Romina Boccia and Ivane Nachkebia
The Social Security Administration (SSA) recently released an FAQ on the so-called Social Security Fairness Act (HR 82), which eliminates the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO). While the SSA focuses on the benefit increases that public sector workers can expect to collect (some in excess of $1,000 more per month!), the FAQ fails to mention that this legislation comes at a steep cost to younger workers—adding $196 billion to Social Security’s cash-flow deficits over the next decade and accelerating trust fund insolvency by six months.
It’s not too late for Congress to backtrack before the SSA implements these unfair benefit increases. By the agency’s admission, “SSA expects that it could take more than one year to adjust benefits and pay all retroactive benefits.”
Before the repeal of the WEP and GPO, stabilizing Social Security’s finances without benefit reductions would have required an immediate and permanent payroll tax hike from 12.4 percent to 16.73 percent—an increase of $2,660 for someone earning $61,440 per year. Now, the necessary rate is 16.84 percent—costing the median worker an extra $68 per year (see the figure below). In other words, 180 million workers will pay more so 3.2 million retired public sector workers can collect more.
The SSA emphasizes the complexity of implementing these changes, warning that processing must be done manually on a case-by-case basis. Yet, instead of reconsidering the law’s impact, a bipartisan group of 28 senators is pressuring the agency to rush implementation, increasing the risk of costly errors and improper payments.
It’s not too late to reverse course. Congress should repeal this costly mistake before the damage is done.