Summary: Testimony was given concerning the recommendations of the National Commission on Social Security Reform for resolving the short- and long-range problems of the social security trust funds. The Commission suggested options which it believes will resolve the entire short-term deficit and about two-thirds of the long-term deficit. GAO recognized that, if economic conditions prove to be less favorable than those anticipated by the Commission, Congress would be faced with the need for additional short-term social security changes to bring about financial stability. However, if the economy performs better than indicated by current projections, the magnitude of the financial problem may diminish. The Commission recognized that the long-term financial needs of the trust funds would not be met by its recommendations and that Congress will be required to address an additional shortfall. GAO suggested that Congress may wish to give consideration to repealing the automatic cost of living adjustment. A Commission recommendation to limit social security benefits for those who also have pensions from noncovered employment would result in a savings of $200 million through 1989, but GAO stated that this would entail administrative problems and could result in the reduction of social security benefits. GAO also noted that supplemental payments which the Commission recommended would cause additional recordkeeping and administrative problems. GAO raised questions of fairness regarding a Commission suggestion to establish income limits above which social security recipients would be taxed because it effectively imposed a "marriage penalty." The Commission did not examine the organization of the Social Security Administration (SSA), but GAO has been reviewing SSA management and has noted an increasing level of criticism of the accuracy and timeliness of its payment system.
