April 19, 2024: The following is Mass Retirees analysis of the April 16, 2024 Congressional hearing on the Social Security Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) laws.
To restate the obvious, Mass Retirees has sought to end the WEP/GPO since the day the laws were created in 1983. In fact, shortly after it was signed into law by President Reagan, we were one of the first organizations to criticize the Social Security Reform Act because it created WEP/GPO.
Not only are nearly all Association board members impacted personally by WEP/GPO, but there is not a day that goes by when we do not hear from members who are harmed by these federal laws. WEP/GPO are unfair and continue to cause significant financial hardship to more than 2.1 million retirees across the country.
Our position is clear: Retirees should receive every penny that they paid for and earned, nothing more and certainly nothing less.
On Tuesday, the House Subcommittee on Social Security held a Congressional hearing on the overall issue of WEP and GPO. This was the 2nd public hearing on the issues within the past 5 months. On November 20th, in Baton Rouge, Louisiana, a hearing was held to hear directly from public retirees harmed by WEP and GPO. In addition to the four retirees invited as official witnesses, that hearing produced more than 800 letters from retirees and organizations – including Mass Retirees – entered into the official Congressional record.
Public retirees are being heard on the unfairness and financial hardship caused by WEP and GPO. It is due to the voice of public retirees, and the pressure placed on Congress to act to resolve these issues, that the second WEP/GPO hearing took place in Washington, DC this week.
Unlike the hearing in November, which was designed to focus on the people harmed by WEP/GPO, hear their compelling stories, and educate members of Congress on the problem itself Tuesday’s subcommittee hearing was designed to hear from policy experts. In the hearing announcement, the subcommittee stated that the purpose of the hearing was “to examine Social Security’s Windfall Elimination Provision and Government Pension Offset, their intended purpose, shortcomings, and alternatives.” The hearing did not focus on any specific bill or proposed fix, nor was it intended to.
As is relatively standard procedure for these types of hearings, the Subcommittee called four witnesses – three from the Majority (Republican) and one called by the Minority (Democrat). By Congressional rules, the majority party calls the majority of witnesses.
Jason Fichtner, Ph.D., Chief Economist for the Bipartisan Policy Center, while stating that WEP/GPO are unfair, began his testimony by stating “The original public policy intent of the WEP and GPO was to ensure fair treatment between workers whose only earnings are covered by Social Security and workers with earnings that are not covered by Social Security. It is important to maintain equity between covered and non-covered workers. But repealing the WEP and GPO would violate the principles of fairness and equity that these provisions were intended to protect.”
While opposing full repeal, on the grounds that it would result in public retirees receiving larger Social Security benefits than which they earned, Fichtner does support WEP/GPO reform. Specifically addressing reform, he said “This change would allow for the use of one benefit formula for all Social Security beneficiaries, would be simple to understand, and would be fairer than the current system, while maintaining the original intent of fairness and equity of the WEP and GPO provisions.”
Rachel Greszler, Visiting Fellow in Workforce, Economic Policy Innovation Center, expressed that eliminating both provisions is not good public policy, explaining that the estimated cost of repeal is $183 billion. Greszler added, “policymakers should implement fair and accurate fix.” She explained that the GPO was put into place in the late 1930s, a time when most women did not participate in the workforce. Eliminating the GPO would violate the intent of the spousal benefit, which is to provide retirement benefits to spouses with limited work outside of the home. She also focused much of her testimony on the pending insolvency of Social Security in 2034, stating that a full repeal of WEP/GPO would serve to hasten the problem.Nancy Altman, President of Social Security Works, supports full repeal of the WEP and GPO, and believes Social Security benefits “should be increased across the board.” Altman included the repeal of WEP/GPO within her broad testimony calling for an overall reform of Social Security – in which the overall benefit structure has not changed in more than 50 years.
Altman proposes paying for repeal, as well benefit enhancements, through higher federal payroll taxes on the wealthy stating the following: “One of Social Security’s strengths is that it is totally self-funded. It can only pay benefits if it has enough dedicated revenue to cover all costs. It has no borrowing authority, and therefore, by law, cannot add even a penny to the deficit. This is true of not only the cost of its benefits but all related administrative costs. Unless Congress plans to radically depart from this fundamental feature, it must, at some point, cover the cost of repealing the WEP/GPO and other proposed benefit expansions, if it is not to make all working families, public and private sector, worse off. Importantly, there is a right way and a wrong way to cover that cost.
“The right way is by requiring millionaires and billionaires to pay their fair share.”
Charles Blahous, Ph.D., J. Fish and Lillian F. Smith Chair and Senior Research Strategist, Mercatus Center at George Mason University, explained that for workers who split their careers between jobs where they pay into Social Security and do not pay in, the issue is very complicated. In a detailed overview of why WEP/GPO were created, Blahous states “An important aspect of Social Security that gives rise to both the WEP and the GPO is that Social Security does not consider employment earnings outside of Social Security coverage when computing benefits. Your Social Security benefits, as well as those of your survivors or a nonworking spouse, are a mathematical function of the earnings on which you have paid Social Security taxes.
“Another relevant feature of Social Security is that it provides ancillary benefits such as survivor benefits and nonworking spouse benefits, and observes “dual entitlement” rules in determining the amounts of these benefits.”
In addition, Blahous echoed the testimony of Fichtner and Greszler by opposing full repeal of WEP/GPO on the grounds that it would result in those retirees receiving pensions from employment not covered by Social Security gaining a larger Social Security benefit than what they earned. However, like his colleagues, Blahous endorses the notion of reform.
Key Observations
- Retiree Voices Are Being Heard
One thing is certain, the voices of public retirees are being heard on Capitol Hill. Years of intense pressure being brought by our Association and others across the country has kept the issues of WEP/GPO on the Congressional radar. With full repeal legislation having earned 313 House cosponsors and 52 sitting US Senators, Congress appears to be seeking a viable solution.
The hearing in the November and the one that took place this week would not have taken place without the unrelenting advocacy of public retirees. It is also important to note that the focus of the first hearing, which took place in November, was to hear and learn directly from public retirees.
- No Surprises
While we are very disappointed that the testimony and outlook from the witnesses was not exactly favorable toward public retirees or on steps that we believe would strengthen the overall system, the hearing went exactly as we anticipated it would. It might be because our Association has been involved in these issues for four decades, but there we no surprises whatsoever. If anything, it demonstrated why WEP/GPO are so difficult to resolve and why (in recent years) our Association has been focused on reform rather than repeal.
- Partisan Ideological Divide
The hearing also showcased the stark difference of ideologic opinions between Republicans and Democrats on Social Security reform in general. Some viewers have questioned why so much time was spent talking about solvency and the overall health of the system. The answer is that even the smallest change in benefits or funding effects the Social Security system. Any change to WEP/GPO will involve considerations on the impact to the overall system. This is largely the reason why US Senate rules require a 60-vote majority to make ANY change to Social Security – which is a high bar to overcome.
In fairness, there is a general concern amongst the leadership of both parties regarding the impact of full repeal – whether it be due to benefit levels exceeding what a retiree earned or the impact on Social Security financing/solvency.
- Full Repeal Remains Unlikely
The reasons why full repeal of WEP/GPO has been so difficult to achieve over the past 41 years was brought to the forefront on Tuesday. Except for Nancy Altman, the witnesses explained in detail why they believe full repeal to be bad public policy. In fairness, Altman’s support for full repeal centered on it being part of a larger overhaul of Social Security that would involve substantial changes in how the program operates and an expansion of the federal payroll tax – items that are highly unlikely to pass in this Congress.
As explained above, opposition to full repeal centers on two factual points: First, WEP/GPO were created to stop those retirees receiving a pension from employment not covered by Social Security from receiving a larger Social Security benefit than which they earned. This factor is due to the structure of the benefit formula itself, which is designed to increase benefits for those viewed as “low wage” earners over the course of a 35-year work history. Under the current formula, fully repealing the WEP would result in retirees receiving more than they earned.
Second, full repeal of WEP/GPO would cost the Social Security system some $183 billion over the next 10 years. It would also reduce Social Security solvency for one year. While our counter argument is that the system should not be unfairly balanced on the backs of public retirees, the fact remains that the cost and impact on the system is a major obstacle in terms of gaining public support for full repeal.
While the current law is very unfair in that it has left those retirees impact by WEP with a Social Security benefit that is less than what they earned, it is hard for gain support for repeal of a law that would result in retirees receiving larger benefits than they earned.
It is also important to point out that these are the reasons why support for full repeal is lacking in the US Senate, where only 53 of the required 60 Senators are on record supporting full repeal. By design, the Senate takes a very deliberate and cautious approach – which is why the 60-vote threshold is backed into Senate rules. Even if a full repeal bill were to pass the House (which remains unlikely), it would most certainly be DOA in the Senate.
- Next Steps: Reform is Only Viable Path
Finally, while it should be clear to anyone watching the hearing that full repeal is very unlikely to happen, reform of WEP/GPO is highly likely. We reached that hard conclusion 10 years ago and shifted our focus to building consensus around reform. We strongly believe that reform must not only be for the WEP, but also include the GPO.
The good news is that the experts agree that the current WEP/GPO laws are unfair and should be reformed. It is important to point out the significance of the fact that all three policy experts, each affiliated with fiscally conservative organizations, share the belief that the current laws treat retirees unfairly and should be changed.
However, even the more moderate step of reform will require compromise – not just from retiree advocates, but also between Republicans and Democrats in Congress over the issue of paying the changes. Each side must be willing to give a little for a deal to get done, which is something that has lacked in recent sessions where potential reforms have fallen short due to differences on how to pay for the changes.
We are also hopeful that those retirees and organizations championing HR82 and full repeal become open to compromise. An all or nothing position for full repeal only will almost certainly end with no changes taking place and no one being helped. Reality can be hard to accept, but it is necessary if we are to truly help those in need.
Before closing, I want to publicly thank our allies at the Texas Retired Teachers Association (TRTA) and the Association of Texas Professional Educators (ATPE). Together, we have kept a direct line of communication open with Congressional leaders from both parties as we seek a bipartisan solution.
The bottom line is that these issues are far too important to give up on. We will find a realistic path forward that brings long overdue relief to our members. And we will continue to do so in a transparent and honest manner. You deserve nothing less than the truth, as well as our full effort to getting a deal done.