A Reagan Retreat

On many issues, Ronald Reagan has a well-deserved reputation for stubbornness, if not downright inflexibility.

But last Thursday, in a rare retreat, he said of Social Security, "Our feet were never embedded in concrete on this proposal." Besieged by mounting pressure from within his own party and a fire storm of increasingly effective rhetoric from Democratic leaders, the President decided to shelve any major reforms of the all-but-bankrupt Social Security system as part of his second round of budget cuts. He had hoped to confront the issue head-on during his televised speech. Instead, he merely recommended again changes that Health and Hu man Services Secretary Richard Schweiker and OMB Director David Stockman had formulated and that the Senate had rejected last May, and proposed a few palliatives to shore up the system for the time being. Reagan also asked that any major changes in Social Security be studied by a 15-member bipartisan task force -- five members each from the Senate and House, plus five presidential appointees. The task force would not be expected to report any findings until January 1983. That, handily, is well after the 1982 congressional elections.

The sections of his speech dealing with Social Security had been hurriedly inserted that afternoon, and the moment of delivery was decidedly un-Reagan-esque. Though Reagan asked the nation's 36 million Social Security recipients "to listen very carefully" to his proposals, his k presentation was surprisingly unpersua-Schweiker mullssive. Backpedaling furiously, the President emphasized that he was not walking away from the problem, but that his Social Security plan was not a part of the overall budget package. Noting that "there has been a great deal of misinformation and for that matter pure demagoguery on the subject," Reagan pointed out that the Social Security system currently pays out "billions of dollars more than it takes in" and could run out of money as early as 1982.

Eventually, the entire system could collapse of its own weight as beneficiaries threaten to outnumber workers paying into it. The President observed that the ratio of workers to beneficiaries has dropped from 16 to 1 to less than 4 to 1 in 30 years.

There are essentially two reform options: increasing al ready high payroll taxes, or reducing benefits. Reagan favors the latter route, and during last week's speech he dutifully re iterated aspects of the reform package that his aides believe would save $82 billion through 1987, thus putting the Social Security system back on the road to solvency. Among them:

tightening eligibility requirements for disability payments and for some beneficiaries--federal employees for example --who have other pension plans; reducing the benefits for early retirement (prior to age 65) from 80% to 55% of the total benefit; and delaying, during one year, the annual cost of living adjustment from July 1 to Oct. 1, which would save an estimated $3 billion. When the plan was first announced last spring, it immediately set off furious outcries that Reagan intended, as Democratic House Speaker Tip O'Neill acidly and inaccurately put it, "to balance the budget on the backs of Social Security recipients."

Across the nation, groups began mobilizing last week on TERRY ASHE behalf of retirees' rights, anticipating that " Reagan might single out Social Security for heavy trims. In California, for example, twelve to 15 senior citizens organizations planned a meeting in Sacramento to put together a "save Social Security" coalition. Surveys commissioned by Reagan's pollster Richard Wirthlin confirmed the political explosiveness of the issue. As the clamor grew, White House strategists conceded that the Democrats might be able to mobilize popular feeling to sabotage the Administration's entire economic program. "The threat of Social Security cuts affects virtually everyone," said one presidential aide. "It has been our soft underbelly all along."The final blow came Monday when Senate Majority Leader Howard Baker and House Minority Leader Robert Michel told the President to steer clear of any proposal touching Social Security. Their blunt message: "You can't get it passed."

Accordingly, the President retreated, unenthusiastically, calling for "interfund borrowing," a quick fix that would beef up the dwindling Social Security retirement fund by combining it with the relatively flush disability and health-care funds.

As for the President's task-force proposal, Texas Democrat J.J. Pickle, chairman of the House Social Security Subcommittee, responded: "We don't need any task force. We know what the problems are, and have known for a long time. Everybody's ducking the tough decisions. These Social Security problems will only get worse as our fears and distrusts grow. The real tragedy is that participants in Social Security will suffer additional years of uncertainty about the program." Younger members of Congress, he predicted, "will see Social Security rising out of the mist, like Banquo's ghost, to haunt them again and again."

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