The Concord Coalition Challenges the Social Security Fairness Act's Misguided Injustices

This week, the focus shifts to the Senate as it prepares to vote on the Social Security Fairness Act, which had previously passed through the House of Representatives in November. This proposed legislation seeks to eliminate two provisions of current law—the Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP)—projecting a hefty cost of approximately $196 billion over the next decade, with an additional $37 billion earmarked for interest payments on the national debt.

Advocates of the Social Security Fairness Act claim that it will safeguard American workers from losing their well-deserved Social Security benefits simply because they opted to pursue public service careers. However, the Concord Coalition vehemently argues that this narrative misrepresents the reality of the situation.

Contrary to popular belief, a significant number of police officers, firefighters, teachers, and other public sector employees do participate in both Social Security and their respective public pension systems throughout their careers. In fact, statistics reveal that less than 30% of state and local government employees intentionally choose not to engage with the Social Security framework. These non-covered employees are not being unjustly denied their Social Security benefits due to their public service; instead, they simply do not receive these benefits because they have opted out of paying Social Security payroll taxes.

While it is true that some workers who fall under the non-covered category do qualify for Social Security benefits, whether through alternate jobs that involve covered employment or as the spouse or survivor of a covered worker, the reductions they encounter linked to the GPO and WEP are not inherently discriminatory or punitive. Rather, they mirror rules that apply to all workers across the board.

Eliminating the GPO and WEP could lead to inequitable treatment. Non-covered workers may receive more benefits while contributing less than their covered counterparts, essentially resulting in an unjust windfall. However, this situation masks a more pressing issue: millions of non-covered workers lack any form of public pension and experience reduced Social Security benefits due to their employment choices. Repealing the GPO and WEP will not alleviate the difficulties these individuals face.

The roots of the current Social Security framework can be traced back to Congress’s decision in 1990 to mandate Social Security inclusion for the majority of workers. State and local government employees were among the notable exceptions, which were supposed to be confined to those partaking in a qualified pension plan that offered comparable retirement benefits. However, the reality is that IRS regulations crafted to enforce this expectation have faltered significantly.

A considerable number of non-covered workers never achieve vesting in a pension due to leaving their positions before fulfilling the necessary requirements. These individuals find themselves not only without a pension but also with a truncated tenure in covered employment, which translates to diminished Social Security benefits. Furthermore, even those who do secure a non-covered pension often receive less generous benefits than what they would have derived from Social Security, particularly affecting individuals with lower earnings or shorter tenures in the workforce.

Proponents of the Social Security Fairness Act assert their intent to protect non-covered workers from unfair treatment. However, a glaring oversight in this discourse is the larger injustice experienced by the many non-covered workers who fail to secure pensions altogether. If advocates genuinely intend to enhance the financial stability of these individuals, they should focus on expanding Social Security coverage to encompass them, rather than bestowing undeserved advantages upon the select few who manage to attain a non-covered pension.

In conclusion, while the Social Security Fairness Act makes bold claims about fairness and equity, a closer inspection reveals it risks perpetuating existing inequalities rather than addressing the systemic issues faced by non-covered workers. The Concord Coalition urges lawmakers to reconsider the implications of these provisions to arrive at a more just solution for all workers instead of a select few.