The U.S. House of Representatives passed the Social Security Fairness Act of 2023 on Nov. 12, pushing the repeal of the Windfall Elimination Provision and the Government Pension Offset to the Senate for consideration. If the legislation becomes law, nearly 70,000 retirees in Georgia will see their checks grow. For the rest of us, it means that our benefit checks will be subject to automatic reductions that will grow larger and arrive sooner.
There are three things to know about this legislation. First, the change would mean that people who haven’t contributed a penny to Social Security will have better benefits than those who contribute to the program every two weeks over their entire career. Second, Congress would create a financial incentive for workers to opt-out of Social Security at the time when the program needs more revenue. Three, the cost of this law will be financed by future retirees.
In total, six members of Georgia’s delegation in the House sponsored the legislation, but only three of those members actually voted for the legislation to pass. While both of Georgia’s Senators cosponsored the Senate version of this legislation, neither has responded to this question: why should people who opted-out of Social Security for a portion of their career be rewarded with better benefits?
For a bit of background, Congress rewrote the benefit formula of Social Security in 1977. At that time, lawmakers made a conscious decision to incorporate a progressive tilt in the formula so that people with long and successful careers subsidize those people who were not as successful in the workplace.
When a minimum wage worker contributes $100 to the program, he or she is buying nearly $25 of benefits for life. That is a fantastic deal considering that when someone like Warren Buffett pays the exact same $100 he gets $4.27 – pre-tax.
Thus, the income transfers in Social Security imply that Congress engrafted upon the system a social valuation that the rich should help the poor. The mixture of benefits is integral to the program’s success with poverty alleviation. Given that these transfers have been in place for decades, it is fair to assume that voters on some level agree with these principles.
Workers who opt out of the system
There is a problem with the helping hand of government, however, created by workers who opt-out of Social Security for a portion of their career. Workers opt-out of Social Security by choosing to work for an employer which doesn’t participate in the venerated program. These workers contribute to and benefit from an employer plan– mostly state and local workers.
When any of these workers qualify for benefits from Social Security either through a spouse or through working some part of their career in a job covered by Social Security, their work record can trigger a design flaw within the benefit formula such that the system provides benefits on terms meant for workers who struggled to find long-term employment.
Congress knew about the flaw and created the GPO and WEP provision as a means of preventing this type worker from gaming the system. Specifically, lawmakers did not want people with long and productive careers to buy benefits on terms set-up for the poorest of the poor. WEP and GPO exist to protect the rest of us from a system design flaw.
Now, Congress is considering ending these protections to reward those individuals who opted-out of Social Security with benefits on the cheap. On the day that the President signs this legislation, the unfunded liabilities increase by roughly $1 trillion. These are the promises that Social Security doesn’t expect to keep.
Congress could just fix the flaw!
This legislation largely proves the axiom of Will Rogers: a fool and your money are soon elected. Instead of working on the flaw, which has been visible for 50 years, our elected officials simply want to throw your money at certain voters in hopes that they will go away.
In exchange for pushing Social Security deeper into the red, Congress gets a pass on having to think about the flaw or write legislation to mitigate the possibility that workers in the 21st Century might have jobs with more than one employer.
Congress is throwing away the money that you made at your job, so that members of Congress do not have to do their job. It is really that simple.
The author, an Atlanta resident, is a policy advisor on Social Security to the Heartland Institute.
