There is growing pressure on the Senate to hold a vote on legislation that would restore Social Security benefits that many public sector employees believe they deserve.
The Social Security Fairness Act, aimed at abolishing the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), was approved by the U.S. House in November and is now pending a Senate decision. The legislation needs to be acted upon by the end of the year, otherwise, it will expire.
The WEP and GPO currently reduce the Social Security payments of certain retirees who also receive pension income. These provisions collectively impact nearly 3 million Americans, including police officers, firefighters, postal workers, and public-school teachers.
With the deadline rapidly approaching, numerous public sector workers alongside several senators are advocating for the Senate to vote on the Act. In recent weeks, Senators Ed Markey (D-MA), Bill Cassidy (R-LA), Sherrod Brown (D-OH), and Susan Collins (R-ME) have either delivered fervent speeches on the Senate floor or written formal letters urging action. Public sector workers from various parts of the country are planning a rally at the Capitol on December 11.
“It is disgraceful that this widely backed proposal has not yet been scheduled for a vote,” stated Susan Dixon, 68, a retired schoolteacher from San Clemente, California, and president of the California Retired Teachers Association. “I will be attending the rally to make sure our voices are heard and to push for justice for the millions of retirees who deserve fairness and respect. It’s also essential that our Senators are present to vote in the next two weeks.”
How do WEP and GPO reduce Social Security benefits?
- The Windfall Elimination Provision (WEP) decreases Social Security for individuals who receive pensions from jobs, typically in the public sector, that did not pay into the Social Security system. This reduction could be as much as half of the pension amount.
- The Government Pension Offset (GPO) lowers spousal or survivor benefits if a person’s pension is from non-covered employment. The GPO affects fewer individuals but reduces the Social Security benefit by two-thirds of the pension amount. If two-thirds of your government pension exceeds your Social Security benefit, it could be reduced to zero.
Why isn’t the Senate voting on the bill?
The Social Security Fairness Act has garnered 62 bipartisan Senate sponsors, surpassing the 60 votes necessary to overcome a filibuster and pass the measure, raising questions about the delay.
It has been suggested that some senators are concerned about the cost implications. The Social Security Fairness Act would cost $196 billion over the next ten years, would accelerate the insolvency of Social Security by about six months, and would increase the magnitude of automatic benefit reductions, according to the bipartisan nonprofit Committee for a Responsible Federal Budget (CRFB).
Representative Garret Graves (R-LA), a co-sponsor of the House bill, speculated that the Senate’s hesitation is a strategy to let the bill expire.
There remains hope that the bipartisan bill could be appended to a crucial spending bill, such as the National Defense Reauthorization Act, and thereby pass. “I’d say the odds are better than even,” he remarked.
Senate Majority Leader Chuck Schumer (D-NY) did not respond to multiple inquiries for comment.
What if the bill dies?
If the Social Security Fairness Act does not pass, Congress would need to start from scratch in drafting new legislation.
This could provide lawmakers an opportunity to create a bill that amends rather than repeals the rules, which some analysts believe could prevent Social Security from becoming insolvent prematurely while ensuring fairness.
“At a time when we’re already borrowing $2 trillion a year and retirees are facing a 21% benefit cut – an average of $16,500 for a newly retiring couple in 2033 – in just nine years, why increase it to a 22%, $17,300 cut in eight and a half years?” questioned Maya MacGuineas, president of the CRFB.
Are WEP and GPO unfair?
These regulations were originally designed to prevent overpayments to individuals who had earnings from non-covered pension jobs, according to policy experts.
People with income outside the Social Security system might appear as low-income workers, potentially receiving a disproportionate return on their Social Security contributions compared to those who consistently paid into the system throughout their careers, explained Andrew Biggs, a senior fellow at the right-leaning American Enterprise Institute think tank.
However, affected individuals argue that these rules are unjust because they have earned those benefits through contributions to Social Security in their private-sector employment.
“I worked and contributed to Social Security from 1969 until about 2018,” shared Don Hillbish, a retired police Sergeant from Reading, Pennsylvania. Like many others in police and fire services, he started working young and continued through his law enforcement career. Yet, “after WEP and GPO, my monthly benefit dropped from $1,100 to about $350 due to my municipal pension,” he revealed.
Is there a better way?
Most policy analysts concur that reforming, rather than repealing, WEP and GPO could balance fairness with the financial health of Social Security.
“The legislation has surprisingly united virtually every think tank in Washington, D.C.,” noted Biggs. “It has brought together organizations that typically disagree, including the Heritage Foundation, the Center on Budget and Public Policy, the American Enterprise Institute, the Bipartisan Policy Center, the Progressive Policy Institute, the Urban Institute, and the Committee for a Responsible Federal Budget, in opposition.”
Many of these research groups, including the Bipartisan Policy Center which represents both Republican and Democratic ideas, suggest replacing WEP with a “proportional formula” for Social Security. This would allow retirees to receive benefits proportional to the part of their earnings that was covered by Social Security, they recommend.
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Passionate about analyzing economic markets, Alice M. Carter joined THE NORTHERN FORUM with a mission: to make financial concepts accessible to everyone. With over 10 years of experience in economic journalism, she specializes in global economic trends and US financial policies. She firmly believes that a better understanding of the economy is the key to a more informed future.
