The Social Security actuaries have recalculated the system's likely long-term deficit and say it will need more money over the next 75 years than previously believed, Health and Human Services Secretary Richard S. Schweiker told the House Ways and Means Committee yesterday.
Although Schweiker gave no details, other officials said the actuaries have tentatively decided to lower their long-term birth rate assumption to bring it closer to Census Bureau projections. A lower birth rate means fewer workers to pay taxes into the system in the first half of the next century.
Assuming the actuaries do not reverse themselves, the system would be left with a 75-year deficit of about 2.1 percent of taxable payroll, about one-sixth higher than previously estimated.
That means it would take revenue infusions and benefit cuts equal to a 2.1-percentage-point increase in the Social Security tax rate to bring the system into long-range balance. The president's recently disbanded Social Security advisory commission had assumed there would be a 1.8-percent long-range gap between revenues and costs, and could not agree on enough measures even to close that.
Sources said the actuaries are still working on their new estimates and are under pressure to stick to the old ones when they report to Congress next week, because a larger projected deficit could endanger the rescue plan that the president's commission proposed and Congress is now considering.
But Schweiker said in his testimony on the plan yesterday that new assumptions "are expected to show a long-range deficit greater than 1.8 percent of taxable payroll."
Although an added deficit of 0.3 percent may seem small, it is not. In today's terms it is equal to several hundred billion dollars.
The presidential commission reached bipartisan agreement on steps to raise $168 billion over the next seven years to handle short-term solvency problems, but its proposals would close only about two-thirds of the long-range deficit that the commission had estimated.
Republicans, generally, favor closing the remaining gap by gradually raising the normal retirement age to 66 early in the next century. Some Democrats on the commission proposed a slight increase in the Social Security tax rate in the year 2010 instead.
The Democrats vigorously oppose raising the retirement age. On Wednesday, Rep. Claude Pepper (D-Fla.), House Rules Committee chairman and a commission member, threatened to withdraw his support for the revenue-raising compromise if an age-66 provision is added.
Under the old estimates, the portion of the long-range deficit not covered by the compromise was 0.58 percent of payroll; the new estimates could raise this by about half.
While the new figures could make it more difficult for Congress to enact a rescue plan, the bipartisan agreement as it stands got a strong push forward yesterday when it was endorsed by 48 of the 50 members of the executive board of the Save Our Security Coalition, which includes 140 organizations representing the aged, the disabled and labor unions.
Asked about the new long-range projections, Rep. Barber B. Conable Jr. (R-N.Y.) said they probably would show larger deficits, adding, "These guys are hell-bent on changing the fertility rate."
Sources said the new Social Security calculations would have relatively little impact on the estimated short-run (seven-year) needs of the system.
For years, Social Security has been assuming a long-term fertility rate of 2.1 births per woman of child-bearing age, but the Census Bureau recently projected 1.9 births per woman. The actuaries, sources said, have tentatively adopted 2.0 births.