Four Bills Now Pending Before the House
Janaury 2022 Voice: Over the course of a week, spanning late October into early November, the number of bills pending before the US House of Representatives to either repeal or reform the Social Security Windfall Elimination Provision (WEP) doubled.
The introduction of two new bills to reform the WEP or fully repeal both the WEP and GPO are proof that our national efforts to draw attention to these issues are working – albeit slower than anyone would prefer!
The first major development this fall came in the form of an omnibus Social Security reform proposal, filed by Congressman John Larson (D-CT), that includes a provision to fully repeal WEP and the Government Pension Offset. This bill, which has the support of Mass Retirees, includes a funding method to cover the billions in new costs that would result from full repeal. This proposal now has 194 cosponsors.
Larson’s proposal (H.R. 5723) is the 2nd of two bills before the House calling for full repeal of WEP and GPO. H.R. 82, sponsored by Congressman Rodney Davis (R-IL), fully repeals both laws – but does not include any provision to pay for the costs associated with doing so. Although the bill now has 237 cosponsors, it significantly lacks majority support in the US Senate where at least 60 votes are needed to pass any bill related to Social Security.
Neal & Brady WEP Proposals: What Distinguishes Them
Congressman Kevin Brady (R-TX) has reintroduced a proposal to reform the WEP. The bill, H.R. 5834, brings the total to four separate proposals now before the House pertaining to the WEP and the Government Pension Offset (GPO). Like the reform proposal filed earlier this year by Congressman Richard Neal (D-MA) (H.R. 2337), Brady’s proposal focuses exclusively on reforming the WEP law – which applies to a retiree’s personal Social Security benefit if they have earned a minimum of 40 Social Security quarters.
Brady’s HR 5834 now carries 38 cosponsors, while Neal’s HR 2337 carries 184.
While both Neal and Brady propose a restoration of some lost benefits for current retirees, as well as a new Social Security formula for future retirees with non-covered service, the two bills differ in the size of the retiree rebate, as well as how benefits will be calculated for future retirees beyond 2061.
Brady proposes up to a $100 increase in Social Security benefits for those impacted by the WEP law and eligible to collect Social Security before 1/1/2023 (age 62, with a minimum of 40 quarters). The proposal also contains a $50 spousal benefit for those collecting Social Security through a spouse who has been WEP’d.
Under H.R. 2337, Neal proposes a monthly rebate of up to $150 but does not allow for an increase in the spousal benefit (retirees would not receive a rebate beyond the amount they have been WEP’d, up to a maximum of $150).
Beyond the difference in the amount of the rebate for WEP’d retirees, the major difference between the two proposals is how the new Social Security formula would be applied to future retirees. While both proposals establish a hold-harmless clause that prevents a potential reduction in benefits for current workers, Neal’s bill permanently maintains the hold-harmless for all future retirees. Brady would sunset the provision for anyone eligible for Social Security after 12/31/2061 – some 40 years from now.
Connected to the issue of perpetuity for the hold-harmless is also the issue of the long-term cost of the changes and how Social Security will pay for future benefits. Since its creation in 1935, Social Security has relied almost exclusively on the federal payroll (FICA) tax to fund the program and pay for the ongoing cost of retiree benefits.
Social Security operates on what is known as a pay-as-you-go basis, meaning the payroll taxes collected each month are used to pay for benefits paid out each month. Excess or surplus revenues are transferred to the Treasury Department to be used as general revenue to fund the US Government. Unlike our public pension systems that operate as investment trusts, Social Security does not invest or set aside payroll taxes in the same manner.
To account for and fund potential future costs associated with WEP reform for future retirees, Neal’s proposal contains a provision that could tap general federal tax revenue to cover a shortfall – in the unlikely event that a shortfall was to occur. Under the structure of Brady’s proposal, long-term budget shortfalls are not predicted. Therefore, H.R. 5834 draws exclusively on the current payroll tax as the funding source.
“The good news here is that Democrats and Republicans agree that WEP is a flawed, unfair law that should be reformed. In fact, we now have four different proposals before the House of Representatives aimed at reforming the WEP or fully repealing the WEP and GPO. This is the result of the work we have been doing here in Massachusetts, as well as around the country, to make WEP and GPO front-burner issues,” explains Mass Retirees CEO Shawn Duhamel. “However, the challenge that remains is in the details and striking a deal. We are doing everything we can possibly do to encourage a compromise that would bring Republicans and Democrats together behind one bill that can pass both the House and Senate this session.
“There also remains some disagreement within the national public retiree and union coalitions, with some reluctant to accept legislation reforming the WEP in the hope that full repeal of WEP and GPO is possible. While we would like nothing more than full repeal and are supporting Congressman Larson’s Social Security reform bill, the likelihood of this type of bill passing in this Congress is remote at best. The votes simply do not exist in the US Senate.”
“Our position at Mass Retirees is clear. After 38 years of fighting for full repeal, we will not continue to allow the perfect to be the enemy of the good. To bring needed relief to our members, we must cut a deal and pass WEP reform now – while continuing to fight for full repeal as part of a wider reform of Social Security. To do anything less is to allow another generation of retirees to suffer needlessly from WEP.
“Thankfully, our position is shared by Chairman Neal. Frank Valeri and I had a chance to speak with him directly in early November at a Forum on Trade hosted by the New England Council. He strongly reiterated to us his determination to bring relief to current retirees, as well as fix Social Security for future generations. He believes that he can get a deal done that will allow a bill to successfully advance through the House, as well as the US Senate. We take him at his word and will continue to do our part to help lay the groundwork for a bill to pass this session.”
Toward that end, retirees impacted by the WEP, as well as current active employees who will one day be affected, are encouraged to contact your local member of Congress and ask that they please make support for a bipartisan compromise and passage of WEP reform a personal priority for this Congressional session.
“We are beyond the point where simply cosponsoring a bill is enough. With a majority of the House now on record supporting some version of reform or repeal, now is the time to get a deal done. Compromise is essential,” continued Duhamel. “Congress has to keep hearing this from retirees over and over again, for as long as it takes.”