Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, January 10, 1995                   TAG: 9501100089
SECTION: NATL/INTL                    PAGE: A-1   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

ADMINISTRATION: GOP PLAN BENEFITS WEALTHIEST RETIREES

The GOP's push to ease the Social Security retirement earnings test, as it is known, is on a fast track in Congress, one of 10 reforms that Republican leaders have promised to take to the House floor for a vote by early spring.

Under current law, Social Security recipients ages 65 to 69 lose $1 in Social Security retirement benefits for every $3 they earn above $11,280. Republicans want to raise the earnings test to $30,000 by 2000. Those 70 and older give up no benefit.

Many of the witnesses testifying before a House Ways and Means subcommittee Monday said the earnings test discourages work and punishes older Americans with limited incomes who need to supplement their retirement checks with a job.

But Social Security Commissioner Shirley Chater, testifying for the Clinton administration, said low-income families would receive little benefit from the GOP's proposed changes because their earnings are so close to the exempt amount already.

Instead, she said, the biggest winners are seniors with the biggest incomes.

According to Social Security's calculations, families with incomes of less than $22,800 would receive only 2.2 percent of the total additional benefits that would be paid out.

Families with incomes over $39,000 would receive 75 percent of the additional benefits. Within that group, more than a third of the new benefits would go to families with incomes above $70,000.

Approximately 925,000 Social Security recipients lose some or all of their benefits as a result of the earnings test. Chater said 600,000 families would receive additional benefits as a result of the GOP proposal.

But lifting the earnings test is expensive, at least initially. Chater estimated the cost of the GOP plan at $7 billion over the first five years, and at $15 billion over 10 years.

Eventually, however, the costs are negligible because fewer people would be delaying their retirement and collecting a delayed-retirement credit in their benefits.

Initially, any drain on Social Security's retirement trust fund would come at a time when it is confronting insolvency by the year 2029, as the baby boom generation hits retirement.

Chater proposed raising the earnings test by $1,000 on annual income, at a cost of $900 million, but said she would support lifting it even more as long as there is a way to pay for it.

Eugene Lehrmann, president of the American Association of Retired Persons, said raising the earnings test is long overdue, ``given the increased longevity and generally improved health of many retirees, the prospect of an aging society, and a slower-growing work force.''