The trustees of the Social Security Administration really started something with their recent warning that the system could run out of money in 2029, seven years earlier than projected only a year ago. For fortysomething Baby Boomers, loudly worried about their Golden Years, this sounds a warning for their middle-Seventies. For twentysomething Baby Busters, this enlarges alarums that there may be nothing left at the trough when they retire. As for real single-digit Babies, we're talking about their whole financial future.
Let there be no mistake: the lines are forming for generational financial warfare the likes of which the nation has never faced before. It's the fault of medical science, as people live longer; it's the fault of federal deficits, which reduce public sector resources over the long run; it's the fault of unpredictable ups and downs in the birth rate.
Faced with such traps and imponderables, the temptation for politicians is to look the other way. After all, isn't this a problem for the Next Millennium? Indeed it is, but it is also a Next Millennium most citizens will live to see -- perhaps for a long, long time. So the question is: Do we take gradual, prudent steps now to head off trouble in 2029 and beyond or do we let the generational clock tick?
Enter House Ways and Means Committee chairman Dan Rostenkowski, who dares to round out his career by putting Social Security on the national agenda just behind health care and welfare reform. He has come up with a plan which, by imposing a certain amount of pain on every age group, might pull off the political hat trick of using countervailing controversies to cancel one another out. Fairness, or its appearance, is his intention. But even that will go nowhere unless President Clinton picks up the baton.
Here's what Congressman Rostenkowski proposes: A half-point cut in the projected 3 percent Cost of Living Adjustment (COLA) increases in Social Security benefits in 1995, which would result in a $3 cut in average monthly payments; lowering the threshold of full taxation of Social Security benefits for single people with taxable incomes of $25,000 to $34,000 and for couples in the $32,000 to $44,000 category; raising the retirement age (now 65) 67 in 2016 instead of 2027 as now scheduled; gradually trimming benefits a little in the next half-century for retirees who earned above-average wages in their working years; increasing payroll tax rates from 6.2 percent to 7.35 percent between 2019 and 2022, plus another hike in the middle of the century.
That's quite a package. Without endorsing any of its specifics, we support the general idea of acting now rather than dumping the problem into the next century when far more drastic steps would have to be taken. That the proposal comes from a congressional leader who has taken plenty of abuse for trying to fix Medicare should be a reminder that Social Security imposes actuarial imperatives the nation will ignore only at its peril.