Senate Majority Leader Chuck Schumer, D-N.Y., promised to bring the Social Security Fairness Act to the floor for consideration. He did, and now the Social Security program is another trillion dollars in the hole. What could keep lawmakers in the office days before Christmas? Pork barrel of course.
While the stability of the venerated program hasn’t drawn the interest of Congress in nearly 40 years, lawmakers were willing to ghost their families the week before Christmas in order to pass this legislation late on Friday, which will repeal the Windfall Elimination Provision (“WEP”) and Government Pension Offset (“GPO”) provisions of Social Security.
In 1977 Congress rewrote the benefit formula, creating a progressive system in which those with long and productive careers would subsidize those with less opportunity to prepare for retirement. At that time, Congress considered whether those who opt-out of the program deserved the same helping hand. The WEP and GPO were Congress’s way of saying no.
Keep in mind, these provisions were added more than 40 years ago to protect future retirees from the system overpaying people who opted out of Social Security for some part of their career. No one more than Senator Schumer should understand the role that these rules play in protecting the system: he voted for WEP in 1983. He must know that the repeal of these rules will add roughly a trillion dollars to the empty promises made to future retirees.
The Social Security Fairness Act of 2023 is Congress’s way of saying it is the job of future retirees to subsidize people who didn’t want to participate in Social Security. It is really that simple.
Not everyone works in a job covered by Social Security. About 4% of the workforce works for an employer which doesn’t participate, and these workers contribute to and collect benefits from a Social Security type pension run by the employer. These people have something similar to Social Security.
Where you work is a choice. What you do is a choice. It may not be an informed choice, but working for one of these employers is a personal decision to not participate in Social Security. Why does anyone have to explain to Congress that no one should be rewarded for the decision to not participate in Social Security when the program can’t keep the promises it has already made.
How would Social Security reward people who don’t contribute? It is a 50 year old systemic defect, which treats those who work outside of Social Security as though they had no job. The system sees the CEO of the local school system no different than an itinerant farm hand. So the system wants to give a helping hand to people who have never contributed a penny to the program, despite getting a pension from a well paid and full career.
To illustrate the flaws in this legislation, the average teacher in the United States makes about $70,000. If that teacher serves in a job covered by Social Security, he or she is not eligible for spousal benefits. That is zero. Under this law, the same type of teacher who opted-out of Social Security would be eligible for as much as $30,000 per year.
The hard-working teacher who contributed for a lifetime would be eligible for $0, and the other hard-working teacher who didn’t contribute a penny might get $30,000 – per year for life adjusted for inflation. The sponsors of the legislation have not responded to repeated requests for comment : Where the hell is the “fairness” in that?
According to the Committee for a Responsible Federal Budget, the average couple retiring in 2033 will lose $8,000 in benefits in 2033 alone, and $25,000 over their lifetime. This is the cost of “fairness.”
These rules are ancient, and awkwardly written. The average person affected by these rules has no idea why their benefits are adjusted. Worse, many do not find out about the impact of their decisions until they receive their first benefit check. These people should be angry, but let’s not take out that anger on the future retiree. That guy already faces large benefit reductions.
Instead of creating a financial incentive for workers to opt-out of Social Security, maybe Congress should fix the quirk. It is not a terribly complicated problem. So the question that I would like to understand is why hasn’t Senator Schumer worked on a solution to the quirk in the more than 40 years he has served in Congress.
The answer is of course the only thing that is easy in Congress is handing out other people’s money.
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