The Senate last night passed its bill to shore up Social Security, 88 to 9, after voting to postpone inclusion of new federal employes in the program.
The postponement vote was a major victory for federal employe unions, which have been fighting to retain the existing separate Civil Service retirement system.
The controversial issue now goes to a conference committee. The House-passed version of the bill would give Social Security benefits to, and levy the Social Security tax on, all federal employes hired after this year.
The bill seeks to increase Social Security revenues and cut costs a total of $165 billion over the rest of this decade. Among other things, it would speed up already scheduled tax increases and put off this year's cost-of-living increase in benefits from July 1 to next January.
Inclusion of future federal employes would also provide funds in the short run, in that more new employes would be paying taxes than drawing benefits. But the Senate adopted by voice vote an amendment delaying this. Put forward by Sen. Russell B. Long (D-La.), it would defer coverage of new federal employes until Congress constructs a supplementary retirement system for them.
In its original form it would also have deferred coverage of members of Congress and the president and vice president. But Long dropped this part yesterday, and they will now all be included starting next Jan. 1.
Before yielding to Long the Senate defeated, 50 to 45, an alternative offered by Sen. Ted Stevens (R-Alaska) that would have put new federal employes into Social Security but then let them defer contributions to the Civil Service retirement fund until a supplementary system could be worked out. Otherwise their combined Social Security and Civil Service contributions could go as high as 14 percent of pay.
The vote on Stevens was the main test of strength on the issue. Most Republicans were on his side, but only four Democrats went against labor on the issue.
Stevens and others predicted that if the Long amendment is retained, "we will never have government employes under Social Security."
They said the federal employe unions would simply use their clout to block enactment of a supplementary system, and Sens. Daniel Patrick Moynihan (D-N.Y.) and Robert J. Dole (R-Kan.) warned that this could deprive the system of as much as $9.3 billion of the $165 billion that Congress needs to raise.
Long said he favors putting new federal employes under Social Security but that making them come in now without knowing what their total retirement benefits would be making them "buy a pig in a poke." Sen. Paul S. Sarbanes (D-Md.) said the Long amendment "assures that the supplemental retirement system is going to be a fair one."
The one other major provision to be resolved with the House in conference involves postponement of the normal retirement age and basic benefit cuts in the next century.
The House version, to help reduce long-range costs, would raise the normal retirement age under Social Security from 65 to 66 right after the turn of the century and to 67 by the year 2027.
The Senate version would go up to age 66 in the same way, but instead of going on to 67, would gradually reduce basic Social Security benefits by about 5 percent below the levels envisioned under current law.
The Senate version also would eliminate the current earnings limitation for Social Security recipients.
It would leave Social Security in the unified federal budget, while the House would remove it starting in fiscal 1988, and the Senate version would automatically reduce future cost-of-living increases if the Social Security trust funds fall below stipulated levels.
The otherwise similar bills are based on the recommendations two months ago of a bipartisan presidential advisory commission. Both President Reagan and House Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.) endorsed these.
Already scheduled Social Security tax increases would be moved up so that the rate for both employers and employes next year would be 7 percent instead of 6.7 percent on the first $37,800 of pay.
Other provisions would increase the Social Security tax on the self-employed and tax half the Social Security benefits of better-off retirees if that half brought adjusted gross income over $25,000 for a single retiree or $32,000 for a married couple filing jointly.
Starting in 1988, the bill would also limit cost-of-living increases each year to the increase in wages or prices, whichever was less, whenever the trust funds dipped below stipulated levels. Prices are the only determinant now.
Additional provisions would fundamentally alter the way the government pays Medicare bills by instituting a prospective payment system, setting fixed rates in advance for services under Medicare, and provide additional unemployment benefits for the long-term unemployed.
On final passage all Maryland and Virginia senators voted yes except Charles McC. Mathias Jr. (R-Md.) who was absent. On the Stevens substitute, Mathias voted yes and the others voted no.