ROBERT M. BALL

Should I choose the Advisory Council of 1947-48 and the subsequent 1950 amendments, which may well have rescued the program from being supplanted by some Townsend-like flat benefit approach or a greatly expanded public assistance program? Should I select the crucial hearings before the subcommittee of Ways and Means in the first year of the Eisenhower Administration when an attempt to discredit the program and its principles was decisively turned back? Should I select the later wholehearted adoption of the program by the Eisenhower Administration and the major extensions of the program during the first Republican Administration since the program's establishments What about the adoption of disability insurance? And Medicare? And not just the legislative developments but the unprecedented problems of administrative implementation of these two additions to our social insurance program? How about the adoption of the automatic cost-of-living adjustments in the Nixon Administration and the adoption of provisions that keep benefit computations up to date with wages in the Carter Administration? Any one of these could be chosen as could dozens of administrative crises met and overcome, as when 95 percent of the people over were signed up for the voluntary part of Medicare (Part B) just before the program became effective, or how the hospitals of the South were desegregated in the months just prior the effective date of hospital insurance coverage. Or the establishment of a district office in the center of Watts within days of the first big city riot of the 1960's.

But I pass over all these and much, much more to choose January 15, 1983, the day the National Commission on Social Security Reform agreed on the recommendations that formed the basis for the 1983 Amendments to the Social Security Act. Because of these amendments, the old-age, survivors, and disability insurance program--what most people mean by Social Security--is financially sound as far as the eye can see.

All through 1981 and 1982 the country was bombarded with stories of the impending bankruptcy of Social Security. Social Security beneficiaries and their sons and daughters were frightened and confused. The very capacity of our government to solve important problems was being challenged. Yet in a very short time, the situation has completely changed. How did this pleasing state of affairs come about?

An important step toward a Social Security "rescue" was taken in the establishment of a National Commission on Social Security Reform appointed jointly by the President and the Democratic and Republican leadership in the Congress. The Commission worked throughout 1982 and 12 of its 15 members agreed on a set of recommendations just an hour or two before the Commission's charter was to expire.

The final agreement was negotiated in the first 2 weeks of January 1983 by three Republican members of the Commission and four top members of the White House staff, on one side, and two Democratic members of the Commission on the other. The President and the Speaker of the House immediately endorsed the agreement, and legislation closely following the Commission's recommendations passed Congress in record time. The amendments were signed into law on April 20, 1983.

Prior to the last 2 weeks of negotiation, the Commission, under the Chairmanship of Alan Greenspan, the noted economist, had made considerable progress by getting agreement on the size of both the short-term and the long-term financing problem and by carefully examining a great variety of possible solutions. The Commission had also made progress by ruling out various radical solutions which would have fundamentally changed the nature of the system or its financing. The Commissioners, however, had not been able to agree on a specific set of recommendations. One group, the members appointed by the Democratic leaders of the Congress, urged solutions based largely on accelerating already-scheduled tax increases, with general revenue offsets for increases in employee taxes, and the other group, those appointed by the President and the Republican leadership of the Congress, focused largely on benefit reductions.

The compromise described below came out of the January negotiations. The Republican negotiating team was made up of four members of the White House Staff: James Baker, then Chief of Staff, Richard Darman, Assistant to the President, David Stockman, Director of the Office of Management and Budget, and Kenneth Duberstein, Assistant to the President for Legislative Affairs, and three Republican members of the Commission, Chairman Greenspan, Senator Robert Dole and Congressman Barber Conable. The two members of the Commission on the Democratic side were Senator Daniel Patrick Moynihan and myself. Any effective agreement, of course, had to be acceptable both to the President of the United States and the Democratic leadership in the House and the Republican leadership in the Senate. And it was necessary to have a set of proposals that could win the endorsement of the majority of the National Commission as a step toward Presidential and Congressional approval. Thus as the agreement was forged, every step of the negotiations had to be cleared in several directions. Could this concession be accepted by Lane Kirkland, President of the American Federation of Labor and a Commission members Could this concession be accepted by the business community, as represented by Robert A. Beck, President of the Prudential Life Insurance Company and one of the leaders of Business Roundtable and Alexander B. Trowbridge, President of the National Association of Manufacturers, both members of the Commission? Could this concession be accepted by Congressman Claude Pepper, Chairman of the Rules Committee of the House of Representatives and the Nation's leading advocate of elderly causes and a member of the Commission? And, of course, the positions of all members of the Commission were important on each issue. Then, too, there were many other persons involved behind the scenes, such as Chairman Rostenkowski of the Ways and Means Committee and Chairman Pickle of the Ways and Means Subcommittee on Social Security.

On the morning of January 15, 1983, the last negotiating session was held in the Blair House, the President's guest house located across the street from the White House. The negotiators had come to an agreement that they were willing to take back to the key people not in the negotiating group and then if it won approval, to the President and to the Speaker of the House for their reaction before presenting it to the full National Commission on Social Security Reform. I spent the afternoon at Blair House on the telephone with President Kirkland, Congressman Pepper and his staff, and former Congresswoman Martha Keys, also a Democratic appointee to the Commission and the staff of the Speaker of the House. Other members of the negotiating group were spread over Washington talking to other key persons about the tentative agreement.

The negotiating group gathered again at Blair House in the early evening and were able to report acceptance of the compromise. With only an hour or two to go before the expiration of the authority of the Commission we went around the corner to Commission headquarters on Jackson Place and met with the full Commission. After thorough discussion, the agreement received 12 votes, with 3 opposed. The President and the Speaker were informed and the press was invited in and the agreement described.

No one who supported the plan liked all parts of it. There was some pain for everyone involved in Social Security, but not too much for any one group. The major elements in the plan were:

• Contribution rate increases were speeded up for both workers and employers, with employers paying more than under previous law in 1984, 1988 and 1989, and employees paying more in 1988 and 1989. The maximum rate from 1990 on was left the same as in previous law.
• The self-employed were required to pay Social Security rates that are comparable to what is paid by and on behalf of employees, a considerable increase over what they had been paying in the past.
• Higher-income Social Security beneficiaries (less than 10 percent of all beneficiaries) were for the first time required to pay an income tax on one-half their Social Security benefits, with the proceeds of the tax going to support Social Security.
• Those non-profit employees not previously covered (about 15 percent of the total) and newly hired Federal employees were brought under the system, as were members of Congress and top officials of the Executive Branch.
• The Federal Government speeded up its payment for military service credits and paid for the refundable tax credit for employees in the year 1984 and for certain tax credits for the self-employed.
• Beneficiaries had the cost-of-living adjustment postponed 6 months and put permanently on a calendar year basis, a move which amounted to approximately a 2.5 percent benefit cut for both present and future beneficiaries.

To put Social Security financing on a sound basis for both the short and long term, agreement was struck among many diverse interests. Because of the willingness to compromise in many areas, adjustment in any specific area such as benefits, taxes, the use of general revenues and other program provisions were relatively minor. It was this agreement with only one major modification (increasing the age of first eligibility for full benefits beginning in the year 2000) that became the Amendments of 1983. More than any other event in recent times, the Social Security compromise demonstrated that there is a political center in America that can govern for the benefit of the country even when there are extremely difficult problems to be faced and strongly held differences of opinion about solutions. Of all my experiences in Social Security, this was certainly one of the most memorable and most important.

Social Security is now safe for the indefinite future.

As the President said in signing the 1983 amendments into law:

This bill demonstrates for all time our Nation's ironclad commitment to Social Security. It assures the elderly that America will always keep the promises made in troubled times a half a century ago. It assures those who are still working that they, too, have a pact with the future. From this day forward they have our pledge that they will get their fair share of benefits when they retire.