Home to Over $196 Billion in Social Security: Will Eliminating Retirement Cuts Shorten the Life of the Program?
On November 12, the US House of Representatives passed Social Security Fairness Actbipartisan legislation was introduced to repeal two long-standing provisions that now reduce Social Security benefits for government workers.
The legislation was originally introduced in 2023 and will head to the Senate, where it has strong bipartisan support. If passed, it is estimated to cost $196 billion over the next 10 years. Critics worry that passing the bill could exacerbate Social Security’s financial problems.
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The bill looks at two important things – added to Social Security Act in 1983 – which covers civil servants:
The Windfall Elimination Provision (WEP): This law reduces Social Security benefits for people who receive pensions from jobs where they did not pay Social Security taxes, such as some state and local government jobs. According to the Congressional Research Service, approximately 2.1 million people are affected by this program.
The Government Pension Offset (GPO): GPO reduces Social Security benefits for spouses, widows and widowers who receive a state pension. About 745,000 people currently receive reduced benefits under the scheme.
Supporters of repealing the laws say they punish retired teachers, police officers, firefighters and other government workers, many of whom rely heavily on their Social Security and retirement benefits.
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Supporters of the bill see it as a victory for equality. Representative Garret Graves (R-La.), a sponsor of the bill, said on the House floor, “This has been 40 years of treating people differently, discriminating against one group of workers.”
The National Committee to Preserve Social Security and Medicare called the House vote a “bipartisan victory” for government employees and their families.
While the bill is aimed at addressing the inequality among the population that has been affected for more than 40 years, critics are concerned that stopping it could add to the strain on an already depleted Social Security system.
The Congressional Budget Office estimates that the bill would add $196.6 billion to the deficit over the next 10 years and bring the trust fund’s expiration date up to six months. Social Security funds are expected to run out at their current rate in 2033, meaning future recipients will receive 79% of their benefits.
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Some lawmakers, like Rep. John Larson (D-Conn.), argues that, while reform is necessary, it needs to be handled differently. “I couldn’t vote the bill down tonight because it’s not going to be paid for and because of that I’ve put the benefits that America gets in jeopardy,” Larson said. “It hurts more than five million of our fellow Americans who live below the poverty line and nearly half of all Social Security recipients rely on their high income benefits.”
Instead, Larson proposed another idea: the Social Security 2100 Act. This also repeals the WEP and GPO and includes other revenue-raising measures, such as raising the payroll tax for high-income earners.
Political experts also express their concerns. Romina Boccia, director of budget and rights policy at the Cato Institute, criticized the bill, saying the policy is flawed and requires significant reform.
“We need to reform Social Security so that it provides financial security to the most vulnerable Americans in old age without increasing the debt or tax burden faced by younger workers,” said Boccia.
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The Social Security Fairness Act already has enough Senate supporters to pass if brought up for a vote. If signed into law, repealing the WEP and GPO would apply to benefits beginning in 2024, dramatically altering benefits for the poor and leaving unresolved questions about the long-term plan to fix it.
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This article Homes Over $196 Billion Social Security Bill: Will Retirement Cuts Shorten the Life of the Program? first appeared on Benzinga.com
