Assaulted from All Sides

By Susan Tifft

Yet the Social Security reform plan may get through Congress

When Republican Senator Robert Dole of Kansas, chairman of the Senate Finance Committee, introduces a bill entitled S.1 this week, he will be the first of a phalanx of blockers trying to mow down obstacles to congressional approval of a $168 billion Social Security compromise package. With the bipartisan blessings of President Reagan and House Speaker Tip O'Neill, the National Commission on Social Security Reform hammered together the agreement hours short of its Jan. 15 deadline. The commission's success, after months of deadlock, may have saved the entire Social Security issue from becoming fatally ensnared in a ferocious wrangle on Capitol Hill. Even so, predicts Republican Congressman Barber Conable of New York, one of the so-called Gang of Five that helped produce the 15-member commission's compromise agreement: "The package will be assaulted from all sides."

First to spring was the Fund for Assuring an Independent Retirement (FAIR), a powerful coalition of about 6 million active and retired civil servants. Barely had the commission's final report appeared, when FAIR began mounting a $3 million lobbying and public relations campaign against a proposed requirement that newly hired federal employees participate in the system. FAIR charges that the switch would bankrupt the healthy $96 billion civil service retirement fund, saddle Congress with $185 billion in future uncovered pension obligations, and deprive the Government of $2 billion in taxes now paid on their benefits by federal retirees.

The 14 million-member American Association of Retired Persons (A.A.R.P.) vehemently denounced provisions requiring a six-month delay in cost of living adjustments (COLA) for benefits and accelerating payroll tax hikes through 1990. A.A.R.P. is especially outraged by a requirement that, starting in 1984, will impose taxes on half of the benefits of individuals with annual incomes above $20,000 and couples above $25,000.

By contrast, the 4 million-member National Council of Senior Citizens and the 5,000-member National Council on the Aging, while objecting to the COLA delay, were relieved that the basic principles of Social Security had been preserved. Said one senior-citizen spokesman: "When you get legislators and White House leaders recognizing the kind of commitments the Government has made under Social Security, you don't want to upset that."

The Service Employees International Union (S.E.I.U.), which represents custodial and building-service workers, and the American Federation of State, County and Municipal Employees (A.F.S.C.M.E.) cheered provisions that 1) require Social Security coverage for nonprofit organizations, which may now elect not to participate, and 2) ban the withdrawal of state and local government employees from the system. These unions maintain that their memberships are better served by Social Security than by private pension plans.

Spurred by rising Social Security costs and doubts about the system's future, growing numbers of church, school, hospital and municipal groups have been pulling out of the Social Security system and patronizing less expensive private pension plans; if they all withdrew, Social Security would lose a potential $18 billion in revenue. As of last fall, 456 hospitals and 399 nonprofits of other kinds had notified the Social Security Administration, which requires two years' advance warning, of their intention to forgo coverage; between 1950 and 1981, only 159 such organizations had dropped out. From 1975 to 1981, however, 606 state and local governments, employing 145,000 workers, left the Social Security system; at the end of 1982, about 100 more units withdrew and 387 had given notice that they would terminate in 1983 and 1984. Total employees affected: 242,000, including 55,000 from Los Angeles County alone, accounting for $140 million in lost revenue to the Social Security system. According to some legal scholars the proposed ban on withdrawals in effect imposes a federal tax on states, a possible violation of the Tenth Amendment to the Constitution, protecting states' rights. Proponents of reform expect stiff court tests on this point.

Among the politicians, battles may flare over two partisan provisions that seek to alleviate the $1.6 trillion Social Security deficit projected over the next 75 years: a Republican-endorsed proposal to raise the retirement age from 65 to 66 after the year 2000, and a Democrat-endorsed plan to increase the payroll tax by .46% in 2010, bringing it to 8.11% at that time. The most formidable opposition to the proposed reforms may come from Republican Senators Jesse Helms of North Carolina, Steve Symms of Idaho and Nancy Kassebaum of Kansas. They have joined forces with fellow Republicans, Senator William Armstrong of Colorado, chairman of the Social Security Subcommittee, and Representative Bill Archer of Texas, two of the three commission members who voted against the final plan. The coalition opposes the agreement's tax hikes and levies on benefits. Armstrong, who has filibustered on lesser issues, denies that he will attempt to talk the reform bill to death. "I don't want to kill it. I want to improve it."

Despite all the nibbling and posturing, however, the commission package appears to have a good chance of surviving Congress. Admits Armstrong: "The odds don't favor victory for the opposition." Democratic Representative Claude Pepper of Florida, 82, chairman of the House Rules Committee and a key commission member, summed up his support this way: "While the compromise is not to my liking, it is better than throwing Social Security into the whirlpool." --By Susan Tifft. Reported by Jeanne Saddler and Evan Thomas/Washington

With reporting by Jeanne Saddler, Evan Thomas This file is automatically generated by a robot program, so viewer discretion is required.