Rare bipartisan momentum is growing in the House of Representatives to force a vote on a bill that would address a topic Congress typically avoids — Social Security.
The bill — the Social Security Fairness Act — would repeal two rules that reduce Social Security benefits for workers and spouses, widows and widowers who also receive pension income.
On Tuesday, Reps. Abigail Spanberger, D-Va., and Garret Graves, R-La., filed a discharge petition to force a vote on the bill on the House floor.
The petition currently has 172 signatures out of the 218 signatures required for a vote, including 25 Republicans, according to Spanberger’s office.
If brought to the House floor, the Social Security Fairness Act may pass, based on the 327 co-sponsors who are currently behind the proposal.
The Senate version of the bill, with 62 co-sponsors, also has broad support.
More from Personal Finance:
The ‘vibecession’ is ending as U.S. economy nails a soft landing
How the election could affect your taxes
Here’s how to know if your college kid actually needs ‘dorm insurance’
National groups representing police, firefighters, teachers, postal workers and government employees on the federal, state, county and municipal level, have also backed the effort.
Despite the momentum, experts say pushing the bill into law will not be easy.
“There’s just a time constraint here, and both the Senate and the House have a lot of work to do before the end of the year,” said Emerson Sprick, associate director for the economic policy program at the Bipartisan Policy Center.
Moreover, simply eliminating the rules — formally known as the government pension offset, or GPO, and windfall elimination provision, or WEP — may not make the program’s benefits fairer, he said.
The WEP, in particular, is “deeply, incredibly misunderstood,” which contributes to calls to simply get rid of the rule, Sprick said.
How the WEP and GPO work
The windfall elimination provision reduces Social Security benefits for individuals who receive pension or disability benefits from employment that did not require them to contribute payroll taxes to the program.
More than 2 million workers are affected by the WEP, according to the legislative proposal.
The government pension offset reduces Social Security benefits for spouses, widows and widowers who also have pension income.
More than 745,000 Americans are affected by the GPO.
The reduced income can come as a shock to those who are affected — and can prompt those individuals to make difficult life decisions.
At a Wednesday Senate hearing, Roger Boudreau, president of the Rhode Island American Federation of Teachers Retirees Chapter, cited a 75-year-old schoolteacher who is still working for fear she would not have enough income to live on if she retires.
She currently receives Social Security benefits after her husband predeceased her. But if she retirees and begins collecting the pension benefits she earned, that Social Security income may disappear. Her pension benefits wouldn’t be enough to live on, Boudreau said.
“She is basically a slave to her job as a result of the government pension offset,” Boudreau said.
Why eliminating current rules may be problematic
But nixing the WEP and GPO completely could make benefits disproportionately generous to workers who only pay Social Security taxes for some of their careers, research from the Center on Budget and Policy Priorities has found.
Social Security benefits are progressive, which means the income replacement formula is more generous for low earners than for higher earners.
Consequently, pension-covered workers who have contributed fewer years to Social Security may look like low earners to the program. That can result in more generous benefits for those workers compared others who have spent their entire careers contributing to the program.
Both the WEP and GPO rules are designed to adjust benefits so people with a combination of covered and non-covered Social Security work don’t get treated more generously, said Paul Van de Water, senior fellow at the Center on Budget and Policy Priorities.
As a long-time federal employee who is now retired, Van de Water is personally affected by the windfall elimination provision.
“These bills would benefit me, but I still think they’re a bad idea,” Van de Water said.
Eliminating the rules through the Social Security Fairness Act would also cost the program at a time when Social Security faces looming trust fund depletion dates, he said.
The Congressional Budget Office has estimated the repeal would cost around $196 billion over 10 years.
Updating the current rules would be a better way to go, according to the Center on Budget and Policy Priorities. That could include a new income replacement rate that better reflects total income, including for spousal and survivor benefits.
The Bipartisan Policy Center has advocated for updating Social Security’s benefit formula to prorate benefits based on the share of an individual’s lifetime earnings that contributed to the program.
“The solution here certainly isn’t to repeal it,” Sprick said of the windfall elimination provision. “It’s to change it, it’s to make it clear, it’s to make it based on the most updated data that [the Social Security Administration] has access to.”
Nevertheless, lawmakers plan to continue to fight for elimination of the current rules through the Social Security Fairness Act.
“Get a hold of your representative or your senator to get on it, because this is part of a broken system,” Sen. Mike Braun, R-Ind., a Republican co-sponsor of the bill, said at this week’s Social Security hearing. “It’s an inequity that needs to be fixed.”
Read the full article here
