European Stars and Stripes (Newspaper) - October 11, 1977, Darmstadt, Hesse                                Page 12 the stars and stripes tuesday october 11, 1977 tying social Security to insurance principle new York the House ways an Means committee has completed a Bill aimed at making the social Security Trust funds solvent for at least the rest of this Century. In doing so the committee had tomake a variety of Tough value judgments. For example the committee decided to derive in creased revenues for the Trust funds More from a rising wage base the amount on which both employer and employee Are taxed than from higher tax rates. The committee rejected proposals bythe Carter administration and others that sums from the government s general reve Nues be used to supplement the Trust funds. Briefly the ways and Means Bill would increase the wage base in successive Steps from the current $16,500 to a maximum of $39,600 in 1987 jumping to $19,900 next year. The tax rate now 5.85 per cent would Rise beyond increases already scheduled to 7.45 per cent in 1990. The net effect would be to put the heaviest Burden on upper income workers and their employers a development Long needed in what has become one of the most regressive american taxes. James Reston at present for example a worker making $37,500 a year or any amount More pays $965 in payroll taxes on the $16,500 wage base. A worker making Only $16,500 pays exactly the same amount. But by 1986, under the proposed plan a worker making $37,500 would be paying taxes on that entire amount $2,588 at the projected new rates while one making $15, 500 would be paying $1,139. But employers payroll taxes would Rise by the same amounts. And while the progressive new system would be aimed at least partially at maintaining purchasing Power for lower and Middle income persons employer payroll taxes Are generally passed directly to the prices of their goods. Thus a rising wage base Over the next decade would be Likely to provide unwelcome upward pres sure on the Price level. The Carter administration had proposed that the wage base of which employers pay taxes should be the entire amount of an employee s wages while the base on which the employee paid tax should Rise Only slightly by $2,400 Over eight years. Tax rates for both would have remained the same except for increases already scheduled under the Carter plan. The and Washington a big change has come Over Washington in the last couple of weeks and As Henry Kissinger Wise cracked in Chicago the other Day you have to give Bert Lance  after being preoccupied for months with personalities Bank balances filibusters and other trivialities Washington is finally talking again about the fundamental prob lems of National and world politics. This has t lowered the noise level but it has changed the subject and raised the debate to More serious discussion of Mili tary arms Panama the Middle East and Trade abroad and to Energy policy tax welfare education and social Security Reform at Home. President Carter has been in new York looking at the tragic decline of the South Bronx and even the decline of the United nations on the East River. He reported some startling facts and proposed some challenging remedies worldwide military expenditures he said Are now in the neighbourhood of $300 billion a year. Last year the nations of the world spent 60 times As much 60 times As much equipping each Soldier As we spent on educating each  we know he added that by the year 2000, nuclear Power reactors could be producing enough plutonium to make tens of thousands of atomic bombs every year. Unless we establish a code of International behaviour in which the resort to violence becomes increasingly irrelevant to the Pursuit of National interests we will crush the world s dreams for human devel mama Caum. He it  therefore he concluded the United states is willing to go As far As possible consistent with our Security interests in limiting and reducing our nuclear weapons. On a reciprocal basis we Are willing now to reduce them by 10 per cent or 20 per cent even 50 per cent. Then we will work for further reductions to a world truly free of nuclear weapons meanwhile Energy Secretary James r. Schlesinger or. Was in Paris and told the 19 member countries of the International Energy Agency that unless they work to Gether on the Energy crisis they would face a degree of political and social unrest in the United states of the kind redid not even see in the 1930s at the height of the  on the solution of this problem he concluded rests the future of our free so  president Carter is at a critical Point in his Young administration now partly be cause he has made some tactical errors and popped off too freely about his objectives without thinking of the consequences particularly in the Middle East. But he Speaks in his own Way to the main Points of confronting every problem at Home and abroad and compromising with everybody if possible. No president in recent memory has invited to his House More critics from the Congress the press or from abroad tha Carter or held More press conferences or answered More questions. He saw the majority Leader of the Senate Robert Byrd of West Virginia almost every other Day on the Lance problem and the Energy crisis. He listened to the Republican leaders on Lance Panama and relations with the soviet Union and Israel without much Suc Cess but he has kept in touch with them All. In the process Carter has taken on almost every powerful lobby in washing ton the pro Israel lobby the labor lobby the anti soviet lobby the Oil and big Busi Ness lobby. They Are watching him very carefully remembering that when opposed in the past he has retreated on eco nomic issues and even facing the soviets on the Helsinki agreements toned Down his propaganda on human rights. Carter s reaction to All this is very inter Esting. The More he is attacked the tougher he gets. He has tried to Compromise with everybody without much Success but having been rebuked by prime minis ministration maintained that employers actually would pay less taxes in such a system than they would in a plan like the ways and Means committees under which both the wage base and the tax rate would Rise substantially. But the administration proposals would not have ended the regressive nature of the present employee tax. The committee s refusal to include Gen eral fund transfers in its Long Range plan rests on the widespread belief in Congress and elsewhere that social Security ought basically to be an insurance rather than a welfare program in which benefits Are linked  a recipient has paid into the system. Without arguing that Point the question still  be asked Why the social Security Trust funds and those who pay into them should be asked to make up for the effects of inflation and recession which by forc ing higher Dollar benefits and declining revenues Are a major cause of the Trust funds present difficulties. In fact candidate Carter asked at a Public forum in Florida in 1976 How he would Deal with the social Security prob Lem said that he would first bring Down unemployment and inflation in order to build up the Trust funds. He has t done much so far to redeem that Promise but he also indicated a willingness to consider general fund transfers and he did make an interesting proposal to Congress on that Point. He suggested that in years in which unemployment is above 6 per cent an amount should be transferred from the general fund equal to the difference be tween social Security payroll taxes actually collected and what collections would have totalled at 6 per cent unemployment. Such a counter cyclical device seems Little different in principle from the indexing of social Security benefits to the Cost of living in t it indexing Trust fund receipts to the unemployment level some economists believe moreover that diverting general revenues to the social Security Trust funds could have anti inflationary effect upon the Price level by making employers payroll tax increases unnecessary. But Congress seems to prefer the insurance principle to such eco nomic experiments. C Newyork times met Ter begin of Israel and As he believes insulted by the democratic candidate for mayor of new York Edward Koch he Speaks All the More to the larger world issues of arms control Energy conserva Tion and accommodation with soviets. All this has created a storm in washing ton and other world capitals but Carter has insisted on facing up to what he re Gards As the Central questions. He was lost issues a few weeks ago in the Lance problem but now he is risking his judgment on the control of arms on accommodations with the Western allies and the soviets and on a new partnership with the other nations of this hemisphere on Panama. It is a Dicey Gamble but at least Carter is now dealing with the major issues of the next generation. C new York times my Way ? " c1977 Uang a i Tom