Make Social Security Broke Again

The US House is bribing former public service workers with our money, sending Social Security faster into bankruptcy. And the Senate may follow suit.

There’s an old saying around our house. Nothing good happens after midnight.

Nothing good also happens in Congress after an election.

Oh, sure, that’s not entirely true. At this writing, we’ll learn who the next Senate GOP (Majority) Leader will be. We’ll discuss our new Senate Majority Leader and the likely changes and challenges ahead in a future post.

But the US House passed the so-called “Social Security Fairness Act” on Tuesday with a lopsided margin of 327 to 75 (29 didn’t show). Like so many other titles to legislation, such as the “Inflation Reduction Act,” the bill’s name is Orwellian at best.

It will hasten the bankruptcy of the Old Age Survivors and Disability Insurance (OASDI) Trust Fund, which is already scheduled to happen within a decade. And when the “trust fund,” which consists primarily of IOUs, runs out of money, 65 million Social Security recipients will experience an immediate 23 percent reduction in benefits.

And a bipartisan cabal of House members voted for it. US Rep. Abigail Spanburger, the retiring Virginia Democrat who wants to succeed Glenn Youngkin as Governor of Virginia next November, is the driving force behind this garbage.

I wrote 11 months ago as the terrible, bankrupting legislation was gaining steam. It was a bad idea then, and it’s a bad idea now. The Senate should stop it, but it’s not looking hopeful. Sixty-two Senators are now cosponsors, and Biden’s autopen will mostly assuredly sign it.

Here’s what I wrote, followed by a link to the entire post, lightly edited. Read it and weep.

Let’s return to the Windfall Elimination Provision and its smaller cousin, the Government Pension Offset.

U.S. Rep. Abigail Spansberger (D-VA, and a candidate for Governor in 2025) and GOP Rep. Garret Graves (R-LA) have introduced legislation, H.R. 82, the Social Security Fairness Act, cosponsored by some 300 of their colleagues (not counting now-former U.S. Rep. George Santos, R-NY, who was expelled but still is listed as a cosponsor).

The bill would repeal the two provisions above and dramatically raise Social Security retirement benefits for hundreds of thousands of retirees who benefit from existing generous public employee retirement plans, totaling $183 billion over ten years.

The legislation would hasten Social Security’s retirement trust fund (Old Age Survivors and Disability Insurance, OASDI) bankruptcy by at least one year.

A companion Senate bill, S.597, by Senators Susan Collins (R-ME) and Sherrod Brown (D-OH, running for reelection), has also attracted an impressive array of 48 bipartisan sponsors, including conservative heartthrobs John Kennedy (R-LA), future Indiana Gov. Mike Braun (R) and Markwayne Mullin (R-OK).

One interesting U.S. House cosponsor is Speaker Mike Johnson (R-LA). The House bill is on the march, thanks to a hearing held last month by the House Ways and Means Committee in Louisiana’s capital city, Baton Rouge. It’s practically guaranteed to pass at least the House, with pretty good odds in the U.S. Senate. And, of course, the President will sign it.

Here’s an argument for the bill, courtesy of Richmond Times-Dispatch, based on testimony to the House Ways and Means Committee:

Robert Callahan retired in 2006 after 29 years as a Fairfax County police officer. He had contributed 12.5% of his earnings to the Fairfax County Police Officers Retirement System, but he also had contributed to Social Security in jobs he worked before joining the police department and as an officer at two other local governments for a total of 16 years.

Callahan stopped working full time this year and began receiving his Social Security benefits in June at age 67 years and three months. He calculated that his benefit should have been $2,224 a month, but the Windfall Benefit Provision reduced the monthly benefit to $1,658, a difference of $566 a month. He does not think he should be penalized for his contributions to the Fairfax police pension plan.

"While employed as a police officer I contributed a significantly higher percentage of my income to a retirement plan than I would have had to Social Security and have earned that benefit as result of my contributions and years of Service," he wrote in testimony to the U.S. House Ways and Means Committee.

Congress has resisted previous attempts to repeal the provisions, in part because it does not want public sector retirees to collect an unfair "windfall," but also because of the cost to a Social Security system that faces serious concerns about its future solvency. Repealing the provisions would cost an estimated $183 billion over 10 years, according to the Congressional Research Service.

The reporter needs to be corrected on one point: the $183 billion cost was projected by the Congressional Budget Office. Not reported is Callahan’s public pension as a retired cop, which I bet is pretty close to his final salary.

While Callahan’s argument seems compelling, and I’m sympathetic to first responders, he paid nothing into Social Security for 29 years while a public employee. In exchange, he contributed to a public pension plan with a generous benefit, a tradeoff he knew and accepted. He has been getting credit for years and paid into Social Security, but not on the same basis as others who have paid into the system their entire career.

In 1983, Congress specifically tried to avoid the situation Callahan and his supporters now want to create.

The 40-year-old reform law was written to bring public employees into Social Security and broaden its base as part of a federal retirement scheme to mirror the private sector and save Social Security for future generations. This bill would throw that out of whack with a nice, immediate windfall for many public (many unions) retirees and hasten Social Security’s impending financial crisis.

These public pensions are generous. I receive pensions from my 16 years at a major corporation and 11.5 creditable years as a federal employee under FERS. My federal pension, with an annual cost of living allowance (COLA), exceeds my corporate one, which doesn’t get a COLA. Many (but not all) corporate employees benefit from equity (stock grants, options, and generous bonuses) from their jobs, while government workers don’t. That, in part, is why they get nicer pensions. For the record, I’m not affected by the bill nor the Windfall Elimination Provision.

Civil service workers also have a lot better job security. Try firing one sometime.

This isn’t about “fairness.” This is about bribing us with our own money. They seem less interested in preventing an immediate 23 percent or more cut in those same benefits in less than a decade. If only Reps. Graves, Spanberger, and their colleagues spent more time trying to rescue a system spinning toward bankruptcy. The list of public employee associations (many with large political action committees that overwhelmingly support Democrats) endorsing the bill should wake up any responsible Member of Congress, especially Republicans.

It is too late to rescue Social Security and Medicare without politically painful reforms. This bill would make that challenge even more urgent and difficult. Still, for aspiring governors and Senators seeking reelection, the urgent trumps the important, especially when winning elections tops the priority list.