Congressional deficit cutters look at touchy social security issue

Handling the issue is a bit like trying to defuse a powerful explosive. But members of Congress sense such a growing national concern about the federal budget deficit that some are taking on the politically sensitive social security program. Despite President Reagan's campaign vow to keep hands off social security, GOP Senate leaders are preparing a broad attack on the deficit that includes a one-year elimination of cost-of-living adjustments (COLAs) for recipients.

``I just don't believe that if we do everything else we're talking about [including freezing other federal programs and cutting back defense], that we'll have much complaint from senior citizens,'' said Senate majority leader Robert Dole (R) of Kansas this week.

``We're talking about reducing the increases'' in social security, stressed an aide to Senate Budget Committee chairman Pete Domenici (R) of New Mexico.

The aide said that while the President ``can't lead on social security,'' there is a 30-to-70-percent chance that the Senate will fashion a bipartisan budget agreement curbing the program and the House agree to go along.

One such strategy would be that the Democrats would take the lead on COLAs, and the Republicans would take the equally unpleasant task of calling for tax hikes. The two parties would then hold hands and jump together into the treacherous political waters, as they did two years ago when reforming social security.

House Democrats have left the door open to some COLA changes, if they are linked with defense cuts and a revenue measure. ``I would not reject out of hand'' such a package, said Rep. Richard A. Gephardt of Missouri, the newly installed chairman of the House Democratic Caucus.

The new House Budget Committee chairman, Rep. William H. Gray III (D) of Pennsylvania, recently said that he was hopeful that Congress could reduce deficits without touching social security. But he did not rule out trims in the $200 billion federal pension program.

Clarence C. Butcher, legislative director for the American Association of Retired Persons, said his organization is already girded for battle. ``There will be serious efforts to reduce COLAs,'' he predicted.

The reason, as Mr. Butcher and participants on Capitol Hill agree, is simple: cost-of-living adjustments add up to enormous totals.

Each year benefits paid by social security pensioners and other federal entitlement programs go up by the rate of inflation. That increase is estimated to cost $10 billion next year, with $7 billion to $8 billion of that amount going to social security raises.

Social security's defenders are armed with studies that show many of the elderly depend heavily on the program, which has already been a budget-cutting target. Mr. Butcher points out that the elderly have taken their share of reductions and ``it's time for other segments'' to feel the budget knife.

Among the cutbacks, social security recipients lost the minimum benefits and student assistance programs in 1981 as a part of the Reagan cutback on federal spending. In 1983 Congress passed an omnibus reform to restore financial stability to the Social Security Administration that included a one-time six-month delay for COLAs.

So far, the political clout of the elderly has protected benefits in the months before national elections. In January 1984, Congress and the President agreed to guarantee social security increases, even if the annual rate of inflation fell below 3 percent -- the trigger for raising benefits.

After Mr. Reagan proposed broad changes in social security in 1982, the Democrats used the issue effectively in the elections and picked up 26 seats in the House. ``The Democrats proceeded to just beat us to death with it in 1982,'' recalled Senator Dole adding that the ``President doesn't want to walk into that trap'' again.

Dole and others point out that the social security system is now sound and does not need a spending cutback. It now has a healthy surplus totaling 21 percent of annual expenditures. Its reserve funds can be used only for social security purposes.

Still, those social security reserves are invested entirely in the federal government. A freeze on benefits would reduce total federal outlays and thus reduce the amount the federal government must borrow from the private sector.

Reducing deficits is seen as so important that the Democratic Congressional Campaign Committee chairman, Rep. Tony Coelho of California, said recently that ``whatever we do in social security and defense,'' the main criterion is that ``there has to be fair treatment.''