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Social Security Cuts on the Table

Super-committee likely to look at 3 options

But critics counter that once you start cutting, where do you stop? There aren't many Buffetts, and no one gets more than the top benefit of $2,366 per month. Reducing or even eliminating the benefits of the most affluent would have little impact on the funding gap.

A recent study by the Center for Economic and Policy Research found that for a means test to have real impact on Social Security's balance sheet, it would need to dock benefits for retirees who have about $40,000 or more a year in non-Social Security income. That would mean reducing benefits for millions of teachers, nurses and other middle-income workers.

Another approach to means-testing would be to change Social Security's benefit formula so that checks for higher earners replace a lower percentage of what they were making while they were still working.

The formula already works in this way, rewarding low earners more generously for each dollar of past contributions than it pays workers with high earning histories.

Widening that gap could alienate higher earners, some analysts believe, leading them to exert political pressure to weaken or even eliminate Social Security.

3. Raise the retirement age.

It used to be that workers could start collecting reduced benefits at 62 and full benefits at 65. Changes adopted in 1983 left the early-retirement age alone but gradually increased the full-benefits age to 67 for workers born after 1959.

Now many lawmakers are talking about another boost, perhaps gradually raising the early retirement age to 64 and the full-benefits age to 69 or 70. This could reduce Social Security's long-term funding shortfall by 30 percent or more. The increases could be scheduled to take effect long after most of today's lawmakers have left Congress.

Proponents say raising the retirement age is justified because Americans are living longer. Critics call it moving the goal posts unfairly, even if the changes can be designed to affect only workers younger than 45. They also note that people doing jobs requiring hard physical work may not be able to work the extra years.

What's off the table

Polls show that as many as two-thirds of Americans would rather pay more in taxes than see benefits cut.

But one option that the super-committee seems certain not to consider is raising the payroll tax that funds Social Security. Republicans have thus far refused to discuss any form of tax increase.

The National Academy of Social Insurance has estimated that raising the rate by one-tenth of a percent per year over 20 years would eliminate close to 70 percent of the projected long-term shortfall in Social Security funding. For the average worker, the increase would amount to about 50 cents a week.

The super-committee also seems unlikely to consider raising the cap on payroll-taxable earnings, currently set at $106,800. Although many experts say raising the cap could do much to close the funding gap, most Republicans dismiss it as another tax increase.

Also of interest: Is full retirement age creeping upward? >>

Thomas N. Bethell is a Washington writer and policy analyst.

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