House Passes $196 Billion Social Security Bill: Will Repealing Pension Reductions Shorten The Program's Lifespan?

On Nov. 12, the U.S. House of Representatives passed the Social Security Fairness Act, a bipartisan bill set in motion to eliminate two long-standing provisions that currently reduce Social Security benefits for public sector employees. 

The legislation was first introduced in 2023 and will now head to the Senate, where it has strong bipartisan support. If passed, it is estimated to cost $196 billion over the next decade. Critics worry that enacting this bill could further exacerbate Social Security's funding challenges. 

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What Does the Social Security Fairness Act Do?

The bill addresses two key provisions – added to the Social Security Act in 1983 – that affect public sector workers:

1. The Windfall Elimination Provision (WEP): This rule reduces Social Security benefits for individuals who receive pensions from jobs where they didn't pay Social Security taxes, like certain state and local government positions. According to the Congressional Research Service, about 2.1 million people are affected by this provision. 
2. The Government Pension Offset (GPO): The GPO reduces Social Security benefits for spouses, widows and widowers who receive government pensions. About 745,000 individuals currently receive reduced benefits under this provision. 

Those in support of repealing these rules argue that they unfairly penalize retired teachers, police officers, firefighters and other public servants, many of whom heavily rely on their Social Security and pension benefits for their income. 

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Supporters Praise the Bill

Proponents of the bill see it as a victory for equity. Representative Garret Graves (R-La.), a coleader of the bill, stated on the House floor, "This has been 40 years of treating people differently, discriminating against a certain set of workers." 

The National Committee to Preserve Social Security and Medicare called the House vote a “bipartisan victory” for public employees and their families.

Concerns About Social Security's Future

While the bill aims to address disparities among a demographic affected for over 40 years, critics are concerned that enacting it could further strain Social Security's already depleting finances. 

The Congressional Budget Office estimates the bill would add $196 billion to deficits over the next 10 years and bring the trust fund depletion date forward by six months. Social Security funds are expected to run out at their current rate in 2033, meaning that beneficiaries would receive about 79% of their benefits. 

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Some lawmakers, like Rep. John Larson (D-Conn.), argue that, while reform is necessary, it needs to be handled differently. "I could not vote for the bills on the floor tonight because they are not paid for and therefore put Americans' hard-earned benefits at risk," Larson said. "It would hurt most deeply the five million of our fellow Americans who receive below poverty checks and almost half of all Social Security recipients who rely on their earned benefits for the majority of their income." 

Instead, Larson proposed an alternative proposal: the Social Security 2100 Act. This would also repeal the WEP and GPO and include additional measures to increase revenues, like raising payroll taxes for higher earners. 

Policy experts also express their concerns. Romina Boccia, director of budget and entitlement policy at the Cato Institute, criticized the bill, stating the policy is wrong and needs broader changes. 

"We should reform Social Security so that it provides basic income security to the most vulnerable Americans in old age without adding to the debt or tax burden that younger workers face," Boccia said.

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What Happens Next? 

The Social Security Fairness Act has already garnered enough Senate cosponsors to pass if brought to the floor for a vote. If signed into law, repealing the WEP and GPO would apply to benefits starting in 2024, significantly changing the benefits for the affected retirees and leaving unresolved questions about the program's long-term solvency. 

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