Good Chances for a Raise

IN the near future, quite possibly before Election Day 1972, Congress may well perform a major retooling job on the 36-year-old Social Security program. There are likely to be substantial raises in benefits paid to the elderly and disabled--and walloping increases in Social Security taxes paid by many working people and by their employers. Congressmen get more mail on Social Security than any other issue; the letters insistently call for higher benefits. Particularly, in a political campaign year, politicians of both parties are eager to boost the income of the 27 million Social Security recipients, most of whom are 65 or over and most of whom will vote. No one can yet predict how big the new benefits will be, but at least a dozen proposals to expand Social Security payments are now being mulled over by the Senate Finance Committee.

Benefits may go up by as much as 20%. That is the recommendation made by Wilbur Mills, the House Ways and Means chairman, who had as much say as anyone in setting recent increases--15% in 1970 and 10% in 1971. If Mills' highly political plan is passed, the compounded increase in Social Security checks next year will be more than 50% over 1969. Senate Finance Committee Chairman, Russell Long, not ruling out Mills' proposal, says emphatically, that a general increase of at least 10% is "a very safe assumption." In addition, Long's 16-member committee is considering a multiplicity of extra benefits that would give even higher increases to elderly Americans who are poor, sick or particularly industrious. Among proposals being debated:

> Much higher payments to people who have worked and have paid Social Security taxes for many years. A retired employee with 30 years or more on the job, no matter what his salary level, would get at least $200 per month, v. as little as $70 now. Married couples would get at least $300.

> More opportunity to work for extra money. At present, recipients under 72 lose $1 of benefits for every $2 they earn in excess of $1,680 a year. This cutoff point might be raised quite justifiably to $2,000 or $2,400. After all, retired people who have been able to accumulate stocks and bonds are not penalized for collecting dividends and interest in addition to Social Security payments.

> New medical benefits. Social Security recipients may be reimbursed for prescription drugs, especially those required for treatment of chronic illness, such as heart trouble.

> Wider coverage. Extra Social Security payments probably will be made available to recipients taking care of dependent and disabled brothers and sisters, and to those raising orphaned grandchildren.

The cost for this will be high. In the unlikely event that Mills gets his full 20% increase, the added cost would be $6.3 billion to $8 billion a year. Any extra benefits would swell the price still further. How will the Government pay the bill? In part the new funds will come from regular Social Security "contributions," which in the past two years, have run about $3 billion ahead of expenses. The rest will have to be raised by hitting taxpayers.

$600 Bite. Beginning next year, employees will probably pay Social Security taxes on all income up to $12,000 v. $9,000 at present. This would place the burden of bankrolling new benefits almost entirely on workers who earn middle-level incomes or above. Since the Social Security tax rate is 5.2%, people earning $12,000 a year or more would have to pay $624 annually, up from $468 at present; employers, who are required to match payroll deductions, would pay the same amount. Middle-income earners, already protesting loudly against the increasingly painful bite of many kinds of taxes, will hardly welcome the raises. They have a point. Social Security taxes take a disproportionate share of the earnings of middle-income and low-income Americans compared with those of the rich, and thus are regressive levies. Yet for all that, the benefits from Social Security contributions at least ease the considerable burden placed on many in the past by elderly relatives.

President Nixon will strongly pressure Congress to finance most new benefits from new taxes. Reason: the excess Social Security contributions currently piling up in the Treasury are counted as normal Government income; thus, if they are spent, the federal deficit will go beyond the large $25 billion already budgeted for the next fiscal year. Nixon's budget for that period, which begins in July, sets aside enough funds for a Social Security increase of only 5%, and he could well argue that any benefits beyond that not raised by new taxes will be inflationary. But if Congress should disregard that warning and boost the benefits further, Nixon might have to discard one more chapter in his tattered book of fiscal responsibility. To veto bigger payments to the nation's elderly during the election campaign could be politically dangerous, and perhaps suicidal.

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