Social Security Fairness Act signed by Biden

President Joe Biden recently signed the Social Security Fairness Act into law. This new legislation will increase benefits for nearly 3 million public sector workers who receive government pensions. The act eliminates two rules that had reduced benefits for certain workers. The Windfall Elimination Provision (WEP) reduced benefits for workers who had both a job that did not withhold Social Security taxes and another that did. It mainly affected public sector workers like firefighters, police officers, and teachers who also held private sector jobs. The Government Pension Offset (GPO) reduced Social Security benefits for spouses and survivors who also received pensions from federal, state, or local governments. The goal was to treat government employees who did not pay Social Security taxes similarly to private sector workers who did. There are different views on these provisions. Some experts say the WEP and GPO were unfair because they reduced benefits for those who served their communities. Others believe the rules were needed to prevent “double dipping” from Social Security and government pensions.

Social Security changes for public workers

The Social Security trust fund was already expected to run out of money by 2033. When that happens, benefits would be automatically cut by at least 21% unless Congress increases funding before then. The Social Security Fairness Act speeds up the timeline for the trust fund running out of money. It increases program spending, which means the fund will be depleted sooner. The Congressional Budget Office estimates that the new law will make the trust fund run out about six months earlier. It will also increase the necessary benefit cut to 26% once the fund is depleted. Congress now has less time to address the funding shortfall due to the Social Security Fairness Act. As the need for a solution becomes more urgent, it remains to be seen how legislators will respond to ensure Social Security remains solvent. Congress is expected to find a solution for Social Security’s financing problem before automatic benefit cuts take effect. However, the challenge has grown given the increased program spending from the Social Security Fairness Act.