IT WASN'T easy to get a Social Security commission, whose members included major political figures from both parties, to agree on a reform package. But the process ensured that the final plan should strike most people--as it did both President Reagan and House Speaker O'Neill--as a reasonable balancing of unavoidably conflicting interests. That won't stop representatives of major groups affected by the plan from attacking it as unfair--many did so before the details had been fully unveiled.
The two major interests to be reconciled are those of the retirees, who draw benefits, and the wage earners, who pay for them. The only way to put Social Security on firm ground is either to cut benefits or raise taxes. You can score the suggested reforms in different ways: Is extending coverage to new workers a tax increase? Is taxing benefits a benefit cut? But the proposal comes close to a balance between the two approaches.
Retiree organizations would, of course, prefer that the burden fall entirely on wage earners. They will point to the fact that, while the elderly as a group are no longer poorer than the rest of the population, many of them are heavily dependent on Social Security. But the sacrifice asked of retirees is very small--a one- time six month delay in next year's cost-of-living adjustment. Since inflation last year was relatively low, the loss will be small for each beneficiary.
No current retiree on Social Security has himself made contributions to the system that cover more than a small part of his expected benefits. For the last decade, faulty inflation adjustment formulas have raised benefits substantially more than actual increases in living costs. These increases have been paid for by ever-higher taxes on the wages of workers whose own incomes have been falling behind inflation since 1979. In this situation, a refusal by retirees to accept even a modest scaling back in future benefit increases would be unreasonable.
It is nevertheless simply impractical to talk about raising the entire $175 billion or so needed in the short-term by cutting benefits. The social consequences would be unacceptable. Some of the gap can fairly be closed by making those workers who now get windfall benefits from the system--federal, state and nonprofit workers--begin to pay their fair share of the costs. But even so, a large residual sum must be raised through higher payroll taxes.
The commission members were well aware that payroll taxes are already a heavy burden on average wage earners. That's why they softened the provisions by allowing payroll tax increases to be offset against income taxes. In order to keep higher employer taxes from discouraging needed job growth, they deferred most of the increase for five years. Workers will be paying more, but in return they will know that the benefits now received by their parents and relatives will be secure and that the system will be in good working order when they themselves reach retirement.