|Security Act, enacted just to give
every American a rock-bottom floor for their retirement years, has been
amended repeatedly since 1935.
Some of these amendments only complicated a worsening
financial situation. For example, the disability provisions written into
Social Security enabled, in some cases, a 25-year-old to stay on the rolls
for as long as 40 years. The chances are that a person of that age paid
very little into the program, but will take a large sum out -- and you
can see what happens.
Strain at the Local Level
And local governments are facing similar strains.
For example, a New York policeman who first got
an early retirement plan, later gained a more liberal formula for computing
retirement based on his last year's salary. If he worked a lot of overtime
in his last year of service and coupled that with a cost-of-living escalator,
he probably would discover that his retirement pay was much higher than
his actual salary.
A different example is the practice that some
call "double-dipping." To explain what happened here, let me recount some
Years ago, we determined, for good reason, that
we needed a young army. If war comes, the United States needs men in their
best fighting years.
At the same time, we wanted an armed forces with
good morale. To attain that, we had to create opportunities for young men
and women to advance. Therefore, rather than pay high salaries during their
best years, we promised a pretty good retirement after 20 years.
Hundreds of thousands of Americans made that deal
with the government and chose military careers. After their retirement,
many took federal jobs and drew both a pension and a salary.
I'm not talking about the case of a retired enlisted
man who may be getting $4,000 or $5,000 in retirement pay, and perhaps
is making $10,000 or $12,000 at another job.
What I'm concerned about are the cases involving
huge amounts of money, and I think that in these cases, we ought to work
out a "top limit" formula that would let us pare these sums to a reasonable
And I want to note here, as emphatically as I
can, that whatever we do about double-dipping in the future, we can't
go back on the current arrangements, in the cases of either those who already
are retired, or those now on active duty.
But double-dipping should be modified in the future.
Let me tell you why -- and why I favor a limit formula.
An extreme case of double-dipping was reported
not long ago by Parade magazine. It involves California Atty. Gen.
Evelle Younger, who, by 1983, will be a "quadruple-dipper" drawing four
pensions -- one each for his service as a state official, as a retired
Air Force Reserve major general, as a District Attorney and as a judge,
of $53,226 a year -- or $4,435 a month.
Another extreme case was reported recently by
The Washington Post, which told of a retired Secret Service agent,
now employed by another federal agency, who draws retirement pay of $31,200
a year, and a salary of $47,025, for a combined yearly income of $78,225
-- more than any member of Congress makes, more than Cabinet officers and
more even than the Vice President.
These are the examples that concern me.
What has happened is that we have created pension
plans to meet social needs -- to maintain an Air Force Reserve, to give
judges something to compensate them for the earnings they might have realized
in private practice, and so on. But in many cases, no one pays into these
retirement plans -- or, if they do, the amount is small compared to what
they get back.
If Mr. Younger lives another 15 years, he may
collect close to a million dollars -- but he only paid a tiny fraction
of that sum into those plans. Who picks up the difference? The taxpayers.
I have cited some extremes here because it is
these examples that make the need for future policy change seem urgent.
There is another major point that I want to discuss,
and it is the one dealing with the age at which workers should retire.
One side in this controversy says that Americans
should retire at 65 -- or even sooner -- regardless of whether they
|are willing or capable of staying
on the job. This process is supposed to clear the way for younger people
entering the job market.
But, as I mentioned earlier, our birthrate already
is dropping. We have to face a situation of fewer, not more, workers coming
on the job.
I believe there is so much to be done in America
that we can find work for everybody, and that includes the vigorous 60
or 70-year-old who wants to keep working -- and paying taxes , and contributing
to the economy.
And I am supporting a bill, introduced by Rep.
Claude Pepper of Florida, that would boost the mandatory retirement age
to 70. This legislation, still in conference committee as of this writing,
would allow people to continue to work if they want to.
The move by Congress raising the "outside earnings"
level for Social Security recipients from $3,000 to $6,000 over the next
four years, is another good step.
I'm not content with the latest Social Security
package, but given our alternatives and faced with the urgency of the situation,
I think we can live with it until we can put the program back on truly
What will the latest package cost?
There has been a good deal of press coverage noting
that the 10-year cost will come to $280 billion.
While that is true, I happen to believe it is
a little misleading because we don't usually calculate costs -- or income
or taxes -- by the decade.
For perspective, consider that the cost of our
national 'defense will come to $1.5 trillion in the next 10 years
-- but surely no one is suggesting that we use a 10-year figure for defense
spending as we vote on year-to-year defense budgets.
The latest Social Security, package, will amount
to an average cost to all workers of about $1.20 per week, over the next
A worker now earning $10,000 now pays $605 a year.
Two years from now, he will pay $613 -- or 3 cents per working day.
By 1987, the $605 goes to $715 -- or $1.10 a week.
The $20,000 worker now pays $1,143; he goes to
$1,226 in 1979, or $83 a year -- or $1.50 a week.
The cost of something figured in 10-year periods
doesn't mean much, unless our comparisons are figured in the same way.
Toward a Sound Future
What I've tried to do in this limited space is
to give you an idea of where we've been -- and where we are, and some thoughts
about what we can do in the future. Let me sum it up:
I'm talking about a several-pronged attack on
our economic ills. Let's take care of our retirees -- when they are honestly
ready to retire, and not before. If incentives are needed for firemen,
policemen and others, let's pay them now and not make extravagant promises
for the future. Let's insure that those Americans who want to continue
working are given that chance. Government should do what it can to help
the private sector boost productivity, and to get our Gross National Product
moving again. And we must take a new look at the top level of our military
and other federal retirement plans.
If we can accomplish this -- and I think we can
-- then we must return to the business of putting Social Security back
in order. One way to do that, which I favor, would be to shift some of
the cost to general revenues, which would stop this terrible bind on the
Already, there is a plan to finance one-third
of Social Security costs with general revenues. The proposal would lower
the Social Security tax rate from 6.13 per cent to 3.9 per cent in 1979,
and increase the taxable wage in 1979 to $100,000. The concept is supported
by the nation's leading economists, a series of Social Security Advisory
Councils, legislative history, international precedent and the plans of
the original founders of Social Security.
Rep. Al Ullman, chairman of the House Ways and
Means Committee, has suggested that Congress will have to find "a better
financing mechanism" for Social Security in the 1980s.
I think he's right.