Inflation will mean sharp rise in US social outlays

Despite a relatively tight budget, federal spending for existing social-welfare programs will climb sharply during fiscal year 1981. The reason: soaring double-digit inflation, which reached 13.3 percent last year, the highest rate since 1946. It has meant automatic cost-of-living increases for millions of Americans receiving "income security" payments of various kinds.

In addition, thousands of citizens joined the rosters of federal transfer programs during the past year -- programs ranging from social security and disability payments to welfare, housing assistance, school-lunch, refugee, and energy- assistance programs, to name only a few.

These income-security programs benefit so many voters that they have become a key reason that grass-roots calls for "cutting back the size of government" have so far repeatedly failed in Congress.

For fiscal 1981, which begins Oct. 1, social programs make up 35 percent of the porposed $616 billion federal budget, making them the largest part of it.

Most federal income programs are mandated by prior Congresses. Hence they are technically beyond the budget- cutting range of the current Congress, even if lawmakers are inclined to make such cuts.

Moreover, they have been extended to almost all Americans who are aged, poor, disabled, or unemployed -- a vast group making up a significant portion of the body politic.

In this context of "coalition politics" as practiced in the United States (and reflected in the federal budget), holding most foreign aid programs to a bare-bones minimum thus becomes the political order of the day. But social outlays touching large segments of the electorate are handled by cautious budgetmakers with white gloves.

For fiscal year 1981, the income-security party of the budget is 35 percent of the total, as noted. It was only 14 percent a quarter century ago under President Dwight Eisenhower.

During the intervening years, total federal budget outlays as a percentage of the nation's gross national product, the output of all goods and services produced, grew by a modest 5.2 percent.In 1956 federal budget spending totaled 17.1 percent of GNP.

In fiscal 1981, federal outlays will be 22.3 percent of GNP.

But now comes the cruncher -- the percentage of the budget spent on income-security programs as a percentage of GNP. In 1956 the income-security portion of GNP was 2.4 percent. For fiscal 1981 it will have reached 8 percent.

That means that the income-security portion of the budget during this period -- spanning the years from President Eisenhower to Presidents Kennedy, Lyndon Johnson and Vietnam, and Presidents Nixon, Ford, and Carter -- grew not by a mere 5.2 percent, but in fact more than tripled.

The largest income-security program, social security (making up the old-age, survivors, and disability insurance trust funds), shot up at a rate four times that of GNP.

The fiscal 1981 budget continues all major existing income-security programs, although the administration, reflecting Mr. Carter's bent on "management efficiency," does seek some minor reforms in these areas:

* Mr. Carter wants to simplify a number of programs.

* He would seek to reform the existing welfare system by setting up a national "basic minimum level of assistance to families."

* He is also proposing modest changes in the social security system, particularly by allowing borrowing between various trust funds.

Most significantly, however, neither Mr. Carter, his budget officials, nor the current Congress appears to be in any greater haste to make sharp cuts in existing income-security programs than were previous Congresses or administrations.