The Social Security Fairness Act (SSFA) will create an unfair loophole in the benefit structure, add hundreds of billions of dollars to the national debt, and hasten Social Security’s insolvency, according to a National Taxpayers Union Foundation (NTUF) report released Friday.
Senate Majority Leader Chuck Schumer (D-NY) announced he intends to bring the bill up for a vote before the current session ends on January 3. The SSFA passed in the House on November 12.
The SSFA would eliminate the Windfall Elimination Provision and the Government Pension Offset from the Social Security Act. These two provisions currently prevent overly generous and unintended “windfall” Social Security benefits to individuals who worked in jobs that were not subject to Social Security taxes, such as many state and local government positions.
Congress relied on rough estimates of non-covered wages when designing those provisions, leading to imprecise benefit adjustments: some affected beneficiaries receive more benefits than they would if their benefits had been calculated with a more exact formula, while others receive fewer.
“Instead of using the precise data that’s now available to create a fair system, this bill dismantles protections that prevent benefit abuse,” Demian Brady, NTUF Vice President of Research and author of the report, said. “It’s an overreaction to a legitimate issue that needs to be addressed.”
According to analysis by the Congressional Budget Office (CBO), the SSFA would add $196 billion to the national debt. CBO’s analysis does not account for $37 billion of accrued interest from the additional spending, which brings the total cost to taxpayers to $233 billion.
By significantly increasing spending on benefits, the SSFA would also expedite the depletion of Social Security’s trust funds. CBO reported that the additional outlays from this bill will cause the Old-Age, Survivors, and Disability trust fund to be exhausted roughly six months sooner than its current projected date of fiscal year 2034.
House Budget Committee Chairman Jodey Arrington’s (R-TX) proposed Equal Treatment of Public Servants Act would replace the WEP with a formula that accounts for a worker’s entire earnings history, ensuring that benefits reflect actual contributions to Social Security while preventing costly windfalls. CBO estimates that Arrington’s alternative would cost “roughly $30 billion” over the decade.
“The Social Security Fairness Act would impose a heavy burden on taxpayers by adding $233 billion to the national debt, hastening Social Security insolvency, and reducing scheduled benefits for individuals who have been paying into Social Security for their entire careers. Rather than undermining the broader Social Security system, reforms should focus on addressing its long-term fiscal challenges,” Brady said.
Read the full report.