The New Social Security ‘Fairness’ Act Is Neither Fair Nor Just

On Jan. 5, President Joe Biden signed a law that represents a giveaway to retirees who already have generous state-provided pension benefits.

While union leaders are cheering the bill as a win for their members, it’s a bad deal for the rest of us. It will undermine the progressive nature of the Social Security program, cost taxpayers billions and force painful cuts down the road.

The new bill itself is short and simple, less than 300 words. In a clever bit of marketing, the sponsors dubbed it the Social Security Fairness Act. But the bill isn’t about “fairness”; it’s about giving a windfall to a relatively small group of people at the expense of taxpayers.

Get stories like this delivered straight to your inbox. Sign up for The 74 Newsletter

That’s because the new act repeals two provisions affecting certain state and local government workers who split their careers between jobs that are exempt from Social Security and those that require them to pay into the system. One, literally called the Windfall Elimination Provision, affected the employees themselves, while the second, called the Government Pension Offset, affected the spouses of those workers.

Repealing these provisions, former Social Security Advisory Board chair Sylvester Schieber told Newsweek, “gives workers who earn salaries not covered by Social Security disproportionately generous benefits compared to workers covered under the system for all their earnings.”

In fact, the American Enterprise Institute’s Andrew Biggs did the math and found that a hypothetical teacher who worked a full career in a state where educators are exempt from Social Security could receive $283,300 more in federal retirement benefits than the exact same teacher who paid into Social Security for her entire career.

Why Congress Should Extend Social Security to All Teachers

This was exactly the type of inequity the provisions were supposed to prevent. Now, Congress has not only opened the door to such windfalls; it has created winners and losers across states. Teachers who pay into Social Security for their full working lives, in places like New York, Florida and 33 other states, will subsidize those who do not in Illinois, Massachusetts, California, 13 other states and the District of Columbia. The Congressional Budget Office estimates the cost of those extra payments — which the retirees will receive in addition to their state pensions — will amount to $196 billion over the next 10 years.

But it’s even worse than that. The money will come out of the Social Security trust fund, which was already projected to run out of money sometime around 2033. With higher Social Security payments now going to those special beneficiaries every month, Congress just sped up the clock.

Once the money runs out, the sitting president will be forced to immediately cut Social Security benefit payments by 21%. Those cuts will be painful no matter when they happen. But by granting this windfall, Congress made sure they will happen sooner. That’s not smart or rational policymaking, let alone fair or just.