Nov 26, 2024 · Analysis and Commentary · by Amy West

On Nov. 12, 2024, the House passed H.R. 82: Social Security Fairness Act of 2023. It would still need to pass the Senate before January 3, 2025 in order to become law as part of the 118th Congress. We do not know what its prospects are.

If it does not pass the Senate, then it can be reintroduced in the 119th Congress. Given that this time around, the bill was able to get enough signatures on a discharge petition to force it to the floor for a vote and then passed by 327-75 odds are good it would be introduced.

But what is the fairness that the bill is supposed to create? Well, come along as we take a look at two separate and fairly longstanding programs under Social Security: the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) which H.R. 82 would eliminate.

Purpose of Social Security

According to the Congressional Research Service,

Social Security spousal benefits were established in the 1930s to help support wives who are financially dependent on their husbands. It has since become more common for both spouses in a couple to work, leading to more cases in which both members of a couple are entitled to Social Security or other government pensions based on their own work records. Social Security does not provide both a full retired-worker and a full spousal benefit to the same individual.

There are a few different ways in which Social Security prevents both a full retired-work benefit and spousal benefit to the same person. They include the WEP and the GPO. H.R. 82 would have repealed both of these meaning that some people would now receive both a full retired-worker benefit and a full spousal benefit.

What is the Windfall Elimination Provision

According to another Congressional Research Service report

Its {WEP's} purpose was to remove an unintended advantage or “windfall” that the regular Social Security benefit formula provided to workers who also had pensions from noncovered employment.

What is "noncovered employment"? From the same report

Noncovered workers include state and local government employees covered by alternative staff-retirement systems; most permanent civilian federal employees hired before January 1, 1984, who are covered by the Civil Service Retirement System (CSRS) or other alternative retirement plan; employees covered by the Railroad Retirement system; domestic, election, or farm workers with earnings below certain thresholds; people with low levels of net earnings from self-employment; and certain nonimmigrants.

Noncovered workers do not have Social Security taxes withheld from their paychecks while they're in the noncovered jobs. They may have funds withheld for the relevant pension programs, but not Social Security. Therefore, they're not paying into the Social Security system while they're in noncovered employment. But, if they end up receiving Social Security benefits as if they have been paying into the system, then the government considers that a "windfall".

What is the Government Pension Offset

According again to the Congressional Research Service,

The GPO reduces the Social Security spouse’s or widow(er)’s benefits (hereinafter “spousal benefits”) of most people who also receive a pension based on federal, state, or local government employment not covered by Social Security.

Why does it exist? Congress's rationale in 1977 was based on a Supreme Court opinion that

...made hundreds of thousands of male retirees who worked in noncovered government employment immediately eligible for Social Security benefits as spouses or widowers, adding hundreds of millions of dollars annually to the cost of the program and raising questions about whether these were unnecessary or “windfall” benefits.

Bottom Line

Social Security is intended for workers who have paid into the system and for the survivors of workers who have and are presumed to be dependent on those workers. When first developed in the 1930s, many women did not work outside their homes even if they needed or wanted to and were presumed to be dependent upon benefits from their husband's work. As more women entered the workforce and began to accrue Social Security benefits for themselves and as many workers, male and female, paid into alternate retirement systems rather than Social Security, paying out benefits in an equitable manner became more complicated. The WEP and GPO were intended to address the potential inequity. But, it also meant that some survivors/spouses of workers who did pay into Social Security saw their survivor/spousal benefits reduced because they had their own sources of benefits.

How Many Workers Are Affected?

The Congressional Research Service estimates that about 2 million or 3% of Social Security beneficiaries are affected by the WEP and a little under 750,000 or 1% of beneficiaries were affected by the GPO.

Is there a CBO Score?

Yes there is a CBO Score. The bill would obviously increase the amount of money being paid in Social Security benefits; that's the point. CBO estimates that the budget effect of these increased payments would be offset by decreased SNAP benefits to the same recipients because now they'd get more from Social Security. Here is the CBO's detailed report.

Where Can I learn More?

This is an extremely complex topic with a lot of jargon and fussy benefit formulas. The vast majority of workers - even when they've spent some years in noncovered employment - are not affected because of all the time they've spent working in jobs from which Social Security taxes are deducted. But if you think you might be one of the folks who would be affected or are just interested, we've found these guides useful:

• Congressional Research Service's Social Security: The Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO)
• Bipartisan Policy Center's The Windfall Elimination Provision (WEP) and Government Pension Offset (GPO)
• Social Security Administration's guide to the WEP
• Social Security Administration's guide to the GPO

Happy Thanksgiving

We hope this addresses at least some of the messages we've received on this topic. Because we do not take positions on policy issues other than government data transparency (we literally wouldn't exist without open government data, so we're for it), we have intentionally not included any of the advocacy articles sent to us or the articles that came up in our research that were pro or con. We hope you all have a good feast weekend and we'll see you next week!