The administration`s proposed budget contained President Bush`s answer to Sen. Daniel Patrick Moynihan`s politically alluring proposal to slash Social Security taxes and return the retirement insurance program to a pay-as-you-go basis.
As promised, Bush rejected the idea of cutting the tax and reiterated his belief that the government should keep accumulating billions of surplus dollars in the Social Security trust funds to provide for the retirement of the huge Baby Boom generation.
But the president agreed with Moynihan (D-N.Y.) that the government should quit using the surplus money to mask the true size of the budget deficit, and he laid out a plan to gradually halt that practice.
Bush`s plan would not take effect, however, until after the 1992 presidential election, and it and the Moynihan proposal are likely to be subjected to intense debate this year.
Bush also proposed cutting Medicare, the health-insurance program for the elderly, by $5.5 billion in fiscal 1991. Most of the cuts, $4.1 billion, would be in payments to hospitals, with the rest in payments to doctors.
Under the Bush budget, premium costs for the elderly would rise to $31.30 a month in 1991 from $29.90 under current law. By 1995, the premium would rise to $50.10 a month, up from the $34.80 called for under current law.
Bush also proposed lowering premiums $5 a month for Medicare recipients who enroll in health-maintenance organizations, and his administration is preparing a cost-saving plan called Medicare Plus to combine Medicare and
”medigap” insurance coverage through use of preferred-provider organizations.