[Comment] Our society's safety net could use some mending

from the Fort Worth Star Telegram

By JACK Z. SMITH

Former House Majority Leader Dick Armey once asked, "If Social Security is such a great program, why is it mandatory?"

Actually, Social Security is a great program precisely because it is mandatory. Ninety-six percent of American workers pay into the system. As a result, Social Security has a strong, steady flow of funding that has made it a tremendous safety net for the nation.

Along with Medicare, Social Security has played a huge role in slashing the poverty rate for the elderly from about 30 percent to less than 10 percent over the past 40 years.

This year, almost 50 million Americans will receive $608 billion in Social Security benefits. Nine out of 10 people 65 and older receive the benefits. Among the elderly, 52 percent of married couples and 72 percent of singles receive more than half their income from it.

If Social Security had not been made mandatory, there would be a much higher poverty rate among the elderly today. Many Americans wouldn't put money into retirement savings unless required to, just as millions of workers today don't participate in voluntary corporate 401(k) programs despite their attractive features.

The program's benefits have served as a crucial financial lifeline for several of my relatives, including my maternal grandmother. As a widow in her twilight years, she scraped by with Social Security as her primary source of income.

Social Security has been on my mind because its trustees released their annual report Tuesday on its projected long-term funding shortfall.

Although the program currently is generating surplus revenues, its cost is projected to exceed incoming revenues by 2017 as more baby boomers hit their rockers. By 2041, the trust funds are projected to be exhausted, leaving incoming payroll tax revenues to pay only 78 percent of benefits.

But if we make some adjustments, the program can be put on a sound financial footing for many decades to come.

That probably will require increasing payroll taxes and some very modest, gradual reductions in benefits. Congress adopted bipartisan Social Security reform legislation 25 years ago and can do so again.

The payroll tax is levied only on the first $102,000 of annual income. That cap could be boosted appreciably, perhaps to $150,000 or $200,000, and indexed to inflation. Even if the cap were $200,000, affluent people earning more than that still would pay a smaller percentage of their income into Social Security than do low- and middle-income workers.

The payroll tax rate, now 12.4 cents per $1 of earnings (half from workers, half from employers), could be raised modestly -- perhaps a half-cent.

Some benefit cuts might be made. For example, the age for receiving full retirement benefits might be raised very slightly and very gradually, because people are living longer.

Several million state and local government employees currently not paying into Social Security might be brought into the system, as federal employees were in 1983.

Greater protection should be provided to the trust funds to ensure that Congress and the White House stop (or at least greatly decrease) the shortsighted practice of spending surplus Social Security revenues for other government programs.

President Bush's departure from the White House in January could ease congressional passage of bipartisan legislation to strengthen and preserve Social Security for future generations. The sooner that strong legislation is adopted, the less severe the remedial measures must be.

If you don't believe me when I say that this is a worthy program, you might recall Bush's words on May 15, 2000, in Rancho Cucamonga, Calif., when he was campaigning for president. Social Security, he said, is "the single most successful government program in American history."