WASHINGTON — When President Clinton pitches his long-awaited economic program to a watching nation on Wednesday, about 8 million elderly Americans could prove to be particularly tough customers. Don Ryan is one of them.
Ryan, a retired attorney in Kalispell, Mont., is among the top 20% of Social Security recipients who are expected to be asked to pay higher income taxes on their benefits as part of Clinton's long-term plan to reduce the deficit.
"This idea is garbage," fumed Ryan, whose annual household income of $45,000 includes $18,000 in Social Security benefits paid to him and his wife. "The people I walk with on the mountains here, when my arthritis is OK, came up from nothing. They saved and scraped and invested in America. They don't deserve to be taxed more."
Ryan's objection reflects the sentiments of many older Americans. And it represents one of the biggest challenges facing Clinton as he attempts to sell an economic package that calls on millions of his countrymen to pay higher taxes or forgo benefits in an effort to tame the deficit. The elderly lobby is among the most powerful interest groups in Washington, and Clinton's program could quickly unravel if older Americans mobilize against it.
Veteran members of Congress are wary of the potential backlash if they attempt to tinker with Social Security. Many still bear political scars from the 1988 battle over catastrophic-care insurance for Medicare beneficiaries.
Although final details of the President's economic agenda are still being debated within Clinton's inner circle, he is widely expected to include a proposal to increase the amount of Social Security benefits subject to taxation. Clinton will unveil his plan in a nationally televised address to a joint session of Congress on Wednesday evening.
Under present law, Social Security recipients pay no income taxes on their benefits unless their total annual income, after adjustments, exceeds $25,000 for individuals and $32,000 for couples. For those recipients, up to 50% of their benefits may be subject to taxation.
Many observers predict Clinton will ask Congress to leave the income thresholds where they are, but to increase the amount of benefits subject to taxation to 85%. That would make the taxation of Social Security benefits roughly comparable to the current tax treatment of private pensions for which employees make contributions.
