At various points throughout its history, lawmakers from across the ideological spectrum have come together to ensure that Social Security is able to maintain its promise to future generations. Most recently, in the early 1980s, a commission appointed by Ronald Reagan and led by Alan Greenspan recommended a package of reforms to restore solvency and build up reserves for the future.

In large part due to the effectiveness of those reforms, a shortfall isn't projected until the year 2041 according to Social Security's trustees, or a decade later according to the Congressional Budget Office. Because the shortfall occurs so far in the future, immediate changes to the program may not be warranted. Critical information about the economy and population 38 years from now is extremely difficult to predict, and many observers believe we should wait until we have a better understanding of the future before making any changes to the program that might hinder future policymakers.

• Scare Tactics: Why Social Security is Not in Crisis (Bernard Wasow, TCF, 2004)

Even if we were to address Social Security's projected shortfall today, however, the problem is quite manageable, despite claims that the projected shortfall is too big to repair or could only be fixed through massive and unpopular tax increases. Policymakers have a wide range of measures available that can increase revenue and reduce costs for the program without placing an excessive burden on any one part of the population.

Raising or eliminating the cap on taxable income
Currently, earnings over and above $90,000 don't get taxed for Social Security. That upper limit increases each year depending on how much the nation's average wages increase. While that level used to cover about 90 percent of all earnings, faster wage growth for high earners in recent years means the limit only covers about 85 percent of all earnings. This limit could be gradually increased to its former level over time, meaning more revenue for the program. A more extreme version of the previous measure, taxing 100 percent of earnings at the current rate, would all but eliminate the program's long-term deficit.

• Fixing Social Security (PDF) (Robert Ball, TCF, May 2005)
• Restore Tax Fairness for Social Security's Solvency (Christian Weller, CAP, May 2005)
• A Real Flat Tax (Richard C. Leone, TCF, 5/4/05)
• Removing the Social Security earnings cap virtually eliminates funding gap (Josh Bivens, EPI, 2/17/05)
  

Dedicating a revised estate tax to Social Security
The estate tax, a tax on very large inheritances, is set to be elminated by 2009 and then reinstated in 2010 unless Congress makes repeal permanent. Instead of repealing the tax, the revenue it brings in could be used to help make up the Social Security shortfall.

• Fixing Social Security (PDF) (Robert Ball, TCF, May 2005)
  

Changing the COLA
Annual Social Security benefits are now increased each year to keep pace with inflation, a provision known as the cost-of-living-adjustment (COLA). Changes to this measure would decrease Social Security costs by reducing the purchasing power of benefits for retirees as they grow older. One way to implement this measure without significantly affecting the value of benefits would be switching to another measure (the "chained" index) for calculating inflation that many analysts consider more accurate.

• Fixing Social Security (PDF) (Robert Ball, TCF, May 2005)
• Options to Balance Social Security Finances over the Next 75 Years (Virginia P. Reno and Joni Lavery, NASI, Feb. 2005)
  

Increasing the retirement age
Social Security's normal retirement age is set to gradually rise to 67 for retirees born in 1960 and after. However, some observers have suggested the retirement age should be pushed back even further. They argue that this is a fair way to reduce the program's costs, since the fact that people are living longer is partly to blame for the projected shortfall. However, it is important to recognize that different groups of workers would be affected in different ways by a later retirement age. While white-collar workers may not mind delaying retirement, this may not be an option for low-income workers in physically demanding occupations.

Any look at raising the retirement age must also consider how to ensure that older workers have rewarding jobs available to them. Some experts argue that the response to increasing life-expectancy is not removing retirees' option to receive Social Security at the current age, but in creating incentives for more retirees to delay benefits and increase their savings.

• Raising the Retirement Age: The Wrong Direction for Social Security (Christian Weller, EPI, 2000)
• Life at the Bottom of the Sea (Beverly Goldberg, TCF, May 2005)
• In Brief: Is Early Retirement Ending? (Sophie Korczyk, AARP, 2004)
• Should We Raise Social Security's Earliest Eligibility Age? (Alicia Munnell, et al., CRR, 2004)
• Many already lack a steady job before the Social Security retirement age (Elise Gould, EPI, June 2005)

Diversifying the trust fund portfolio
While Social Security's trust funds are now invested exclusively in special government bonds, the government could improve the returns on that investment by investing part of the trust funds on the private market. Instead of subjecting individuals to the market fluctuations and high expenses related to personal accounts, the government would bear this risk and greatly reduce expenses by investing the funds all at once. However, this approach has raised questions about the political implications of large scale government investment in the stock market.

• Investing the Social Security Trust Funds in Stocks (TCF, 1999)
• The Stock Market Bubble and Investing Social Security in the Stock Market (Dean Baker, CEPR, 2002)
• Fixing Social Security (PDF) (Robert Ball, TCF, May 2005)
  

Extending Social Security to workers who don't participate in the program
While Social Security is nearly universal, about a quarter of the nation's state and local government employees still do not pay into the system, a lingering effect of the early practice of allowing states and localities to opt out of the system. New revenues could be obtained by requiring coverage for all new hires in these positions going forward.

• Fixing Social Security (PDF) (Robert Ball, TCF, May 2005)
• Options to Balance Social Security Finances over the Next 75 Years (Virginia P. Reno and Joni Lavery, NASI, February 2005)
  

These and similar measures can be easily drawn upon to restore long-term solvency to the program, if not today, then in the future when the projected deficit is better understood.