Returning from a six-week district work period, the House considered two measures on Social Security that would impact public service workers’ benefits — passing one of them. A third bill that would allow Treasury to suspend the tax-exempt status of organizations supporting terrorism saw a lively debate, but ultimately failed.
Social Security legislation passes.
The Social Security Fairness Act (H.R. 82) passed 327-75 on Tuesday evening. The bill would remove the windfall elimination provision and government pension offset from the Social Security Act — both provisions reduce or eliminate Social Security benefits for public service workers who also receive benefits from a state or local government.
Specifically, the windfall elimination provision reduces Social Security benefits for workers who also receive a public pension or disability benefit from job not covered by Social Security. The government pension offset reduces benefits payable to spouses and widows who receive their own pensions from jobs not covered by Social Security.
Congress intended for the windfall elimination provision to prevent workers who receive noncovered pensions from being treated as long-time, low-wage earners, thus receiving higher Social Security benefits. But bill sponsors Representatives Abigail Spanberger (D-VA) and Garret Graves (R-LA) say the provision “unfairly” reduces or eliminates Social Security benefits for public service workers — impacting about 2 million beneficiaries.
The government pension offset reduces to two-thirds the payment of Social Security spousal benefits to those who receive a pension from noncovered government employment. The provision impacts nearly 800,000, according to Spanberger and Graves.
H.R. 82 took an unusual path to the House floor, with the bill sponsors filing a discharge petition back in September. The Ways and Means Committee had failed to take up the bill, despite it having 327 co-sponsors. Once the discharge petition received the requisite 218 signatures, the bill had a direct path to the floor.
A Senate companion bill, S. 597, has 62 co-sponsors but also has not moved. Sponsors Senators Sherrod Brown (D-OH) and Susan Collins (R-ME) urged Senate leadership to bring the bill to the Senate floor back in August, to no avail.
Alternate Social Security proposal fails.
The House also considered — but rejected — a more modest proposal on the windfall elimination provision, the Equal Treatment of Public Servants Act (H.R. 5342), on Tuesday evening. Sponsored by Representative Jodey Arrington (R-TX), that bill would have established a new formula for determining benefit amounts under the windfall elimination provision based on the proportion of an individual’s total lifetime earnings that were subject to Social Security payroll taxes.
The new formula would be applicable for workers who become eligible for Social Security benefits after 2067. The bill also would have created a transition period for current workers and provided additional payment to certain beneficiaries currently impacted by the windfall elimination provision.
Insolvency concerns remain.
While H.R. 82 has broad support from lawmakers, not all believe it is the correct approach.
Maya MacGuineas, of the Committee for a Responsible Federal Budget, cautioned that the Social Security Fairness Act would speed up the timeline for Social Security retirement fund insolvency, while “adding $200 billion to the deficit.”
As to the alleged unfair treatment of public service workers, MacGuineas explained that the two provisions “were created to prevent Social Security from overpaying certain beneficiaries who also collect state and local pensions, which they paid into instead of paying Social Security taxes during their employment for state and local governments.”
“These provisions aren’t perfect … [b]ut repealing them altogether would move in exactly the wrong direction,” added MacGuineas.
Terrorism and taxes.
An unrelated measure, the Stop Terror-Financing and Tax Penalties on American Hostages Act (H.R. 9495), also failed on the House floor Tuesday.
The bipartisan bill, which passed out of the Ways and Means Committee in September 38-0, would have postponed tax deadlines and eliminated late penalties for those wrongfully detained or held hostage abroad. It also would have suspended the tax-exempt status of organizations that support terrorism. This second component of the bill sparked debate.
According to Representative Don Beyer (D-VA), H.R. 9495 provides Treasury with “unnecessary and extremely dangerous” authority to “strip” nonprofits it designates as terror-supporting organizations of their tax-exempt status. Beyer cautioned that the provisions could be used by an administration “to dismantle organizations they don’t like.”
Representative Mark Takano (D-CA) seconded the concerns, adding that the “legislation would grant the president-elect unilateral power to essentially shut down any tax-exempt organization based on any simple accusations of wrongdoing.”
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