More than half of Missouri’s US representatives are trying to weaken Social Security | Opinion
On Nov. 12, the U.S. House of Representatives passed the Social Security Fairness Act of 2023, a change that would affect millions of people who live in Missouri — some in a good way, and for the rest of us in a very bad way.
The legislation would repeal two rules in Social Security that adjust benefits for more than 50,000 current beneficiaries in Missouri. While these retirees would see their benefit levels increase, the rest of us would see the looming benefit cuts grow larger and arrive sooner.
What does the bill do? It would repeal two federal policies — the Windfall Elimination Provision or WEP, and the Government Pension Offset or GPO. These rules were established 50 years ago to ensure that the program does not overpay people who have opted out of Social Security for some portion of their career.
For a bit of background, not everyone contributes to Social Security — most of them state and local government employees. These workers opted out of Social Security by choosing to work for an employer that doesn’t participate in the nation’s pension plan. Instead of Social Security, these people contribute to and receive benefits from an employer pension.
What are these provisions? Back in 1977, Congress redesigned the benefit formula, part of which incorporated a social valuation that people who had worked long and productive careers should subsidize those who did not enjoy a robust career. As part of that change, Congress created rules to make sure that people who opt out of Social Security cannot take advantage of the program’s progressive benefit formula through its quirks.
The progressive nature of the system, by design, enables people with low career earnings to buy benefits on the cheap. For example, $100 of payroll taxes for a minimum wage worker retiring in 2024 would buy roughly $25 of benefits per year in benefits for life. The progressivity of the benefit formula is one of the reasons Social Security is able to lift so many older Americans out of poverty.
Repealing WEP, GPO a terrible idea
Unfortunately, it is possible for a retiree to qualify for Social Security benefits and an employer pension. In this case, a person who had a long and well-paid career can appear to the benefits formula as a low-wage earner who struggled to find a place in the workforce. In fact, someone who hasn’t contributed a penny to Social Security would get better benefits than those who have contributed for a lifetime.
If Congress repeals these protections, people who chose to opt out of Social Security would be able to buy benefits on terms meant for the poorest of the poor. Such a change would be great news for the 50,000 retirees in Missouri who are subject to the WEP and GPO rules. On the other hand, it is a terrible idea for the other 1.3 million people in the state who collect benefits now, because the law would exacerbate the financial strains on the program.
This legislation would dilute the progressivity of the program, while creating a financial incentive for people to opt out of Social Security at a time when the program is struggling to keep the promises it has already made. Over the next 10 years, future retirees would hand over nearly $200 billion to people who didn’t want to participate in Social Security. When we look at the longer term, this change would add roughly $1 trillion to the promises that no one expects it to keep.
Missouri has eight representatives in the House, five of whom cosponsored this legislation that would shorten the solvency of the program by six months, and generate trillions in unfunded liabilities for the rest of us.
I have no idea why Congress would consider much less pass this legislation. It is a profoundly bad idea.