Sen. Daniel P. Moynihan (D-N.Y.), in his new campaign for honesty in federal budgeting through reform of Social Security, is half right. He is right to launch a fight to correct the deliberate deception of the federal budget and its concealment of a dangerously growing deficit. But he is wrong to risk the soundness of Social Security to force the issue.
At the same time, however, it seems obvious that President Bush, in resisting broader action to cut the deficit, in stubbornly refusing any new taxes, is inviting the kind of campaign that Moynihan now has undertaken.
The issue will be joined Tuesday when Moynihan introduces legislation to eliminate the increase in Social Security payments that went into effect Jan. 1 and then, next year, to cut the overall rate even further. His proposals would save workers $567.8 billion in Social Security payments over the next nine years. But it would condemn the work force of the next century to even more onerous payments.
At the heart of the dispute are two legislative milestones: The 1983 Social Security rescue package, assuring the survival of the system at least until the middle of the next century by creating a Social Security trust fund, and the 1985 Gramm-Rudman legislation, intended to eliminate federal budget deficits by 1991. No one in 1983 could have anticipated that Congress and former President Ronald Reagan would collaborate two years later to enable Gramm-Rudman to cloak the real depths of the deficit by counting the new Social Security trust fund as general income. Moynihan argues that the actual deficit, when the trust fund is not used to help make up the difference, is not decreasing. It is increasing, and will continue to increase, from $204 billion last year to an estimated $268 billion in the year 2000. It is the deception that Moynihan is now attacking.
The principal risk in perpetuating the deceptive budget figures is that it allows the President and Congress to postpone the painful budget cuts and tax increases that inevitably will be necessary to reduce the deficit. There is no way that any prospective peace dividend will be sufficient to do the job.
Moynihan said that he offers this proposal only reluctantly after President Bush ignored a request for reform made last March by leading Democrats on the National Economic Commission. The bipartisan commission had been created to examine pressing economic issues. "I make this proposal because it has now become clear that the Administration intends to use the Social Security payroll tax as an ongoing, permanent source of revenue for the general purposes of government," the senator commented last month. The President's response gave credence to Moynihan's assertion. Rather than deal with the deficit realities, he portrayed the proposal as an effort "to get me to try to raise taxes on the American people by the charade of cutting them" or cutting benefits. No change in benefits has been proposed.
The growing support for Moynihan reported on Capitol Hill is understandable. Everyone likes tax cuts. Here is an opportunity for the Democrats to give workers a substantial windfall through the 1990s, never mind that it is at the expense of the workers of the next century, who ultimately would be forced to pay at a rate 24% higher than the current tax.
If Moynihan has his way and the Social Security tax rate is cut, there will be annual reductions in what workers pay, $6.4 billion this year, $53.6 billion next year, increasing to $86.7 billion in 1998. As the worker payments are reduced, so also will be the trust fund. As the trust fund dwindles, less and less will be left for the bookkeepers to use to conceal the real federal budget deficit. But at no small risk, because the nation would be exchanging the prudence of the existing system for yet another American credit card account drawn on the future.
We oppose any weakening of the Social Security trust fund. Obviously, the fund will remain a tempting target as it grows toward a peak of $11.8 trillion in the year 2030. Some have already suggested a direct raid on the cash. Fortunately, that sort of betrayal is political poison to most legislators. The fund is discreet and dedicated. Its money is invested in U.S. securities--in effect, loaned to the Treasury until it is required for payments to beneficiaries. In 1989 the fund earned 9.9% interest which was added to the principal, augmenting the security of Social Security. That is the correct way to go.
But respect for the trust fund is already being eroded by exasperation over the budget deficit. Moynihan's remedy reflects that impatience. His challenge to the Social Security system has at least shattered the torpor, sounded an alarm, focused attention. Congress has a new opportunity to address the basic problem. But the solution is not to be found by risking the fiscal soundness of Social Security. It is to be found through realistic measures to reduce the deficit, the real deficit, with appropriate budget cuts and higher taxes.