Tiptoeing across social security reform mine field

Tinkering with social security is a bit like working with dynamite: You have to do it very carefully. President Reagan learned that lesson the hard way when he proposed drastic cutbacks in the system last May, and now even a more modest plan to delay yearly cost-of-living increases from July to October is drawing criticism.

On Capitol Hill social security reform has stalled. House Democrats refuse to move until the Republican Senate acts, and Republican senators are reluctant to act until they have assurances that the House will joint them.

"We're like bantum roosters challenging each other," said J. J. Pickle (D) of Texas, chairman of the House Social Security Subcommittee at a meeting this week of the National Federation of Independent Business.

AT the core of the problem is both parties' desire to avoid offending the 37 million Americans who receive some form of social security benefit, not to mention the nine of every 10 workers who pay into the system expecting to receive future benefits. And yet experts from most quarters say the gigantic system needs reform.

Alice M. Rivlin, director of the Congressional Budget Office, said Sept. 22 that Mr. Reagan would not be able to balance the federal budget by 1984 without either making major social security reductions, or raising taxes. She told a joint congressional committee that "a balanced budget would leave little room for other federal spending unless benefits to individuals or spending for defense were to be reduced."

Ms. rivlin said that Reagan's proposal to postpone benefit increases by three months would save $2.9 billion in 1982 and about $15 billion through 1986. Bigger savings could be made by such reforms as raising the age of retirement, reducing incentives for early retirement, and by changing the formula for annual cost-of-living increases, she said.

However, so far Congress has shown little inclination toward making such reforms. About the only change that now seems certain is that soon both houses will agree to allow "interfund borrowing" within social security.

That borrowing is needed because the fund that pays retirement benefits, Old Age and Survivors Insurance, is headed for bankruptcy sometime next year, while both the disability and hospitalization funds have surpluses. As a stopgap measure, a new law could permit shifting surplus funds into the old-age fund.

Rivlin's Congressional Budget Office predicts that such a shift might keep the social security system running for the next decade even if Congress takes no other action. But she warned, "Some risks are inherent in this strategy," since the amount of money in social security is tied so closely to the economy.

If the economy takes a turn for the worse, Congress probably would be forced to act quickly to save the social security system by cutting benefits, she said. "Since social security does represent a long-term commitment that affects people's plans, making decisions about changes in the system as early as possible is desirable" to allow time for adjustment, said Rivlin.

"We've got a problem facing us," said Chairman Pickle earlier this week. Pickle, who favors gradually raising the retirement age, said he would like to lead the reform charge. "I'm looking for my troops to lead," he said jokingly, adding that unless the Democratic leadership in the House gives a green light, there will be no major reform this year or next.

"I'm not able to do anything at this point," said the Social Security Subcommittee chairman. "I hope this is only a delay and that we can still go forward. It's too important to the American people."