Show THE VOICE OF BUSINESS Simple changes cans can s save ve Social Security By fly Richard L. L Lesher President Chamber of or Commerce of the United States Slates Suppose I told you that we can solve the financial problems of the Social Security System without reducing present benefits without dipping into general revenues and without drastically increasing the wage base or the tax rate Sound too good to be true Itis It Itis Itis is true if we act soon To seewhy see seewhy seewhy why you need to know a little about the nature of the trouble RIGHT NOW Social Security is on a collision course with disaster The system m is piling up a def cit def f cit that will grow to more than 2 trillion in 75 years If f present trends continue Actuaries differ over whether the deficit projection should be 2 trillion or 26 trillion or even more But what's a few billion among friends Part of the reason for this slight imbalance is the inaccuracy inaccuracy inac mac curacy of past population forecasts Ten years ago agog experts experts exports ex ex- ex- ex ports failed to foresee the baby bust that has sharply reduced our rate of population growth Consequently there will be fewer workers in the future to support a larger number of retiring elders But a much bigger part of the problem is the changes in benefits embodied in the Social Security amendments of 1972 Thanks to these changes the amount of benefits a Social Socia Security participant is entitled to to receive increases steadily in two ways First the benefit level is pegged to earnings while working The more you make up to the cutoff point the greater your benefits at retirement And second the amount of the benefits is pegged to the cost of living inflation The more prices go up the themore themore themore more the benefits go up for both present retirees and future retirees SOUNDS REASONABLE right The trouble is when you put these two innocent innocent- appearing provisions together in an inflationary economy the term long-term result is a pension system far more generous than anyone could reasonably bly expect or pay for As things now stand eventually a low-income low wage earner can wind up with retirement benefits for himself and his wife equal to percent of his retirement pre-retirement pay In other words we will be retiring people at more than they made while they were working It doesn't take a Scrooge to see that this is a level of generosity that society cannot afford and should not promise What's the solution Simply end the double indexing of benefits That is let benefits continue to rise with increases in the cost of which living-which protects recipients against inflation-but inflation hold the line on further increases based on increases in wage levels IF SUCH a system were adopted people would be able to retire in the future at the same relative standard of living as those retiring now Present benefit recipients would exp experience experience ex ex- ex- ex p no cut in benefits Indeed their benefits would continue to rise to keep pace with inflation And workers and employers would not face ruinous increases in the Social Security tax There are other problems with the Social Security system j problems of equity that tha t twill will have to be worked out eventually But the solutions to many of these other problems are costly which means that they are less likely to be resolved while the system as as presently constituted is facing a snowballing deficit |