Unionized teachers, firefighters, and other public sector union employees already receive a generous pension, and they don't pay Social Security taxes while employed in their public sector jobs.
Recognizing this, Congress passed two provisions in the 1983 Social Security overhaul: the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). The WEP reduced Social Security benefits for those who didn't pay into the system while the GPO applied to the spouses of government workers.
This week, the Senate will consider the Social Security Fairness Act, which would repeal both those limitations on Social Security benefits, costing taxpayers about $195 billion over 10 years.
The problem is that Social Security will be insolvent in nine years. So something's got to give, right?
Not a chance.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a press release, "It is truly astonishing that at a time when we are just nine years away from the trust fund for the nation's largest program being completely exhausted, lawmakers are about to consider speeding that up by six months."
"Even worse is that repealing WEP and GPO does nothing to address the windfalls they are intended to eliminate—instead, it just restores windfalls for folks who have other government pensions. What an incredulous set of events," she wrote.
MacGuineas' group estimates that repealing the WEP and GPO would end up costing the average couple more than $25,000 in lifetime Social Security benefits. That's because it will accelerate the mandatory across-the-board benefit cuts that will be implemented when the program hits insolvency.
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In broad strokes, this is a fundamental flaw with any retirement system where individuals do not have control over their own accounts—which is true for both Social Security and most pension systems. In such an arrangement, certain groups will always have incentives to snatch a larger slice of the collective pie.
“What’s happening to you is unfair, un-American,” declared Senate Majority Leader Chuck Schumer at a rally with union leaders, including teacher's union President Randi Weingarten.
What Chuck means is that getting something for nothing is the American way if you happen to work for a union that contributes half a billion dollars to the campaigns of politicians.
Government workers who spend some of their career in private industry are entitled to Social Security benefits. However, the standard Social Security formula treats years employed in government as if workers have zero earnings. This reduces their average earnings in the equation and thus increases their wage replacement rate.
As a result of this formula quirk, government workers who spend some years with private employers would get a relatively larger benefit than similar-earning workers who spend their entire careers in private industry. Congress in 1983 sought to fix this injustice with the Windfall Elimination Provision (WEP), which reduced benefits for such government workers.
As the Journal points out, the proper time to address what some consider "unfairness in the WEP and GPO is when the inevitable fundamental overhaul of the Social Security system is taken up, hopefully, sooner rather than later.
More than a dozen Republican senators are co-sponsoring the bill, making any advocacy for spending restraints ludicrous hypocrisy.
Republicans are hypocrites when it comes to spending restraint but "handing a huge victory to unions like the teachers and Afscme that back Democrats takes a special kind of political masochism," says the WSJ Editorial Board.
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The Social Security Fairness Act easily passed the House and should sail through the Senate with little difficulty.
"In short," writes Boehm, "By allowing public workers to double-dip into retirement benefits they did not contribute towards, this bill will make everyone who did pay for Social Security worse off."
So much for "fairness."
