Its inability to arrive at an adequate solution to the financing needs of Social Security vividly demonstrates the political problems involved in fashioning a real solution in the halls of Congress itself. I believe the political problems in reaching agreement are far worse than the congressional leadership or the president now realize.
Another warning sign is that both the Office of Management and Budget and the Senate Budget Committee now realize that this issue cannot be handled in the normal budget process. Last year's annual budget resolution resulted in a political firestorm when the Budget Committee included Social Security "savings" in the budget proposal. While it is highly desirable to handle Social Security separate from the unified budget, the absence of either OMB or the Budget committees mandating the size and timing of a solution releases Congress from yet another reason to fully confront the issue.
The prospects seem slim that the House can pass a Social Security financing bill. On examination of the options likely to be considered, the chances of achieving a majority vote are zero, absent intervention by the White House and Speaker O'Neill.
Why? No one expects the House to pass a bill relying primarily on reductions in cost-of-living adjustments. So it is inevitable that the Democrats will try to enact a solution almost entirely based on payroll taxes or general revenues. But, quite apart from the issue of whether the president could sign such a measure, the question is, does the House have the votes, even in a caucus of Democrats, to pass a bill relying primarily on revenue increases? Few can vote solely for raising payroll tax rates when this is really a vote for taxing jobs and reducing take-home pay at a time of record unemployment and sluggish consumer spending. And those who believe they can soften the impact of the payroll tax hike with an offsetting income tax credit will quickly learn that they are adding as much as $25 billion per year between now and 1990 to the already unaffordable general fund deficit. Disbelievers of this pessimistic prediction should note the recent poll of incoming freshmen in which they overwhelmingly opposed (by 78 percent and 89 percent, respectively) either raising taxes or reducing COLAs as solutions to Social Security's financing problems.
Neither party can gain satisfaction or profit from the prospect of staring the other down as the July 1983 expiration date for the Social Security funds draws near. This will leave only the option of extending borrowing from the hospital insurance, or Medicare, fund for another eight months, an option that involves a terrible cost--the depletion of that fund six years earlier than otherwise is projected.
Failure to reach immediate agreement also threatens the ability of Social Security to meet one of the basic tenets of any responsible reform proposal: that no one now receiving benefits shall have his benefits reduced. Delay for even another year would put so much financial pressure on the retirement fund that no rescue would be possible that didn't involve hurting current retirees. Such a course of delay is clearly irresponsible.
A bipartisan agreement reached before the 98th Congress gets under way is essential. Without it, no one will want to yield negotiating positions. Only a compromise package sanctioned by a "summit meeting" between the president and Speaker O'Neill and their key lieutenants will enable all members of Congress, new and old, to get on board. Without this political umbrella, many members of both parties will be obligated to oppose many of the financing options that must, of necessity, appear in a comprehensive proposal.
The work of the National Commission on Social Security Reform may soon be behind us, but the opportunity to provide the necessary bipartisan leadership on Social Security has not been lost. The commission's report will make the choices abundantly clear. It is time for the leadership of both parties to think and act to avert a continued standoff on Social Security in the next Congress. The key act is to move to the high ground that will be found only at a summit.
The writer, a Republican senator from Pennsylvania, is chairman of the Senate Special Committee on the Aging.