Social Security-Will it make it?
O'Donoghue, Joseph
'A TIMEBOMB TICKING UNDER THE ECONOMY' Social...
...But the combining of life insurance and a savings plan contributors to the system...
...The continued use of this device as the sole support of the adequate support/ system in the post-retirement years...
...So wide is the growing network of beneficiaries that nomy" is how Time magazine described the status an estimated one out of three American families will ex hof the nation's Social Security program at the be- ence a financial loss through any downward revision oithe ginning of this year...
...But in- modated (1) by slowly raising both the tax rate and the tax base creases of this magnitude will affect the salaries of no more for Social Security, and (2) by gradually expanding the pool of than 15 percent of the work force, a segment that up to now has tax-paying workers through adding previously uncovered secbeen able to acquire Social Security eligibility at a fraction of tors of the work force...
...D Send gift cards directly to recipient El Enter a subscription for me only...
...However, an individual then earning $18,000 paid the dependents (husbands, wives, or children) of beneficiaries...
...with my greeting...
...The superior benefits revenue available to fund Social Security programs...
...benefits for every ten workers some four decades from now...
...perhaps $700 million, or approximately one-half of one perGlossed over in the administration's report were pertinent cent of anticipated revenue from the payroll tax for that year...
...mandating these new rates the 1977 tax legislation moved the The total number of individuals entitled to benefits under system toward the capture of an equal percent of payroll tax Social Security has grown to the extent that one out of every from the upper middle class...
...benefit only for that small percent of retired workers with fertility rate from 3.69 in 1957 to 1.72 in 1976 meant that each additional earnings sufficient to lift them up to an otherwise year a relatively smaller number of new workers began to pay taxable level...
...A mere under current law can lose a spouse's benefit if married less 15 0 of every dollar collected has been found sufficient to cover than ten years...
...In a U.S...
...For ments an average of such amounts would almost inevitably be example, the administration's plan to phase out benefits now far below the actual amount a worker earned in those years...
...An mately 17 cents per week...
...0 Send gift cards to me for mailing...
...The options appear to payments and the tax revenue needed to finance the benefits be obvipus...
...The pro- are made possible by a 75 percent subsidy directed to federal posal by congressional liberals called for the use of treasury pensions from the general tax revenue of the nation...
...In late summer where long-term employees with above average incomes can the president announced that he would prefer a cut in the rely on a fixed pension payment after retirement...
...On the assumption that 65 years will movements in the Consumer Price Index the Social Security remain as the major point of retirement it is possible to anticisystem has achieved a form of inflation protection which is pate that there will be five Americans receiving Social Security absent from virtually every pension plan in the nation...
...T HE NATION was in the midst of the decade of the Great I N THE 1976 New Hampshire primary Ronald Reagan made Depression when Social Security legislation was initially the mistake of suggesting that retirement payments under signed into law by President Franklin D. Roosevelt on August Social Security might have to be reduced at some future time 14, 1935...
...In 1970 there were 1.4 million the option of selecting the lower of two already minimal disabled American workers receiving $3.1 billion in annual calculations the administration could guarantee for itself a payments under the Social Security program...
...More importantly, the same individual relying on personal investment habits now under way...
...At a time when the average American male at birth because of the tax pressure which these payments placed on the had a life expectancy of 60 years it was not difficult to finance a current members of the work force...
...recipients in an election year, the continuation of Social Secuworkers do not have any form of pension that can be relied rity payments at present levels would require the immediate upon for steady income in their post-retirement years, nor is (1980) infusion of general revenue...
...In spite of occasional congressional legislation sible to reduce major Social Security payments for current designed to encourage pension plans the vast majority of U.S...
...The increase earning $29,700 or more will see their Social Security tax in funds paid to the expanding population over 65 was accommove from $965.25 in 1977 to $1,975.05 in 1981...
...In the current period in which 50 worker now entering the Social Security system in his late percent of all married women work it frequently happens that teens or early twenties can outperform the system in total after several years of work a married woman ends up with savings over 'a forty-five year working career...
...evidence of a stabilizing or possible slight increase in future From 1972 to'1979 the average payments for new retirees fertility levels...
...these policies should be compared to the 98.3 percent rate by But will Americans continue to choose retirement in their the Social Security administration on every dollar it collects mid-sixties as the majority now do...
...Three million Americans over tirement age...
...Legislation passed by Congress in 1974 to eliminate abuses the payroll tax would be recovered from revenue acquired and insure stability in the management of private pension plans through the corporate tax when employers reported less labor is now regarded as having contributed to a reduction in the total costs...
...certain amount of life insurance while simultaneously guaran- On balance the use of the 50 percent floor for spouses tends teeing a fixed payment (savings) upon the maturity of the to reward those outside the system at the expense of long-time policy...
...The alternative, a majority now feel, is to be urge limits to benefits for the aged and the disabled on the basis relegated to the dump heap of an inactive, unproductive, and that such assistance requires impossibly high tax levels seldom even desperate existence of simply waiting out their time to attempt to explain the prosperity of the Scandinavian nations die...
...In the long run the Carter administration's attempt to working career, e.g., increasing the retirement age of 65 by solve a "crisis" by reducing benefits in the Social Security one month per year over the next 36 years...
...3) imposing an new applications can be expected to financially strain the earlier (16 years) cut-off for benefits to children of widowed program...
...contributing the maximum amount of tax to Social Security Employers would benefit through a corresponding reduction in every year since its establishment in 1935 would have an Commonweal: 654 individual account of slightly over $30,000 if the worker had consistently placed the amount of tax paid by the worker and the employer into a personal savings account...
...A month later U.S...
...The combined tax rate (federal, state, and local) "The basic, undeniable fact is that most Americans in the last of the U.S...
...benefits...
...Up to insurance industry...
...half in the last rive years...
...COMMONWEAL 232 Madison Avenue, New York, N.Y...
...This year a of Retired Persons has pointed out that the single step of Louis Harris poll indicated that eight out of every ten Ameriswitching Medicare support from the payroll tax to general cans covered by Social Security are not sure that they will get revenue would make it possible to slash $24 billion from the the benefits they believe they have earned under the program...
...Although most of the proposed average lifetime earnings under Social Security, a sum based reductions would not affect current beneficiaries, they would on the amount of income against which Social Security taxes have considerable impact on the level of payments expected by are extracted each year...
...Either the nation's workers must accept constant will require staged increases in the payroll tax rate from 6.13 tax increases to support the program at its current level, or the percent this year to 7.65 percent in 1990...
...Under tax rates legislated in 1977 the tinuing increases in their benefits which are annually adjusted system is designed to be in balance each year for the remainder to the inflation rate...
...This year the average retirement benefit is $3,454 at a time when increasing longevity and falling birth rates were for an individual and $4,800 for a married couple...
...Under legisla- from another perspective a second and different type of job tion scheduled to become effective in 1982 an individual who after a relatively early retirement has become an attractive continues to work after 65 will receive an eventual 3 percent alternative for those Americans fortunate to enjoy a secure increase in benefits for every year of work beyond age 65 up to pension from either a unionized industry, e.g., steel, or from...
...Over half of all Speaker O'Neill told the AP after the passage of the bill, employees in the nation are not covered by any form of pension "we're the only nation in the world that doesn't use general plan...
...Until the late 1970s tration's attempt to reduce the benefits seems particularly the payroll tax produced a growing and easily tapped source of ill-timed in 'vjew of the certain reduction of pressures on the revenue...
...coming disabled...
...A closer look at the data suggests that the relatively modest Social Security benefits when joined to low income HEW grants could exceed educational expenses only for that fraction of the college age population with access to two years of very low-cost community college education...
...Walter Heller, the top economic advisor to Presiby more than one-half in the last five years of high inflation dents Kennedy and Johnson, has estimated that perhaps $4 rates...
...4) ending Social Security retirement payments for The technical jargon used by administration representatives "double dippers," viz., the substantial number of civil service also contributes to a clouding of the real level of expenditures retirees who have managed to acquire additional retirement under Social Security...
...With absolutely no cut in benefits this would repre- made available to the system by the tax legislation of 1977...
...But twenty years of growth in the spread cent in the case of those with maximum earnings...
...estimated $135 billion to be collected from this year's payroll At the same time there appears to be an increasing number of tax...
...There is no evidence to suggest that any substantial increase in future Social Security payments is the president's endorsement of a cut in the Social Security tax linked to the use of general tax revenues as a supplement to would have any influence on legislators who, at this writing, revenue raised by the payroll tax, a move which is vigorously have rejected all his proposed cuts in Social Security with the resisted by fiscal conservatives...
...News and World major Social Security benefits...
...In the absence of a their total labor costs, a savings which could be expected to mechanism of adjustment for inflation almost all the pension result in lower product prices and additional employment plans in: the nation have had the real value of their payouts cut possibilities...
...Damn it," leading industrialized nations of the world...
...And it now seems likely that life expectancy under Social Security rose 75 percent in the case of recipients will not continue to move upward at the pace experienced in with a record of,,ininimum qualifying earnings, and 107 per- the last two decades...
...policies adequately indexed against inflation is estimated to 23 November 1979: 653 range from 3 percent to 7 percent...
...The use of this low threshold indicator has Accounts of widespread "double dipping" by retired civil produced the current situation in which the available service personnel may arouse the ire of taxpayers, but it is an maximum benefit to the family of a disabled worker is under anticipated benefit for members of Congress and their staff $600 a month...
...But even this potential benefit is offset by the Social Security taxes...
...Medical possibility that the new level of continued work force partici- data suggests that length of life and life satisfaction are inpation should be attributed to economic necessity during the creased through productive work experience after 65...
...sence of adequate personal savings in the U.S...
...The fall in the U.S...
...Report ran a doomsday scenario under the heading Social Since its inception in 1935 the entire system has been Security: Will It Be There When You Need It...
...they could at age 65 draw benefits to be paid by the contribuBut the proposed cuts can also be perceived as a key land- tions of workers then in the labor force...
...other countries add $2 per year...
...El I enclose...
...The fact that the 1977 tax legislation represented a long Commonweal: 650 overdue move toward progressivity in the Social Security tax percent from employee, 1 percent from employer) on only the has been almost universally overlooked by the popular media...
...The White House has expressed particular concern over a recent Government Accounting Of- A lmost all the pension plans in the fice study indicating that approximately 100,000 of the stu- nation have had the real value of dents are receiving combined assistance from Social Security their payouts cut by more than oneand from HEW that reaches an amount greater than the actual costs of their education...
...For occurring in 1984 would be realized only if there were an example, since 1977 the rate of new awards under the disabil- immediate reversal in the current downward trend of disability ity program has been steadily falling...
...population in a manner that will have profound period of gain in benefits relative to prices will not be repeated impact on the amount of tax support needed for Social Security since its occurrence was due to a now corrected congressional into the next century...
...society if alternative careers provide new outlets for the now But a strong case can be made for the emergence of a continu- under-utilized capabilities of individuals at the traditional reing pattern of work beyond 65...
...in a of Social Security programs and rising benefits had ended, and unique position among the over one hundred nations which that the 1980s must be a "decade of reform" in which Connow have some form of general support for retired workers...
...For every two dollars _ of earned income above constantly accelerating demands on the payments of benefits...
...As indicated earlier, insurance as compared to the far more cost-effective term life Social Security was initiated in a period whose life expectancy insurance policies which provide only life insurance over a rates (60 years for the average male) meant that the majority of fixed period...
...maximum ($4,500 in 1979) additional salary now permitted economy can be expected to provide additional employment without reduction of Social Security benefits...
...The commissions paid to salesmen of whole life workers would not live long enough to acquire the payout of can be generous because the dropout rate from such policies benefits commencing at 65...
...The worker with students who last year received an estimated $1.6 billion in greater income was thus acquiring eligibility for future Social Security benefits at a mere 2.6 percent of total salary, or JOSEPH O'DONOGHUE, a professor of sociology at Hofstra University one-half the rate imposed on less affluent workers with $9,000 on Long Island, has testified before congressional and state legisla- in annual earnings...
...receiving Social Security benefits from 65 to 68 would reduce Would the nation be undergoing an unsettling debate on the the total cost of retirement payments by approximately 20 future of Social Security benefits if general revenue had been percent...
...For the average U.S...
...Last year for the first time through the payroll tax...
...They do not affect basic retirement pay- who for the first time began to pay Social Security taxes ments whose continuation at inflation-adjusted levels will al- through their inclusion in an expanding system...
...Expanded benefits such as assistance to college stupayment system when the college age population falls by 25 dents and wider disability coverage were successfully intropercent in the 1980s...
...thereby accepted from Social Security a prorated cut in beneInstituted in a period in which only one out of six married fits that can amount to 20 percent for those retiring at 62...
...At the same time the expanded benefits they amount to less than 2 percent of benefit payments antici- could be used to impress the thirty- to forty-year-old workers pated for next year...
...retirement payments relative to the taxes imposed on a lifetime This ending of an easily tapped source of revenue occurred of earnings...
...There is the opportunities on the senior side of the working career...
...Each congressional mark in the future development of the Social Security program passage of improved payments to beneficiaries added to the because their enactment would be a victory for Senator Russell marketability of the system since such actions collectively B. Long, Chairman of the Senate Finance Committee, and established an atmosphere in which ever higher levels of future other long-time advocates of confining Social Security fund- benefit payments were anticipated...
...The subsequent increase in runs as high as 20 percent within the first five- to ten-year longevity may be regarded as the single most important factor period...
...In addition to scale of benefits must be reduced...
...facts regarding the growth rate of the particular programs The one billion in savings cited by the administration as whose current cost is so disturbing to the White House...
...workers...
...Also effective in 1982 is a legislated change by which 70 came in large part from worker associations whose memthe Social Security payment will take on the status of an bers were committed to some form of full-time employment annuity at age 70, thereby eliminating any ceiling on outside beyond the arbitrary 65-year level...
...The move toward reduction of the payroll tax would also number of pension plans in the nation...
...In an individual's credited average earnings, or 150 percent of the its report to Congress on Social Security the administration individual's primary benefit under Social Security...
...For a short period in 1977 it seemed against annual earnings, a federal worker with 30 years of that the White House would follow House Speaker Tip O' Neill service can retire with benefits well above those provided to and other liberal Democrats in efforts to make general tax Social Security participants at age 65...
...billion of the revenue lost to the treasury as a result of lowering...
...tive committees on tax reform...
...death benefits...
...sent a savings for the program that is ten times greater than that Could it be that no other industrialized nation in the West is proposed by the Carter administration through the reduction of experiencing a wave of alarmism in the funding of its national benefits...
...now approximately 50 percent of workers covered by Social However, the Social Security system has a number of de- Security have opted for early retirement (ages 62-64) and ficiencies which have been surprisingly resistant to correction...
...At a maximum E ffective help for Social Security investment rate of 10 percent the same individual upon retire- appears to be coming from a ment this year could expect far less in payouts from the startling reversal of American work personal investment than from Social Security...
...of 6.13 percent to approximately 5.0 percent...
...For families earning at or near the Eventually, of course, the system had to mature...
...Nor is there a clearly estab76.7 percent of the salaried and 60.6 percent of the hourly lished link between a nation's prosperity and its level of employees scheduled to retire elected to stay past age 65...
...The can expect a negative return on the savings component of the Social Security-covered worker who retires at age 65 in 1979 policy...
...By 1978 the reduction of at least 15 percent in future benefit levels paid to number had doubled to 2.8 million and the benefit level had Americans incapable of further employment because of a quadrupled to $13 billion...
...immediate result was that extra revenue for the paying of But both the affluent and the less affluent worker are on benefits could no longer be gained through the addition of common ground in raising questions as to the size of eventual contributors formerly outside the system...
...The Carter administration's response to 23 November 1979: 651 what it perceives as a crisis in Social Security financing has the drop to the successful handling of the backlog of disability been to present Congress with a list of possible Social Security cases existing prior to the enactment of legislation authorizing cuts in areas other than retirement benefits...
...In return for a 7 percent withholding tax levied of the nation's payroll...
...Analysts considering the possibility of delaying re- retirement program because no other industrialized nation has tirement benefits to age 68 have invariably cited the need for chosen to draw the revenue from a single source in the style of legislation that would slowly phase in an extension of the the U.S...
...During the between falling birth rates and increasing longevity has shaped same period the Consumer Price Index rose 56 percent...
...2) phasing out the benefits paid to the implicit (but erroneous) assumption that an avalanche of college-attending children of beneficiaries...
...4,500 in 1979 the Social Security beneficiary suffers a loss of Analysts of U.S...
...But specific program may be remembered as one more example of its legislation to delay the retirement age need not be enacted if narrow provincialism...
...The fact that beginning to create major problems by adversely effecting the these payments are tax free to their recipients is of significant all-important ratio of workers to retirees...
...Califano was referring to credited election campaigns in 1980...
...productivity gains are stagnant the powerful Japanese Security system...
...Once it was initiated this there any indication that this situation will be changed in the use of general tax support would be almost impossible to near future...
...Seven out of every eight practice argue that Social Security merely places a protective American families have purchased whole life insurance floor underneath the spouse of a covered worker, if she earns policies at a total cost of $14 billion, a sum slightly greater than greater benefits than that floor she gets those greater benefits, the total bank savings of these same families...
...But eventual Social Security retirement payment...
...Specifically, the wider coverage in the early 1970s...
...if inflation were to subside a good for the individual could prove to be very good for the reverse trend might occur in the case of Americans over 65...
...2.9 million Americans with job-incurred disabilities JOSEPH O'DONOGHUE now obtain Social Security payments under legislation enacted ~~ TIME BOMB ticking under the whole U.S...
...The funds available each year to the program benefits has ended is perhaps most evident in the determination can be rigorously controlled because of the established linkage of 2.8 million federal employees to avoid future inclusion in between Social Security benefits and a predetermined percent the system...
...This program made it necessary to increase both the tax rate and the hope for a total support system has not yet materialized...
...This type of switch could conceivably reduce the current Americans prepared to argue that they could better prepare for payroll tax, now assessed in equal parts against both the their own retirement if they invested on their own rather than individual employee and the employer, from its present level contributed to the payroll tax...
...The muniexpressed considerable concern over what it interpreted as ficent sounding 150 percent of primary benefit meant an aversoaring increases in the level of payments made to workers age disability support of $330 a month in 1978...
...The Carter admost European nations the funding for programs comparable ministration's inclination toward pessimistic statements about to Social Security is derived in almost equal parts from a the future of Social Security is having a predictable impact on special tax and from general taxes...
...El Enter gifts only...
...Last year the nation's largest retailing chain, Sears, or the Federal German Republic where the combined tax rate Roebuck and Company with 400,000 employees, reported that now approximates 50 percent...
...This the U.S...
...A purchaser who drops out during that initial period in leading to today's reputed crisis in Social Security...
...A recent (July, Social Security benefits that are not much greater than the level 1979) report by the Federal Trade Commission (FTC) has of benefits (viz., 50 percent of the spouse's benefit) which she documented what can happen to the nation's savings in the would have received if she had never worked...
...The nation's relatively small number of substantial There is an outside chance that the Carter administration pension programs are almost exclusively confined-to large, might be backed into a position of advocating the use of generally unionized, industries such as steel or auto production general revenue for Social Security programs...
...relative to' the number of retired workers who are now sup- The achievement of this constant balance between benefit ported by the Social Security payroll tax...
...Last Commissioner of Social Security, Robert M. Ball, who linked year's allotment of $1.6 billion to these students represents the Commonweal: 652 continuation of a steady climb in benefits paid since the institution of the program in 1965...
...Last women worked, the payment formula guarantees the spouse of year's delay in retirement could be the first indication that a retired worker a sum equivalent to 50 percent of the worker's there is a new generation of retirees who will opt to stay in the 23 November 1979: 655 labor force until 70 because by so doing they can increase their could be regarded as a new form of worker exploitation...
...comply...
...Among existing programs the number of retirement revenue in some way for retirement benefits...
...The S OCIAL SECURITY Commissioner Stanford G. Ross, a Carter current unavailability of general tax dollars to support benefits appointment, recently declared that a long era of expansion such as retirement payments and Medicare place the U.S...
...whose working careers almost inevitably combine private em- The New York Times became a casualty of this language fog ployment under Social Security with their congressional em- when in a recent (July 19) editorial it stated that "many people ployment under a civil service pension...
...No presidential candidate program which provided very modest retirement payments for in 1980 is likely to make a similar statement in view of the vote the relatively small percent of the population which would live loss attributed to Reagan because of his remarks on reducing long enough (65 years) to collect benefits...
...age in the mid-1980s when the nation will be confronted with a One more indication of a national propensity to stay in the sudden shrinkage in the college age population which will fall work force beyond 65 can be seen in the steady increase in by 25 percent in that decade...
...reverse, in the opinion of both advocates and opponents of the The unavailability of comprehensive pensions plus the ab- step...
...The great 1979 U.S...
...3) a decline in the size of the work force of this century...
...Only someone familThe Carter administration's proposals have not been iar with the language of the Social Security administration warmly received by members of Congress who are facing would realize that Mr...
...At the opposite end of the spectrum a earnings limitation imposed on Social Security beneficiaries rising life expectancy rate (73 years at birth in 1977) placed under 72...
...the latest rate of disabil- applications...
...A TIMEBOMB TICKING UNDER THE ECONOMY' Social Security will it make it...
...Herbert Bienstock and earnings as a condition for receiving full payments from Social other Labor Department analysts are predicting a labor shortSecurity...
...national debt as some analysts would suggest in urging a Each year of delayed retirement by members of the work reduction in the funding of social programs...
...The FTC has indicated that by paying an average of only retains a future right to 50 percent of their collective contribu1.3 percent on the saving component of these policies the life tion to the system...
...The 85 percent of the working population with system at a rate faster than the increase in retirees it was even annual earnings well below the new ceilings on the tax base possible to finance some improvements in benefits and to add will have their Social Security taxes raised only to the extent of new forms of protection, e.g., Medicare for those over 65, the percent changes in the tax rate, viz., 5.85 percent in 1977 without major advances in either the tax rate or the tax base...
...The destruction of savings potential is perpetuated because EFFECTIVE HELP for the problems of the Social Security of the much larger commissions which the industry makes program appears to be coming from a startling reversal of available to its eihployees for the successful sale of whole life American work habits now under way...
...can anticipate an average of 14 years of payments if male, or The 30 percent skim off by the insurance companies on 17 years if female...
...These new legedly be strengthened by the reductions proposed in other members were told that without being lifelong contributors areas...
...duced in Congress on the basis that the new additions could be IUN ONE SENSE THE Social Security reductions poposed easily supported by relatively modest increases in a tax with a by the White House appear'to be rather modest...
...The Carter adminis- in the benefits provided by the program...
...By accepting the established support the current trend to later retirement is further sweetened by system and the established retirement age as unalterable giincreases in eventual Social Security payments for every year vens, the administration has lost the opportunity to supply the of additional work past 65...
...Lopmog W" 1W...
...0 Bill me...
...Carter's plan to reduce are eligible for larger payments than their wages" (emphasis benefits paid to widows with children is particularly unappeal- added), and then proceeded to endorse the administration's ing to representatives who see their political vulnerability proposed cuts on the grounds that they reasonably limited increased in return for only minimal savings to the Social benefits to a person's maximum take-home pay prior to beSecurity program...
...This year there are three Americansoversight in the method of computing the inflation adjustment...
...Canada...
...The recent impetus behind successful 1 percent in additional benefits for every year of work after 65 legislation to raise the age of mandatory retirement from 65 to to 70...
...Former HEW Secretary Joseph in the same package effectively disguises the fact each of the Califano has proposed a two-way split of whatever benefits are two items could be purchased separately at considerably better accumulated by a married couple in such a way that each rates...
...benefit regardless of whether the spouse ever contributed to the There is even less likelihood that the young American system as a taxed worker...
...it was $4,800...
...revenue received from this sions this year the New York Times has recommended major month's payroll tax becomes revenue used in next month's reductions in Social Security benefits because the editors be- payment of benefits...
...to 6.65 percent in 1981...
...From its start the Social Security system was deThe 1977 tax bill solved the Social Security "crisis" of that signed as a form ofsupplementary retirement assistance which year by keeping the system within the confines of whatever would be added to money coming from private pensions and funds could be raised through the mechanism of the payroll individual savings in order to provide an individual with an tax...
...Social Security Commissioner job-incurred disability...
...parents...
...began to retire in the late 1970s...
...Most Republicans and con- possible exception of some minor modifications in disability servative Democrats in Congress have long argued that any use coverage...
...Since it would be politically imposto negotiation...
...median family income level ($15,200) the actual bulk of employees who had been added to the system in the dollar increases in the tax over the supposedly horrendous middle of their working careers during the 1950s and the 1960s 1977-81 peribd will be $30 per year...
...In real dollars the bill would cut disStanford G. Ross estimated that the administration's plan to ability coverage by amounts that would bring many disabled lower the benefit rate for future qualifiers could save approxi- workers to an income approaching the poverty level...
...ity awards represents the lowest in the history of the program...
...In reality the bill suggested by the adminisThe potential savings appear to be much greater in the cuts tration would limit benefits to the lower of either 80 percent of which the White House has proposed for disabled workers...
...eco- in 1957...
...A 2 percent tax (1 retirement benefits...
...assigned to over 800,000 college students is politically unat- For example, in the early 1950s the amount of credited earntractive in view of the long-standing anticipation of those ings under Social Security was $3,600, while in the mid 1960s benefits by beneficiaries with children nearing college age...
...Commonweal: 656 Commonweal Subscription Order Form CHRISTMAS $20.00 $15.00 For the first one-year For each additional one-year subscription (your own or gift) subscription U.S...
...considerably greater than the entire national debt...
...The American Association public confidence in the reliability of the program...
...For the vast majority of these students, who have one parent either deceased or out of, the work force by retirement or disability, the grants repre- It is ironic that the confinement of Social Security revenue to sent a limited duration return of a benefit earned by a payroll- the payroll tax now constitutes an obstacle to further increases taxed parent throughout a working career...
...first $3,000 of earned income was sufficient to meet all payBy focusing on the admittedly large upward steps in the tax ment demands on the program from 1937 to 1951...
...In gress would mandate "painful adjustments...
...ing to whatever revenue can be raised by the single instrument The fact that the golden era of expansion in Social Security of the payroll tax...
...of general taxes by the retirement program would open the flood gates of runaway spending for increased benefits...
...What is current period of rapid inflation...
...A worker retiring in 1979 after viding workers with additional income in each pay check...
...now approximates 30 percent, the second lowest quarter of the Twentieth Century want to work for the rest of rate among the world's industrialized nations...
...Your Name (Please print) wy .a e,rrr Street Going bust ~~ in Youngstown City State Zip I I Q;-un rnMMr%MWI (Please print) (Please print Street Street City State Zip City State Zip Gift card to read from Gift card to read from El Enter my subscription plus gifts...
...10016 Phone (collect) 212-MU 3-2042 23 November 1979: 657...
...With the type of contraction in the recent years in the percent of retired workers who earn the number of young workers entering the labor force the U.S...
...same amount of tax dollars as the less affluent worker since the Among these dependent beneficiaries are 817,500 college top $9,000 of income was over the ceiling...
...By bringing new workers into the the general rate...
...The current record of benefit payments by Social Security Any lightening of the payroll tax rate could be expected to provides little support for the view that an individual saver have an immediate effect in stimulating the economy by pro- could outperform the system...
...A similar misreading of trends by the Carter administration The trend toward less applications each year was observed and is evident in its recommended reduction in benefits to the its continuation predicted over three years ago by the then college age children of Social Security beneficiaries...
...fertility rates have recently reported some one dollar in the retirement payment...
...Testifying before the House Select Com- of the tax experience of all other industrialized nations at this mittee an Aging in early 1978 pollster Louis Harris stated: point in time...
...Individuals who have been annually U.S...
...Prior to the 1977 changes the tax seven Americans now receives some form of monthly support had been lopsidedly regressive due to the low ceiling placed on from the program...
...On three occa- operating on a fund transfer basis...
...type of comprehensive support which Social Security needs to At first glance the extension of the work career beyond 65 regain its status as a program of equity...
...The distilled obligation is less than awesome since a work force of 96 wisdom of some of the leading media suggests that the pro- million is automatically taxed in every payroll check for an gram is in deep trouble because of three related factors: 1) a amount of revenue that will match the system's anticipated steady growth in the number of retired beneficiaries...
...Defenders of the area of life insurance programs...
...It now seems certain that tion in Congress is so low...
...level of personal savings now 'ranks last among the payments and tax benefits throughout the 1980s...
...greater than their pre-disability earnings...
...reached 65 and continued to rise thereafter...
...Robert J. Meyers, Chief Actuary of the industrial machine last year raised its productivity by 8 percent Social Security Administration from 1947 to 1970, has esti- while maintaining a national debt that is higher relative to GNP mated that legislation raising the, minimum retirement age for than our own...
...Unions payroll tax over a cut in the federal tax in the event that some which have attempted to introduce the improvement of pen- form of tax cut became necessary to head off a deep recession...
...Analysts who their lives...
...65 are now working full time, and another four million are It seems unlikely that Proposition 13 fever will become a estimated to be seeking full time work according to the De- permanent component of the American consciousness in view partment of Labor...
...many firms confronted be expected to have a long-term impact in lowering inflation with new legal responsibilities in the management of their rates when productivity rates began to rise relative to a drop in pension funds simply opted to drop their programs rather than labor costs...
...At the same time Social Security in this decade there was a percent decline in the number of provides almost all of the 96 million American work force with Americans choosing to retire in the age 62 to 65 category as a disability insurance which is not available from the nation's compared to the total pool of workers in that category...
...is frequently The odds on the occurrence of the above scenario remain used as an augument for the expansion of Social Security long because the president's impact on Social Security legislabenefits beyond their current level...
...where 11 percent of the popula- the amount (the tax base) against which the tax rate was tion is over 65 there are 18.6 million recipients of retirement charged...
...An additional 13.2 million percent Social Security tax on his or her entire earnings for the Americans qualify for Social Security benefits as survivors or year...
...For example, when the tax base was limited to benefits by reason of payroll participation in Social Security $9,000 (year 1972) an individual earning that amount paid 5.2 during their working career...
...Former HEW Secretary Joseph benefits (beyond their generous federal pension) by working Califano testified that in a recent year 6 percent of the disability the absolute minimum amount needed to qualify for Social beneficiaries received Social Security payments that were Security coverage...
...base from 1977 to 1981 it is possible to shock the public by The first major challenge to the financing of the system reporting scheduled tax increases of over 100 percent within occurred in the early 1950s when male life expectancy in the that four-year period...
...70...
...Because there is no accumulation of lieve that benefit reduction is inevitable, and that any'attempt assets the long-term obligations of the Social Security system to oppose reductions at this time would risk "far more destruc- can be reported as an astronomical one trillion dollars, a sum tive changes in the future...
...2) con- obligations for each year...
...This type of change would also begin to insurance companies have been able to utilize 300 of every provide some future protection for divorced individuals who dollar collected for their overhead and their profits...
...The mately one billion dollars per year by 1984 without any lower- estimated savings to the government for 1980 would be ing of payments made to beneficiaries already on the rolls...
...In the computing of disability payindividuals who become eligible in the immediate future...
...In effect the Carter adminis White House has proposed: 1) placing a cap on disability tration is urging a major cut in future disability payments under payments at a lower level...
...The current benefit for delayed retirement is an increase of government service...
...In reality the How real is the crisis in Social Security...
...would have absolutely no protection against either the erosion of inflation or the escalation of medical expenses, two dangers from which an indexed Social Security system and Medicare benefits provide some protection...
...By reserving with job-incurred disabilities...
...The tax base in order to preserve a strict balance between tax U.S...
...funds as temporary loans to the system whenever a slowdown in the economy led to a drop in taxes gained by the system...
...sions for currently retired workers as an item in contract A cut in the payroll tax, if adopted by Congress, would negotiations have been successfully blocked by court deci- effectively break the confining linkage of Social Security sions ruling that management need not make the issue subject benefits to the payroll tax...
...SOLUTION to the current problems in the funding of Social Opponents of the measure regarded it as a dangerous precedent A Security takes on special urgency because of comparable which would offer too many opportunities to increase benefits problems in the private pension plans available to American through the constant availability of bail-out money...
...In their totality (then) low profile...
...By that time the number of worker with an income of $11,000 in 1979 the dollar increases workers covered by Social Security had been expanded to in Social Security taxes over 1978 will amount to approxi- include 94 percent of the entire working force of the nation...
...At a time when force has obvious consequences in the financing of the Social U.S...
...receiving Social Security benefits for every ten workers who But with future benefit increases now legislatively linked to pay Social Security taxes...
...Whole life while if she earns less benefits than the floor she has the insurance policies have the obvious advantage of providing a advantage of having her benefits raised to the level of the floor...
Vol. 106 • November 1979 • No. 21
