The Social Security Fairness Act: A $200 Billion Boondoggle – Social Security and You

Congress just passed a law that will give me (and millions of people like me) extra Social Security benefits that we simply do not deserve and haven’t earned.

To understand what is going on, here is a quick history lesson: The original Social Security Act included unintentional and overly generous benefits for government employees. These were benefits that no other Americans could get. About 50 years ago, a more responsible Congress recognized this and created two laws to correct this mistake. The Windfall Elimination Provision said that Social Security retirement benefits for government employees should be figured the same way as those for all other senior citizens. The Government Pension Offset law said that government pensions should offset any Social Security spousal benefits potentially due, just as Social Security retirement benefits have always offset those same spousal benefits.

But now, bowing to relentless pressure from government employee unions and advocacy groups, a more naive and vote-seeking Congress has repealed WEP and GPO. So once again, government retirees like me will get overly generous Social Security benefits that no other senior citizens in the country are eligible for. And by so doing, they have put a $200 billion hole in an already rapidly deflating Social Security budget balloon.

To explain why repealing WEP and GPO is a wrongheaded boondoggle, I will use myself as an example. But first, you need to know a basic tenet of Social Security: Benefits have always been skewed to give lower-paid workers a better deal than their more highly paid counterparts. Very low-paid workers could get a Social Security benefit that represents up to 90% of their preretirement earnings. This percentage is known as a “replacement rate.” People with average incomes (the middle class) generally get a 40% replacement rate.

So now back to me. I spent the bulk of my career working for the federal government. While working as a fed, I paid into the Civil Service Retirement System, not Social Security. (Things have changed since I was hired in the early 1970s; all federal employees hired after 1984 pay into Social Security.) But I also did pay into Social Security at a few jobs I had in high school and college and at other jobs I’ve had since I retired from federal government work. I have about 15 years of earnings that were covered by Social Security.

So when the Social Security computers looked at my record when I applied for Social Security benefits, they assumed I must be poor. After all, I had all those years with no earnings. That record didn’t show that I actually was working all that time for the government and earning a civil service retirement pension.

And because the Social Security system thought I was poor, it was programmed to give me that 90% poor person’s benefit rate. In other words, I would have been getting an undeserved windfall from Social Security. And that’s where the “Windfall Elimination Act” came in. It correctly recognized that I wasn’t poor, and it gave me the same 40% rate all other average income Americans get.

And it did the same for all other workers who spent the bulk of their careers in jobs not covered by Social Security. These are primarily teachers, police officers and firefighters in certain states. (Why those groups don’t pay into Social Security is the subject for another column.)

For the past half-century, union officials representing these groups have been pressuring Congress to eliminate WEP because they wrongly think the law cheats their members out of Social Security benefits they are due. And in each of those years, a bill to eliminate WEP has failed to get approved. But in this wacky political year, things were different. So even though almost all of you reading this column are getting the proper 40% Social Security benefit rate, Congress has now decided to eliminate WEP to give me (and all those other government employees like me) the 90% rate — boosting our Social Security checks by a couple hundred extra bucks per month. What a sham and what a shame!

But it gets even worse. As I said, the other law that the misnamed “Fairness Act” eliminated is called the Government Pension Offset, or GPO.

To explain what is going on here, I will once again use myself as an example. Before the GPO law came into effect, I would have been able to get my government pension retirement check AND I would have been due a “dependent” husband’s benefit on my wife’s Social Security record. Why? Because of those Social Security computers that think I’m a poor old guy with just a small Social Security check. So I was deemed financially dependent on my wife and granted spousal benefits on her Social Security record. But the GPO law came along and recognized I worked for the government and get a civil service pension check. And just like a Social Security retirement check offsets any spousal benefits that might be due, my civil service pension check would also offset those potential dependent benefits.

But by eliminating GPO, Congress is giving me (and all those millions of other government pensioners) unintended benefits from our spouses. Think about that. Almost all of you reading this column cannot collect your own Social Security retirement check and at the same time, get some extra benefits from your spouse’s account. But now I and other government pensioners will do just that.

And so if you believe that repealing WEP and GPO makes sense, write your member of Congress and tell him or her you think the “Social Security Fairness Act” was a great idea. But if you don’t think it’s fair, then write your member of Congress and say, “Shame on you! I thought you were supposed to be saving Social Security, not squandering its funds on greedy government retirees!”

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