Will repealing the pension cuts shorten the life of the program?
House passes $196 billion Social Security bill: Will repealing pension cuts shorten program's lifespan?
On November 12, the US House of Representatives approved the proposal Social Security Fairness Acta bipartisan bill initiated to eliminate two long-standing provisions that currently reduce Social Security benefits for public sector workers.
The legislation was first introduced in 2023 and will now head to the Senate, where it has strong bipartisan support. If passed, the proposal would cost an estimated $196 billion over the next decade. Critics are concerned that passage of this bill could further worsen Social Security's funding problems.
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The bill addresses two important provisions – added to the Social Security Act in 1983 – affecting public sector workers:
The Windfall Elimination Provision (WEP): This rule reduces Social Security benefits for individuals who receive pensions from jobs where they did not pay Social Security taxes, such as certain state and local government positions. According to the Congressional Research Service, approximately 2.1 million people are affected by this provision.
The government pension compensation (GPO): The GPO reduces Social Security benefits for spouses, widows, and widowers who receive government pensions. Approximately 745,000 individuals currently receive reduced benefits under this provision.
Those who support repealing these rules argue that they unfairly punish retired teachers, police officers, firefighters and other public servants, many of whom rely heavily on their Social Security and retirement benefits for their income.
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Supporters of the bill see it as a victory for equity. Rep. Garret Graves (R-La.), co-sponsor of the bill, said in the House of Representatives: “This is the last forty years of treating people differently and discriminating against a certain group of workers.”
The National Committee to Preserve Social Security and Medicare called the vote in the House of Representatives a “bipartisan victory” for state workers and their families.
While the bill aims to address inequality among a demographic group that has been affected for more than four decades, critics worry that its introduction could further strain Social Security's already depleting finances.
The Congressional Budget Office estimates that the bill will increase deficits by $196 billion over the next decade and push back the trust fund depletion date by six months. Social Security funds are expected to run out at their current rate in 2033, meaning beneficiaries would receive about 79% of their benefits.
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Some lawmakers, like Rep. John Larson (D-Conn.), argue that while reforms are necessary, they should be approached differently. “I could not vote for the bills before us tonight because they are unfunded and endanger Americans' hard-earned benefits,” Larson said. “It would most deeply affect the five million of our fellow Americans who fall below the poverty line, and nearly half of all Social Security recipients who rely on earned benefits for the majority of their income.”
Instead, Larson proposed an alternative proposal: the Social Security 2100 Act. This would also repeal the WEP and GPO and include additional measures to increase revenues, such as increasing payroll taxes on higher incomes.
Policy experts also express their concerns. Romina Boccia, director of budget and rights policy at the Cato Institute, criticized the bill, saying the policy is wrong and needs broader changes.
“We must reform Social Security so that it provides basic income security to the most vulnerable Americans in old age, without increasing the debt or tax burden that younger workers face,” Boccia said.
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The Social Security Fairness Act has already gathered enough co-sponsors in the Senate to vote if it comes up for a vote. If signed into law, the repeal of the WEP and GPO would apply to benefits beginning in 2024, significantly changing benefits for affected retirees and leaving unresolved questions about the program's long-term solvency.
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This article House passes $196 billion Social Security bill: Will repealing pension cuts shorten program's lifespan? originally appeared on Benzinga.com
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