In Washington’s lull between the farewell party for Paula Jones and the denouement of the Monica Lewinsky Story of the Century, some lawmakers are trying to sneak in a debate about reforming Social Security. With a little encouragement from the public, they might produce something of substance.

The reason for reworking Social Security has been reviewed often. Those omnipresent Baby Boomers are all planning in the next couple of decades to trade in their work clothes for golf shirts and baggy shorts and start collecting government checks. Almost all of them can expect to receive more than they have paid into the system, interest included, with the balance to be made up through the productivity of Generations X, Y and Z.

Trouble is, there aren’t enough younger workers to cover the payments to the retirees. What to do?

President Clinton vaguely suggested in his most recent State of the Union speech that any budget surplus be used against Social Security shortfalls. House Speaker Newt Gingrich has a privatization plan for Social Security, which, while interesting, leaves lots of details to be worked out at some future date. But Sen. Daniel Patrick Moynihan of New York, who has been tossing out possibilities for reforming the system for 15 years, has gone furthest in developing a plan to save the retirement program.

A place to start

In a talk recently in Massachusetts, Sen. Moynihan explained four points he thought important to keeping the system healthy far into the future. He would begin by making Social Security pay-as-you-go. That would reduce the payroll tax rate from 12.4 percent to 10.4 percent, creating an immediate payroll savings of $800 billion. That money, he said, could be used to establish voluntary personal savings accounts designed for slow, long-term growth. To ensure the proper amount of money was collected, he would increase the taxable wage from $82,800 in 2003 under the current law to $97,500 by that time.

Speaker Gingrich’s plan calls for similar savings in what he calls Social Security Plus accounts, which would be built on money generated by budget surpluses and invested in market-based retirement accounts. There may be something to the idea of finding accounts with better returns than what is currently guaranteed, but counting on the ephemeral surplus to provide dependable retirement money is sort of like counting on the military to never again buy an overpriced hammer.

Sen. Moynihan would, secondly, use a cost-of-living rate one percentage point below the consumer price index instead of linking Social Security increases directly to the CPI. Sen. Moynihan has spent the last several years drawing attention to the idea that the CPI overstates inflation; his arguments seem to have persuaded a substantial number of economists to come to agreement on this. He also would increase the retirement age to 67, beginning with those who would turn 62 in 2022. He bases his argument for this on the increase in life expectancy.

His plan tosses out the earnings test, which he called a relic of the Depression, when the government was trying to get older workers to retire to make room for younger ones. This would allow seniors to earn as much as they wanted without having their Social Security benefits reduced.

Finally, he offers a three provisions that are grouped, perhaps, because each has a constituency that will be really irritated by the idea. They are the following: tax Social Security benefits to the same extent private pensions are taxed; include newly hired state and local government workers in Social Security; and increase the number of years used to compute earnings, from 35 to 38 years.

Taken together, the four points create a radical change in Social Security for the next century. Such reforms are needed. Surveys of young adults consistently show that they are resigned to the idea that the system they are paying into will not be able to pay them back when they retire. Not only do government reports conclude they are right, but this lack of faith eventually could lead to reforms that do more harm than good.

Sen. Moynihan’s work is not the final word on Social Security. It is, instead, a starting place for the serious, difficult job of repairing the system before it collapses, permanently.