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Keep Social Security intact for baby boomers

Circle the wagons. Congress is getting ready to strike again! After seven years of relative safety, the Social Security program is again at risk. Our friends in Congress are yielding to temptation and planning ways to mess it up.

But this time it's not the seniors they are seeking to abuse; it's the younger crowd.

You undoubtedly have heard of the plan to cut Social Security contributions and to take Social Security "off-budget."

Cutting Social Security taxes sounds great. After all, in 1990, the worker and his or her employer each contribute 7.65 percent of earnings, up to $3,924, to Social Security. Cutting this to 6.55 percent, as proposed by Sen. Daniel Patrick Moynihan, D-N.Y., would save the average worker about $73.

What's the downside? Under this plan, there won't be enough money in the till to pay Social Security benefits when the baby boomers retire.

In 1983, this problem was recognized and averted when the bipartisan Greenspan Commission developed the current schedule of contributions. This was purposely designed to create a surplus to accommodate the bulge of retirees in the years 2010 to 2040 - the years during which a majority of the baby boomers are expected to retire.

In its wisdom, the 1983 Social Security Commission developed a plan to set aside a multitrillion-dollar nest egg as a treasure trove.

The size of the treasure is astounding. For 1990 alone, the government has estimated a $54-billion surplus in the Social Security trust fund, rising by 2010 to a total of $4.5-trillion. It's no wonder Congress would like to get its hands on this money.

Without such a surplus, the work force would be hard pressed to finance this glut of retirees. By then, it is expected that there will be only two workers for each retiree. To be on a pay-as-you-go scheme at that time, as Moynihan proposes, is impractical. The contributions required by the working children of the boomers would be unrealistically huge and could result in an insolvent Social Security system.

One of the arguments for "improving" the system is that the Social Security "surplus" is being used by the budget-makers to offset much of the federal deficit. True, but irrelevant.

In order to help hide the real cost of the Vietnam War, President Lyndon Johnson persuaded Congress to include any Social Security surplus in the federal budget figures. This helped mask the modest wartime loss then, and continues today to hide much of our vast federal deficit.

Yes, Moynihan's plan would eliminate this charade. But so would simple congressional action to take the Social Security trust fund out of the budget process, without messing with the future retirement plans of the baby boomer. A move that Congress, many times in the past, has rejected.

Then there is the charge that Social Security is "regressive," because only the first $51,300 of annual earnings are taxed. That could be readily corrected, and significant additional funds raised, by lifting the cap and taxing all earnings. What could be more fair or make more sense?

The other argument being promoted by Moynihan's supporters is that the Social Security trust fundreally is not being saved for future retirees. They say the money is being spent to meet day-to-day government expenses. Well, yes and no. By law, these trust funds must be invested only in U.S. government

securities. Yes, the government uses the money received from these bonds to pay its bills, but it must then pay that money back to Social Security on time. Of course, repayment funds usually are raised by more borrowing. The Social Security trust funds are just as safe (or unsafe) as your U.S. Saving Bonds or the Treasury Bonds owned by every bank, insurance company and pension fund (and astute Japanese investor).

You may not approve of this "revolving charge account" system of

financing our government, but that's what Congress has mandated.

Changing the methods used to finance government spending has nothing to do with Social Security, nor should Social Security be the whipping-boy for fiscal reform.

Moynihan's plan is flawed. His motives are suspect. Unmasking the federal deficit and reducing it can be done by a bold, imaginative and cooperative Congress.

We don't need to destroy the retirement plan for young and middle-age workers in the attempt.

- Jack Fischer is a director and secretary of the Sun City Center Community Association.