The 4% Solution

In his State of the Union address, Bush cited four types of benefit cuts that are "on the table." One under serious consideration is changing the formula for calculating initial benefits, basing them on inflation rather than faster-rising wages. What this technical-sounding change would mean is smaller Social Security checks. For instance, according to a 2002 analysis by the chief actuary's office at Social Security, a 38-year-old earning $35,000 would now expect to receive $1,343 a month when she retires at 65, but with indexing to inflation, that benefit would drop 18.2%, meaning she would get $1,099. Given the existing system's long-term funding challenges, of course, that kind of cut could happen anyway. —With reporting by Perry Bacon Jr./Washington