close
close

What’s next for the Social Security Fairness Act?

What’s next for the Social Security Fairness Act?

Richard Stephen | Istock | Getty Images

As Congress struggles to avoid a government shutdown, the Senate is also poised to consider another bill that would increase Social Security benefits for some civil servants.

But the bill, the Social Security Fairness Act, could see changes if efforts by some senators to add amendments are successful.

As originally proposed, the Social Security Fairness Act calls for eliminating decades-old Social Security provisions known as the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO).

The WEP reduces Social Security benefits for individuals who receive retirement or disability benefits from employment where they did not pay Social Security payroll taxes. The GPO reduces Social Security benefits for spouses, widows and widowers who also receive their own state pension income. In total, the provisions affect an estimated 3 million people.

The bill has enthusiastic support from organizations representing teachers, firefighters, police officers and other government employees affected by the benefit cuts.

The government will close at midnight if no agreement is reached

“You shouldn’t penalize people for income outside of a system when you’ve paid into it and are receiving that benefit,” said John Hatton, vice president of policy and programs at the National Active and Retired Federal Employees Association. “We’ve been trying to repeal this for 40 years.”

The bill received overwhelming bipartisan support. The Social Security Fairness Act passed the House of Representatives in November with a majority of 327 votes.

Preliminary Senate votes this week also showed strong bipartisan support for moving forward with the proposal. On Wednesday, the chamber voted by a majority of 73 votes to move forward with the motion. This was followed on Thursday by a vote on a continuation motion, which also received a majority of 73 votes.

Experts believe the Senate could hold a final vote soon. There are two options: with amendments that change the terms of the original bill, or with a final vote without changes.

Changes may include raising the retirement age

According to the Congressional Budget Office, the Social Security Fairness Act would cost an estimated $196 billion over 10 years.

These additional costs come as the trust funds that Social Security relies on to pay benefits are already facing imminent depletion. Social Security trustees have forecast that the program’s trust fund, used to pay retirement benefits, could be depleted in nine years, when only 79% of benefits may remain payable.

Some senators who oppose the Social Security Fairness Act have expressed concerns about the pressure the additional costs would put on the program.

Sen. Rand Paul, R-Kentucky, who voted against introducing the current version of the bill in the Senate this week, said this week he plans to propose an amendment to offset those costs by gradually raising the retirement age to 70 and at the same time Make adjustments for life expectancy. The full Social Security retirement age — when beneficiaries receive 100% of their earned benefits — is currently 67 for people born in 1960 or later.

“It is absurd to consider a proposal that would make Social Security both less equitable and financially weaker,” Paul said in a statement. “To undo the harm caused by this legislation, my amendment to gradually raise the retirement age to reflect current life expectancy will strengthen Social Security by providing nearly $400 billion in savings.”

More from Personal Finance:
Answers to common questions about the Social Security Fairness Act
73% of workers fear that Social Security will not be able to pay their benefits
A study shows that early retirement comes as a surprise to many employees

A total of six amendments to the bill had been introduced as of Friday morning, according to Emerson Sprick, deputy director of economic policy at the Bipartisan Policy Center.

Some changes propose replacing the complete repeal of the WEP and GPO provisions with other changes.

An amendment from Sens. Ted Cruz, R-Texas, and Joe Manchin, I-West Virginia, would instead establish a more proportional formula for calculating benefits for affected individuals. This change, inspired by Texas Republican Rep. Jodey Arrington’s Equal Treatment of Public Servants Act, has strong support from policy experts and the Bipartisan Policy Center, Sprick said.

Social Security advocacy groups have pushed for broader Social Security reform that would use tax increases to fund more generous benefits.

“We want to help make this happen, but we would rather it be part of a much broader Social Security reform,” said Dan Adcock, director of government relations and policy at the National Committee to Preserve Social Security and Medicare.

Of course, if amendments are successfully added to the bill, it would have to be sent back to the House of Representatives.

“We hope it doesn’t come to that because that could complicate things depending on the timing of the implementation of the (continuing) resolution” to avoid a government shutdown, Adcock said.

The Senate can proceed to a final vote on the original bill

Much of what happens next, Sprick said, depends on Senate Majority Leader Chuck Schumer, D-New York, who could unilaterally decide not to allow amendments to be considered.

Alternatively, Schumer could decide to allow amendments in exchange for limiting the time spent considering the bill, he said.

However, Sprick said he doubts Schumer will allow any changes at this point.

“The most likely scenario at this point is that Senator Schumer will simply let time pass, not allow amendments to be considered, and take a final vote either very late tonight or tomorrow morning,” Sprick said.

While opponents of the bill could delay a vote, they would not be able to stop a vote, Hatton said. In addition, there is reason to believe that the leaders who voted to present the bill this week will also vote for it when it is put to the final vote, he said.

“I’m still optimistic that this will pass, and it’s more a question of when, not if,” Hatton said.

Leave a Reply

Your email address will not be published. Required fields are marked *