On January 5 President Joe Biden signed the Social Security Fairness Act into law stirring up heated discussions among policymakers, unions and financial experts. While supporters hail the move as a win for public worker retirees critics warn that it could further strain the already fragile Social Security program.
What Does the Law Change?
The Social Security Fairness Act repeals two long-standing provisions, the WEP and the GPO. These rules previously reduced Social Security benefits for certain retirees, spouses and survivors who earned pensions through government jobs.
With the repeal about 2.5 million public sector retirees can now receive full Social Security benefits something many have been waiting years to see. Senate Majority Leader Chuck Schumer called it a step toward fairness ensuring public service workers “are not unfairly denied their well earned Social Security benefits.”
The Cost of “Fairness”
Critics of the law point to its financial toll. The Congressional Budget Office (CBO) estimates the repeal will cost $196 billion over the next decade with another $37 billion in interest payments. This could accelerate the depletion of the Social Security Trust Fund currently projected to run out by 2033 potentially moving that date up by six months.
Former Social Security Advisory Board chair Sylvester Schieber voiced concerns that the repeal disproportionately benefits workers who earn salaries not covered by Social Security. He argued that this group is receiving “generous benefits” while claiming victimhood to gain favor over other workers.
Similarly, Andrew Biggs of the American Enterprise Institute criticized the law, stating that it restores “windfall Social Security benefits” for public employees with government pensions, calling it a “massive disappointment.”
Who Benefits the Most?
The impact of this law will vary by state. Public employees in 15 states, such as California, Illinois and Massachusetts where Social Security often doesn’t cover certain jobs stand to gain the most. On the other hand workers in states like Florida and New York where most employees pay into Social Security may feel they’re subsidizing others.
Critics also note that the law doesn’t address deeper systemic issues. Many workers who don’t qualify for public pensions or receive lower benefits than Social Security are still left behind. Groups like the Concord Coalition suggest a fairer solution would be expanding Social Security coverage to all public employees.
The Road Ahead
With the Social Security Trust Fund facing challenges, reform remains a pressing issue. The new law impacts millions of retirees and taxpayers but debates over its fairness and long-term implications will likely continue. For now public sector retirees should stay informed and consider how these changes may affect their financial future.
FAQs
1. What is the Social Security Fairness Act?
The act repeals the WEP and GPO provisions, allowing certain public sector retirees to receive full Social Security benefits.
2. How much will the repeal cost taxpayers?
It’s estimated to cost $196 billion over the next decade, with an additional $37 billion in interest.
3. Who benefits the most from this law?
Public employees in 15 states, like California and Illinois, where Social Security doesn’t typically cover certain jobs, stand to gain the most.