(FORTUNE Magazine) – A nationally syndicated editorial cartoon recently showed a corpulent, cane- & carrying, white-haired lady brandishing a submachine gun. The caption read: ''The reason Congress doesn't touch Social Security . . . Granbo.'' The cartoon's message: Elder power keeps Congress from doing what it should -- cutting Social Security, especially its cost-of-living adjustments (COLAs). Many businessmen, economists, editorial writers, and even a few politicians express the hope that the newly appointed National Economic Commission will enable the next President to do the unthinkable -- shrink Social Security benefits to reduce the budget deficit. But Social Security does not cause federal deficits. Indeed, over its first 50 years Social Security operated at a more than $50 billion (yes, billion) surplus, and during the period 1987-92 it will produce a $330 billion reserve, with a multitrillion (yes, trillion) dollar surplus in prospect for the early decades of the next century. Why the clamor for cuts, caps, delays, or other reductions in COLAs? Because Social Security is a great cash cow: It pays so many beneficiaries, some 38 million, that seemingly small benefit reductions would produce even larger surpluses. Since Social Security is funded through payroll taxes, shared equally by employer and employee, the government kept the account separate from the rest of the budget for the first 32 years. Then, in 1969, President Johnson began including Social Security accounts in the general budget, hoping thereby to screen the deficits caused by the Vietnam war. In 1983, in response to a recommendation by the National Commission on Social Security Reform, Congress restored Social Security's separateness. Supposedly. But the Gramm-Rudman- Hollings deficit reduction law requires Social Security receipts and payout to be calculated with the rest of budgeted government revenues and spending. With President Reagan adamant against military budget cuts, and social programs such as food stamps squeezed to the point of anorexia, Social Security seemingly offers the only possible source of deficit relief. But it would be a mistake to cut COLAs or subject Social Security recipients to means testing. That's not to say that all old-age benefits are sacrosanct. Some can certainly be spared to help the cause of deficit reduction. For example: Taxing Social Security benefits more extensively makes sound tax policy because it would treat all income alike and would affect mainly upper-income recipients. In addition, Congress could pare down some of the tax breaks in employee retirement programs, such as stock-bonus, profit-sharing, and 401(k) plans. Such plans enable employees, largely the best paid, to shield earnings from tax until drawn as benefits. The Congressional Budget Office calls these tax-favored retirement plans ''one of the largest preferences in the federal income tax'' to survive tax reform. Before the 1986 tax cut, eventual taxation of benefits would have recaptured most of the lost revenues. But the rate cuts sliced about $13.6 billion a year from those deferred collections. Congress ought to recapture that annual $13.6 billion by taxing benefits at 1986 rates for contributions made prior to that time. This would result in collecting what people expected to pay and what Congress expected the Treasury to receive. That brings us back to Granbo. The caricature depicts her with symbols of affluence, including what appears to be a fur coat. Shades of yesterday's fiction of mink-coated welfare cheats! But Social Security is not welfare; it is a substitute for earnings lost through retirement. Social Security eligibility comes from working long enough in ''covered'' jobs and contributing payroll taxes. Few myths have the currency and credence of the notion that the elderly are affluent, or at least better off than their juniors. But according to a 1987 Social Security Administration study, about 80% of Social Security beneficiaries had no earnings. For that group, the median total income was $8,410; of that, $6,270 came from Social Security benefits. About one-fifth of all beneficiaries had income over $20,000; of that, only one-fifth came from Social Security, much of it subject to income tax. Work income (often earned by an as yet unretired spouse) put many into the over-$20,000 category -- temporarily. For most people, however, job opportunities diminish after age 62, and relatively few work past 65. SO WHY does the myth of affluence continue? One reason is that some analyses of the economic status of those 65 and over include a wealthy fraction, some of whom are still in the work force and do not even draw Social Security benefits because of high earnings from their jobs. When their income is figured into the 65-and-over group, atypically high average (mean) income results. For instance, if one person in a group of ten gets an annual income of $100,000 and each of the other nine gets $10,000, their average (mean) income is $19,000. In contrast, their median income (half with an income above ! and half below) is $10,000, a more accurate portrayal of the financial situation of most members of the group. In 1985 the Council of Economic Advisers fueled the myth by reporting that among families headed by a person 65 or over, 1983 mean income was an impressive $21,420, and the mean for individuals was a solid $10,040. However, 60.8% of those individuals had pretax income of only $4,000 to $15,000. A report by the Conference Board and the Census Bureau the same year furthered the misconception, stating that the elderly had more ''spendable discretionary income'' than any other age group. The study defined discretionary income as that amount 30% or more above the average income for the age group. The income of many over-65s qualified as discretionary because the group's average income was so low. Only those under 25 had lower dollar income -- just what everyone would expect of young people, many of them at school, unemployed, or on the bottom rungs of the work force. Much has also been made of the fact that during the 1970s those 65 and over enjoyed a bigger advance in average income than the ''nonaged,'' with Social Security benefits accounting for most of the increase. But from 1947 to 1967, the income of the elderly lagged woefully, with shockingly high numbers in poverty. That led Congress to improve the Social Security payouts. By the early 1980s, the elderly drew about even with the nonelderly. Some critics contend that the elderly are well off because of their assets, especially homes, their larger federal income tax exemptions and state property tax breaks, and the fact that they no longer have expenses associated with employment. A high percentage of those 65 and older do own their own homes, often mortgage-free. But older homes are a mixed blessing, frequently needing more repair and maintenance than recently built boxes. Besides, property taxes often are high, and most state and local tax breaks go to only a fraction of the elderly who demonstrate very low income. In 1986 Congress eliminated the extra deduction for the elderly. And anyone who thinks that not going to work saves money hasn't paid oil and gas bills for full days spent at home. Comparisons of aged/nonaged often do not take into account the many tax advantages enjoyed by the nonaged, such as deductible mortgage interest, untaxed employer health insurance contributions, and the breaks given deferred income. In fact, most elderly Americans have modest incomes and depend heavily ( on modest Social Security benefits. For them cutting, capping, or freezing COLAs would mean a loss of badly needed purchasing power. Under the slogan ''sharing the pain,'' the 1983 Social Security amendments delayed the COLA for six months. That has cost beneficiaries an estimated $40 billion in benefit reductions during the 1980s. Because each COLA is based on the former level, beneficiaries never catch up. So most can reasonably say, ''I've already given -- several billion dollars every year since 1983.'' That leaves the argument suggested by former Commerce Secretary Peter G. Peterson and others that Social Security should be ''means tested,'' that is, restricted only to those who demonstrate by their low income and meager assets that they are needy. In 1983, David Stockman, who was then the Budget Director, testified that without Social Security, the incomes of over half the elderly (55.1%) would have dropped below the poverty level; with it, the figure was still 14.6%. MEANS TESTING would force millions of formerly self-supporting and self- respecting people to suffer the indignity of proving their destitution. Many -- especially older people who have always earned their own way -- already forgo benefits like food stamps because they will not submit to such procedures. Furthermore, needs testing may discourage many from saving if reserves of cash and property disqualify them from benefits. Not least, needs- testing programs tend to be expensive: The Social Security cash programs cost just over 1% of payout to operate, while Supplementary Security Income (SSI), the comparable means-tested program for the very poor, costs 9%. Most Americans support Social Security because it preserves a modicum of human dignity and independence for our parents, the disabled, 3.2 million children with disabled, retired, or deceased parents, and, sooner or later, ourselves. The trustees of the Social Security funds say the program can meet its obligations over the next 75 years. Everyone can rely on it. For how many things in this world can that be said?