A Grand Bargain For Social Security Reform?

WEP/GPO Compromise Sought

MAY 2013 VOICE: As President Obama and Congressional Leaders search for a means to address the current budget deficit and America’s long-term debt, the prospects of a potential “grand bargain” between the White House and Congressional Republicans continues to loom.

Of interest and concern to the Association is the real possibility that a deal could be struck that includes Social Security reform, as well as a major reform of Medicare. As we have previously stated, action on the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) hinges on the larger issue of Social Security reform.

Both issues were very much on the Association’s agenda, as it participated in talks in Washington, D.C. this winter. The Association belongs to several national organizations that advocate for public pensions, Social Security and Medicare at the federal level.

In January, the National Conference of Public Employee Retirement Systems (NCPERS) held its annual legislative conference in Washington. Hundreds of public pension officials from across the country attended the two-day conference. A host of issues were discussed, including defined benefit pensions, “ObamaCare” and, of course, Social Security.

Legislative Liaison Shawn Duhamel attended the meeting on behalf of the Association. Several other members of the Massachusetts Public Retirement Community, including representatives of the Public Employee Retirement Administration Commission (PERAC), joined him at the conference.

“Over the years, our Association has been an active participant in a number of national organizations and coalitions focused on the WEP/GPO,” explained Association President Ralph White. “NCPERS, along with the Coalition to Assure Retirement Equity (CARE), are two of the leading national groups fighting exclusively for pension and Social Security protection for public retirees.

“Members, impacted by the WEP or GPO, should know that they are not alone in this fight. The same federal laws, that have taken money from you, also apply in several other states. Through our work in these national groups, we’ve been able to forge strong partnerships with retiree and employee organizations in the other non-Social Security states, such as California, Ohio and Texas.”

Window of Opportunity

Since the passage of the WEP and GPO in the 1980s, our Association and other groups have fought for a full repeal of both laws. Each session, bills have been filed before Congress that, if passed into law, would offer a full repeal and prospectively adjust retirees’ Social Security benefits to their full amount.

Despite strong support in the House and complete devotion from our federal delegation from Massachusetts, the bills have yet to make it beyond committee. Following the 2010-midterm elections, the number of congressional supporters saw a marked reduction. A new, more conservative Congress, with an eye toward debt reduction was leery to support any expansion of federal benefits, regardless how meritorious.

During our January visit to Capitol Hill, Republican and Democrat House and Senate members expressed skepticism that a full repeal of WEP/GPO would materialize, even in the context of a larger deal involving Social Security reform. However, a reform package could very well include adjustments to the WEP and GPO formulas that would allow public retirees to keep a larger share of their Social Security benefit.

“In 2011-12 we heard very little talk in Washington of doing anything with Social Security other than making cuts designed to reduce federal spending (see Chained CPI, March Voice). That trend has continued into 2013, with more than 1/3 of the House being elected on a debt reduction platform,” explains Duhamel. “That said, the likelihood of a full repeal of either the WEP or GPO is a long shot, at best. Right now our fear is a deal being struck that settles the debate on Social Security for the next generation, without the WEP/GPO reform being included.”

“Losing the opportunity to include WEP/GPO relief as part of a large Social Security reform deal would be a catastrophic setback. The last time Social Security was reformed was in 1983, when Ronald Reagan and Tip O’Neill struck their historic deal,” recalls White. “Our members can’t afford to wait another thirty years for the chance for relief. If that means agreeing to a compromise, then that is a bridge we might need to cross. Our priority has to be bringing some relief to those retirees who need it most.”

Association officials have sought the counsel of leading members of the Massachusetts congressional delegation in order to devise a strategy to ensure that WEP and GPO remain part of the dialog surrounding Social Security reform. We are also working closely with retiree organizations in other impacted states, such as the massive Retired Texas Teachers Association, with its 75,000 members.

Texas Congressmen Sam Johnson and Kevin Brady, both senior members of the House Republican Leadership, would play central roles in any deal to reform Social Security. Johnson chairs the Social Security Committee, while Brady is the Deputy Republican Whip and a senior member of the House Ways and Means Committee.