Social Security legislation passed by the U.S. Senate, which would cost more than $195 billion over 10 years, now goes to President Joe Biden for his signature. (Photo by Getty Images).
WASHINGTON — The U.S. Senate approved a broadly bipartisan bill early Saturday that would increase Social Security benefits for millions of Americans with pensions by ending two of the program’s policies in place for decades — the windfall elimination provision and government pension offset.
The legislation, which would cost more than $195 billion over 10 years, now goes to President Joe Biden for his signature. While he hasn’t released a public endorsement of the bill, extensive support in the House and Senate could signal he’s likely to support the measure becoming law.
The Senate vote was 76-20 and the House vote in November was 327-75.
Maine Republican Sen. Susan Collins said during floor debate Wednesday that a fix for the two provisions has been decades in the making, noting she held the first hearing on the issue in the upper chamber in 2003.
Collins later partnered with the late California Democratic Sen. Dianne Feinstein to introduce the first version of the bill in 2005, before working with former Maryland Democratic Sen. Barbara Mikulski in 2007 on another version.
“Social Security is the foundation of retirement income for most Americans, yet many teachers, firefighters, police officers and other public servants often see their earned Social Security benefits unfairly reduced by two provisions,” Collins said.
The windfall elimination provision, she said, “affects public servants who receive a pension from a job not covered by Social Security, but who also worked long enough in another job to qualify for Social Security benefits.”
The government pension offset affects people who worked in jobs that weren’t eligible for Social Security, but were eligible for a spousal benefit. That pension offset, Collins said, can reduce a spouse’s Social Security benefit by two-thirds of the non-covered pension, leading to 70% of those affected by the GPO to lose the entire Social Security benefit.
“This issue is extraordinarily important in my state of Maine because the state’s pension system does not include a Social Security component,” Collins said. “And among those most affected are Maine school teachers.”
Collins called the WEP and the GPO “an unfair, inequitable penalty.”
Hit to trust fund
North Carolina Republican Sen. Thom Tillis said the bill’s title made it sound like “motherhood and apple pie,” but argued it wasn’t the right approach to address the problem.
He expressed concern the bill would reduce the Social Security trust fund by an additional $200 billion during the next decade, moving up the insolvency date by six months.
“This chamber needs courage and needs to say what needs to be said — we are about to pass an unfunded $200 billion spending package for a trust fund that is likely to go insolvent over the next nine to ten years and we’re going to pretend like somebody else has to fix it,” Tillis said. “Well, when you’re a U.S. senator and you have your election certificate, that falls on us.”
Tillis said he agreed with Collins and others who support the bill that the WEP and the GPO must be fixed, but said that should be part of a larger conversation about addressing Social Security’s upcoming insolvency.
“We do not disagree with what we ultimately need to do,” Tillis said. “This is a disagreement in how to get here and how to have something that assesses the downstream risk. So it is with some trepidation that I come to the floor and criticize the good work of Sen. Collins. But I do it because there is so much riding on us getting this right and having the courage to fix Social Security over the next few years.”
Ohio Democratic Sen. Sherrod Brown said during floor debate Wednesday that people who paid into Social Security for the required amount of time should receive their full benefits.
“Social Security we know is a bedrock of our middle class — it’s retirement security that Americans pay into and earn over a lifetime,” Brown said. “You pay in for 40 quarters, you pay in essentially for 10 years. You’ve earned it. It should be there when you retire.”
Brown said it “makes no sense” that workers in certain public service jobs, like teachers, police officers and firefighters, cannot draw their full benefits.
“They protect our communities, they teach our kids, they pay into Social Security just like everyone else,” Brown said.
How do these provisions work?
The pension offset reduces a “spousal or widow(er)’s benefits of most people who also receive pensions based on federal, state, or local government employment not covered by Social Security,” according to a report from the nonpartisan Congressional Research Service.
The windfall elimination provision changes the formula to reduce Social Security benefits for people “who are also entitled to pension benefits based on earnings from jobs that were not covered by Social Security,” the report said.
The pension offset affects about 746,000 Americans while the windfall provision affects 2.1 million.
“The share of Social Security beneficiaries affected by the GPO varies widely by state,” the CRS report says. “States with a relatively larger share of GPO-affected beneficiaries are usually those with a larger share of state and local government employees not covered by Social Security or those with more (Civil Service Retirement System) retirees.”
The pension offset has a disproportionate impact on Social Security beneficiaries in Alaska, Arizona, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Idaho, Illinois, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Missouri, Nevada, New Hampshire, New Mexico, Ohio, Rhode Island, Texas and Utah.
The windfall elimination provision affects a larger percentage of residents in Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Missouri, Montana, Nevada, New Hampshire, New Mexico, Ohio, Oklahoma, Oregon, Rhode Island, Texas, Utah, Virginia and Washington, Wyoming.
“Similar to the GPO, the share of Social Security beneficiaries affected by the WEP varies by state,” CRS wrote. “Typically, states that have a larger share of state and local government employees not covered by Social Security or more CSRS retirees have a relatively larger share of Social Security beneficiaries affected by the WEP.”
Bipartisan House support
The U.S. House voted 327-75 in November to approve the four-page bill, sponsored by Louisiana Republican Rep. Garret Graves and Virginia Democratic Rep. Abigail Spanberger.
Graves said during floor debate that for 40 years, Social Security worked by “treating people differently, discriminating against a certain set of workers.”
“These are police officers, teachers, firefighters, and other public servants,” Graves said at the time. “I worked side by side with these folks. They are not people who are overpaid. They are not people who are underworked.”
Spanberger called the windfall elimination provision and the government pension offset “two misguided provisions that were added to the Social Security Act in 1983 (and) have denied Americans the retirement security they worked for and expected to receive.”
“For more than 40 years, public servants have tirelessly implored their representatives in Congress to listen to their stories and to correct this glaring injustice,” Spanberger said. “Today, for the first time, Congress will vote on the Social Security Fairness Act, to repeal the WEP and the GPO, and to finally put an end to this theft.”
Opposition to bill
Missouri Republican Rep. Jason Smith, chairman of the Ways and Means Committee, said the two provisions affect around 4% of all Social Security beneficiaries, more than 60% of whom are concentrated in 10 states.
The two provisions, he said, “were put in place more than four decades ago to prevent workers with earnings that were exempt from Social Security payroll taxes from getting more generous treatment from Social Security than workers who spent their whole careers contributing to Social Security.”
“Unfortunately, these policies still result in overly generous benefits for some while unfairly penalizing others,” Smith said, before arguing the bill wasn’t the right way to address the two provisions.
Smith said that getting rid of the two provisions “without a replacement potentially trades unfair treatment for preferential treatment.”
He also expressed concern about how pulling more money from the Social Security trust fund would impact solvency.
The nonpartisan Congressional Budget Office estimated the bill would cost $195.65 billion during the next 10 years and wrote in a letter to Iowa Republican Sen. Chuck Grassley that it would likely move up the Social Security insolvency date by six months.
“If H.R. 82 was enacted, the balance of the (Old-Age and Survivors Insurance) trust fund would, CBO projects, be exhausted roughly half a year earlier than it would be under current law,” CBO Director Phillip L. Swagel wrote. “The agency estimates that under current law, the balance of the OASI trust fund would be exhausted during fiscal year 2033.”
The Social Security trustees report for 2024 says that the program will be able to pay full benefits until 2035. After that, if Congress hasn’t brokered a solution, Social Security would be able to pay about 83% of benefits.