Requiring state and local governments to put all workers in the Social Security system could reduce the projected 75-year Social Security deficit 11%.
Barbara Bovbjerg, a director at the U.S. Government Accountability Office, made that prediction today during a hearing of the Senate Finance Committee Social Security subcommittee.
The federal government permits municipal governments to keep employees out of Social Security if the employees are in pension plans.
But many municipal employees are eligible for some Social Security benefits through their spouses or in connection with other employment, and the mechanisms meant to adjust benefits for retirees eligible for partial benefits work poorly, Bovbjerg said, according to a written version of her remarks.
Putting the municipal employees in Social Security would offer many benefits for workers, such as accessed to easily portable Social Security retirement benefits, Bovbjerg said.
The main obstacle would be the effect of the shift on state and local government budgets, Bovbjerg said.
A copy of Bovbjerg’s testimony is available