House lawmakers agreed Congress needs to take action to make sure Social Security payments are properly calculated for America’s public servants during a House Subcommittee on Ways and Means Social Security hearing Tuesday.
The panel said, under current policy, many teachers, firefighters, police officers and others who didn’t pay Social Security taxes and have worked in both the private and public sectors are seeing their benefits arbitrarily reduced by the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO), due to calculations factoring in other pension payments.
“This causes their average lifetime earnings to appear lower to Social Security than they actually are, because all those years when they didn’t pay Social Security taxes count as zeros,” said Ways and Means Chairman [crscore]Kevin Brady[/crscore] in his opening statement, adding he believes the one-sized-fits-all approach needs to be replaced .
Illinois Republican [crscore]Bob Dold[/crscore] said he’s concerned after talking to constituents who didn’t know how they would be affected until they came into retirement; he spoke with a teacher who worked at both a private and Catholic school who didn’t qualify for her full pension because of WEP.
“The Social Security statement that is required by law shows them the wrong number. Their statements give them the amount of Social Security benefits they would receive if the WEP and GPO didn’t exist. These workers, just like every other American, have a right to know what their Social Security benefits will be so they can best prepare for their retirements,” said Rep. [crscore]Sam Johnson[/crscore] of Texas, the 85-year-old chairman of the subcommittee. “These workers, just like every other American, have a right to know what their Social Security benefits will be so they can best prepare for their retirements.”
In a bipartisan effort to tackle the issue, Brady and Massachusetts Democrat [crscore]Richard Neal[/crscore] introduced the Equal Treatment of Public Service Act in 2015, which proposes a new formula that applies to all workers – calculating payments based on real-life earnings and work history.
“Under our approach, two workers with the same lifetime earnings – one who has spent an entire career in Social Security covered employment and another who has worked in both covered and non-covered work – will receive a Social Security benefit that is calculated the same way,” Brady, who has been pushing for action on the problem since 2004, said. “No more unfair formula for teachers, firefighters and police officers. Instead, we use the same benefit formula for everyone, looking all earnings. And if some of those earnings aren’t from Social Security covered employment, we adjust benefits to reflect the proportion that are.”
Subcommittee Ranking Member Rep. [crscore]John Larson[/crscore] of Connecticut commended his colleagues on the legislation, but had his doubts on whether it was the best approach and advocated for a full repeal instead.
“I am a cosponsor of H.R. 973, the Social Security Fairness Act, which would repeal both the WEP and another provision known as the Government Pension Offset (GPO), which reduces Social Security spousal and survivor’s benefits for many workers with a public pension,” he said. “However, due to the cost to fully repeal, to date Congress has not acted, denying relief to those affected by the WEP.”
Brady argued that while the current system isn’t working, a full repeal wouldn’t be fair either.
“Public employees who are eligible for Social Security should be treated just like everyone else – no better and no worse,” he said. “And just as importantly at a time when Social Security is already in trouble doing so would only worsen its financial standing.”
Dr. Jason Fichtner, a senior research fellow at George Mason University’ Mercatus Center, confirmed Brady and Neal’s bill would take effect in 2017 – 10 years faster than the Obama administration’s proposal in the 2017 budget blueprint, which takes similar steps to H.R. 711, but only covers future retirees.
The lawmakers hope to have the legislation hit the floor before the end of the year.
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