Early Saturday, the U.S. Senate approved a mostly bipartisan measure removing two of the program’s provisions in place for decades — the windfall elimination provision and government pension offset, therefore increasing Social Security payouts for millions of Americans with pensions.
Now headed for President Joe Biden for signing, the law would cost more than $195 billion over ten years. Although he has not publicly endorsed the idea, strong support in the House and Senate could indicate his potential backing of the plan turning into law.
The House voted in November 327-75; the Senate vote was 76-20.
Noting she held the first hearing on the matter in the upper chamber in 2003, Maine Republican Sen. Susan Collins said during floor discussion Wednesday that a fix for the two clauses has been decades in making.
Before collaborating with former Maryland Democratic Sen. Barbara Mikulski in 2007, Collins later teamed with the late California Democratic Sen. Dianne Feinstein to present the original version of the measure in 2005.
“Social Security is the foundation of retirement income for most Americans, yet many teachers, firefighters, police officers, and other public servants often see their earned Social Security benefits unfairly reduced by two provisions,” Collins stated.
She stated, “affects public servants who receive a pension from a job not covered by Social Security, but who also worked long enough in another job to qualify for Social Security benefits.” The windfall elimination clause addresses this.
Those who worked in jobs not qualified for Social Security but were eligible for a spousal benefit would see their government pension offset effects change. Collins noted that two-thirds of the non-covered pension offsets a spouse’s Social Security benefit, therefore depriving 70% of people impacted by the GPO of the entire Social Security benefit.
“This is quite significant in my state of Maine since the pension system there does not incorporate Social Security,” Collins added. And among those most impacted are Maine school teachers.
Collins dubbed the WEP and the GPO “an unfair, inequitable penalty.”
Hit to fund based on trust
Although North Carolina Republican Sen. Thom Tillis claimed the bill’s title sounded like “motherhood and apple pie,” he disagreed it was the appropriate strategy to solve the issue.
He voiced worries about the measure pushing the bankruptcy date by six months and reducing the Social Security trust fund by an extra $200 billion for the next ten years.
Tillis stated, “This chamber needs courage and needs to say what needs to be said — we are about to pass an unfunded $200 billion spending package for a trust fund that is likely to go insolvent over the next nine to ten years and we’re going to pretend like somebody else has to fix it.” “Well, that falls on us when you are a U.S. senator carrying your election certificate.”
Though he agreed with Collins and others advocating the bill fixing the WEP and the GPO, Tillis argued that should be part of a more general discussion on Social Security’s approaching insolvency.
“We do not dispute what we finally must do,” Tillis remarked. “This is a dispute over how to get here and how to have something measuring the downstream risk. I thus approach the floor with considerable nervousness and critique Sen. Collins’s outstanding effort. However, I do it because there is so much riding on us to ensure that Social Security is corrected over the next five years with the bravery required.
During a floor debate Wednesday, Ohio Democratic Sen. Sherrod Brown declared that anyone who paid into Social Security for the required period should get their whole benefits.
Brown added, “Social Security we know is a bedrock of our middle class; it’s retirement security that Americans pay into and earn over a lifetime.” You pay in for forty quarters, essentially for ten years. You qualify. When you retire, it ought to be there.
Brown said it “makes no sense” that employees in some public service roles—such as those of teachers, police officers, and firefighters—are unable to fully benefit.
“They pay into Social Security just like everyone else, they teach our children, they guard our neighborhoods,” Brown remarked.
Voting “nay,” Kentucky Sens. Mitch McConnell and Rand Paul opposed enabling teachers, firefighters, police officials, and other public servants with pensions start receiving Social Security spousal benefits and Social Security benefits earned in other employment.
What effect do these clauses have?
Based on federal, state, or local government employment not covered by Social Security, the pension offset lowers a “spousal or widow’s benefits of most people who also receive pensions,” says a research by the independent Congressional Research Service.
The clause eliminating windfalls alters the calculation to lower Social Security benefits for persons “who are also entitled to pension benefits based on earnings from jobs that were not covered by Social Security,” the report said.
While the windfall clause influences 2.1 million Americans, the pension offset influences roughly 746,000 others.
“The share of Social Security beneficiaries affected by the GPO varies widely by state,” the CRS study notes. “States with a relatively larger share of GPO-affected beneficiaries are usually those with more (Civil Service Retirement System) retirees or those with more state and local government employees not covered by Social Security.”
Social Security recipients in Alaska, Arizona, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Idaho, Illinois, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Missouri, Nevada, New Hampshire, New Mexico, Ohio, Rhode Island, Texas, and Utah find the pension offset disproportionately affecting them.
A greater proportion of people living in Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Missouri, Montana, Nevada, New Hampshire, New Mexico, Ohio, Oklahoma, Oregon, Rhode Island, Texas, Utah, Virginia and Washington, Wyoming affect the windfall elimination provision.
“Like the GPO, the state determines the share of Social Security recipients impacted by the WEP,” CRS noted. “Generally, states that have a relatively larger share of Social Security beneficiaries affected by the WEP those have more state and local government employees not covered by Social Security or more CSRS retirees.”
Support in the House by Both Parties
Sponsored by Louisiana Republican Rep. Garret Graves and Virginia Democratic Rep. Abigail Spanberger, the four-page measure was approved by the U.S. House vote in November 327-75.
During the floor debate, Graves stated, that Social Security operated for forty years “treating people differently, discriminating against a certain set of workers.”
“These are police officers, teachers, firefighters, and other public servants, Graves noted at the time. “I labored side by side with these people. None of them are overpaid folks. These are not underworked people.
Spanberger termed the government pension offset and the windfall elimination clause “two misguided provisions added to the Social Security Act in 1983 (and) have denied Americans the retirement security they worked for and expected to receive.”
“Public servants have relentlessly begged their Congressmen to listen to their stories and correct this clear injustice for more than forty years,” Spanberger added. Congress will vote on the Social Security Fairness Act today, to eliminate the WEP and the GPO, and at last stop this fraud.
Resistance to Bill
Chairman of the Ways and Means Committee, Missouri Republican Representative Jason Smith claimed the two clauses impact almost 4% of all Social Security recipients—more than 60% of which are concentrated in 10 states.
He added, “were put in place more than four decades ago to prevent workers with earnings exempt from Social Security payroll taxes from getting more generous treatment from Social Security than workers who spent their whole careers contributing to Social Security.”
” Unfortunately, these policies still result in overly generous benefits for some while unfairly penalizing others,” Smith stated before contending the bill wasn’t the appropriate approach to handle the two sections.
Eliminating the two clauses, Smith added, “without a replacement potentially trades unfair treatment for preferential treatment.”
He also voiced worries about how solvency might be affected by drawing additional money from the Social Security trust fund.
The nonpartisan Congressional Budget Office said the plan would cost $195.65 billion over the next ten years and wrote in a letter to Iowa Republican Sen. Chuck Grassley that it would probably cause the Social Security insolvency date to move six months forward.
“If H.R. 82 were passed, the balance of the Old- Age and Survivors Insurance trust fund would, CBO projects, be exhausted roughly half a year earlier than it would be under current law,” CBO Director Phillip L. Swagel stated. Under present law, the agency projects that the OASI trust fund would run out during fiscal year 2033.
The Social Security trustees project that the program will be able to provide full benefits until 2035. Following that, Social Security would be able to pay roughly 83% of payouts should Congress fail to broker a solution.