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House Panel Advances Bill Repealing 2 Unpopular Social Security Rules

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What You Need to Know

  • The Social Security Fairness Act would eliminate the Windfall Elimination Provision and the Government Pension Offset.
  • These provisions can reduce benefits for public workers who did not pay Social Security taxes.
  • Rep. Larson called again for Congress to take up his Social Security 2100 bill, which would also repeal these rules.

The House Ways and Means Committee Tuesday ordered without recommendation to the full House H.R. 82, the Social Security Fairness Act of 2021, which repeals Social Security’s Windfall Elimination Provision (WEP), a law that reduces the Social Security benefits of certain public workers — like teachers — who receive pensions and don’t pay Social Security taxes.

The bill also eliminates the government pension offset (GPO), which in various instances reduces Social Security survivors’ benefits for spouses, widows and widowers who also receive government pensions of their own.

The WEP, in some instances, reduces Social Security benefits for individuals who also receive a pension or disability benefit from an employer that did not withhold Social Security taxes.

The bill’s changes are effective for benefits payable after December 2021.

With Ways and Means reporting the bill without recommendation, “it’s now up to House Democratic leadership whether to take up the bill on the House floor,” Dan Adcock, director of Government Relations and Policy for the National Committee to Preserve Social Security and Medicare, told ThinkAdvisor Tuesday in an email.

House Ways and Means Social Security Subcommittee Chairman John Larson, D-Conn., has been pressing House lawmakers to vote on his comprehensive Social Security 2100 bill, but chances of that happening by year-end appear to be unlikely.

As the Social Security Administration explains, the WEP can affect how it calculates workers’ retirement or disability benefit.

“If you work for an employer who doesn’t withhold Social Security taxes from your salary, such as a government agency or an employer in another country, any retirement or disability pension you get from that work can reduce your Social Security benefits,” the SSA explained.

The WEP “can reduce your U.S. retirement or disability benefits if you receive a pension based on work and you did not pay U.S. Social Security taxes on those earnings,” according to the agency.

House Ways and Means Chairman Richard Neal, D-Mass., said Tuesday during the markup that while H.R. 82, which has 300 co-sponsors, is “very popular,” there are also concerns about its broader impact on the solvency of Social Security.

“We are faced with a very challenging question — how to address the concerns of hardworking public servants while also safeguarding Social Security for all, and for generations to come,” Neal said. “I’m committed to finding a path forward and will continue working closely with Ranking Member [Kevin] Brady to find meaningful relief to those who have spent their lives in service of their communities.”

Larson told ThinkAdvisor Tuesday afternoon in an email that Social Security 2100: A Sacred Trust “includes President Biden’s proposal for full repeal of WEP and GPO and is paid for, so it will not harm the Social Security Trust Funds.” The bill “also goes well beyond the 27 states that are impacted by this problem, helping current beneficiaries and all Americans who pay into Social Security. We continue to work with Chairman Neal and implore House leadership to bring 2100 to markup and then the floor.”

The Social Security Fairness Act of 2021 violates congressional pay-as-you-go rules and is thus unlikely to be taken up in the House during this Congress, Adcock said.

Social Security 2100 Bill: Another Option

The Social Security Fairness Act is not the only pending legislation that would protect public workers from benefit reductions.

Adcock says that while his advocacy group supports repealing the WEP and GPO, his group prefers the “comprehensive” Social Security reform proposed in H.R. 5723, Social Security 2100: A Sacred Trust.

That bill, sponsored by Larson, would also repeal the WEP and GPO and “is paid for,” while H.R. 82 is not, Rep. Bill Pascrell, D-N.J., noted Tuesday during the markup.

But Pascrell said he supported H.R. 82, calling it ”a path to a solution before the end of the year.”

Larson, along with other lawmakers and Social Security advocacy groups, renewed a push in early August for passage of the Social Security 2100 bill.

Larson pushed again Tuesday, stating: “It’s time that we bring up comprehensive reform and it’s time that this committee of consequence addresses it and we urge the leadership to take it up on the floor.”

Adcock says his advocacy group will continue to support Larson’s push, “but the chances that bill will be considered by the full House grow dimmer as the number of days on the legislative calendar for the 117th Congress declines.”

Comprehensive Reform

There’s a need to look at Social Security and repealing WEP and GPO in a “comprehensive manner,” Larson said Tuesday.

With WEP and GPO, “we’re talking about 2.7 million people; they need to be addressed … but so do the 65 million people on Social Security currently. For 51 years Congress has kicked the can down the road.”

Social Security 2100, introduced on Oct. 26, adopts the Consumer Price Index for the Elderly as the basis of the annual cost-of-living adjustment (COLA), applies the payroll tax to wages above $400,000, combines the Old-Age and Survivors and Disability Insurance trust funds, includes a 2% benefit bump.

The bill would extend the trust fund depletion date — when a 20% cut to benefits would occur — by about three years, to 2038.