Both chambers of Congress have now voted to pass legislation that would be good for a small percentage of Social Security recipients but bad for the program as a whole. The bill is now awaiting the president’s signature, which would make it law.
Dubbed the Social Security Fairness Act, the bill would repeal provisions that can leave Social Security recipients with reduced payments if they receive certain other types of retirement or disability benefits.
These changes would apply to Social Security benefits payable from January 2024 onward. So, recipients affected by the bill would receive back payments for 2024.
The House of Representatives passed the bill by a vote of 327-75 in November. The Senate passed it 76-20 this month and sent it to President Joe Biden’s desk on Dec. 27. He is likely to sign it, considering that doing so would mean making good on one of his 2020 campaign promises.
The two provisions that the bill would repeal are the:
- Windfall elimination provision (WEP). This can reduce Social Security retirement and disability benefits for individuals who also receive a retirement pension or disability benefit through an employer that did not withhold Social Security payroll taxes from their paychecks. Such an employer could be a government agency or an employer in another country.
- Government pension offset (GPO). This can reduce Social Security spousal and survivor’s benefits for individuals who also receive a retirement pension or disability benefit through a federal, state or local government that did not withhold Social Security payroll taxes.
So, in short, if the legislation is signed into law, it would mean higher Social Security payments for people who also receive benefits through an employer that didn’t withhold Social Security payroll taxes.
Proponents of the Social Security Fairness Act say it is long overdue.
U.S. Reps. Garret Graves (R-La.) and Abigail Spanberger (D-Va.) issued a statement after the Senate passed the bill, saying the legislation would help “millions of Americans — police officers, firefighters, teachers, federal employees, and other local and state public servants — who worked a second job to care for their families or began a second career to afford to live.”
The representatives noted that the legislation would also help “hundreds of thousands of widows and widowers who are denied their spouses’ Social Security benefits while grappling with their loss.”
According to an analysis of the bill by the U.S. Congressional Budget Office, eliminating the WEP would affect an estimated 2.1 million people (about 3% of all Social Security recipients), increasing their benefits by an average of $360 per month.
Eliminating the GPO would affect an estimated 380,000 spouses and 390,000 surviving spouses (about 1% of Social Security recipients in all), increasing their benefits by an average of $700 or $1,190 per month, respectively.
However, the legislation does not include any means of paying for the added cost of higher Social Security benefits for those retirees. So, it would cost the Social Security program as a whole.
Specifically, the Congressional Budget Office’s analysis found that repealing the WEP and GPO would cost $198 billion from 2024 through 2034.
A separate analysis, by the nonprofit Committee for a Responsible Federal Budget, found that repealing the two provisions would speed up depletion of Social Security’s retirement trust fund by six months. (Currently, it’s projected to be exhausted by 2033.)
As a result, the typical couple who retires when the trust fund is exhausted would receive $25,000 less in Social Security benefits over the course of their retirements.
In a statement, Maya MacGuineas, president of the Committee for a Responsible Federal Budget, noted that the WEP and GPO are intended to prevent the Social Security system from overpaying recipients who also collect state and local pensions.
These workers typically pay into these pensions instead of paying Social Security payroll taxes during their employment. In the statement, MacGuineas says:
“These provisions aren’t perfect, and there are lots of ideas to reform them. But repealing them altogether would move in exactly the wrong direction.”
She adds that the bill should be called “the Social Security UnFairness Act” because it only helps “a small number of beneficiaries who would get to double-dip their retirement benefits.”
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