A $196 Billion Giveaway? Critics Decry The New Social Security 'Fairness' Act

On Jan. 5, President Joe Biden signed the Social Security Fairness Act into law. This new law, introduced in January 2023, has stirred heavy debate among policymakers, union leaders and financial experts. Those favoring the legislation see it as a step forward, with public worker retirees gaining long-deserved equity. Critics, on the other hand, say that this new law will only jeopardize the future stability of the Social Security program.

What does the law do?

The Social Security Fairness Act repeals two long-standing provisions that previously affected certain public sector employees. These provisions – the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) – reduced benefits for retirees, spouses and survivors who received pensions from government jobs. Eliminating the provisions allows around 2.5 million retirees to receive Social Security benefits that were previously reduced.

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Senate Majority Leader Chuck Schumer praised the move in a post on X, stating it ensures "Americans are not erroneously denied their well-earned social security benefits simply because they chose at some point to work in their careers in public service."

While the act aims to address inequities, its critics highlight the financial implications for the Social Security Trust Fund, which is already under significant strain.

The Congressional Budget Office (CBO) estimates the repeal will cost taxpayers $196 billion over the next decade, plus an additional $37 billion in interest payments. The Social Security Trust Fund is projected to run out by 2033, a date which could be moved up six months without further reform to the program.

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Former Social Security Advisory Board chair Sylvester Schieber told Newsweek that the repeal will shorten the timeline for the fund's depletion, but he said that's not his largest concern. "The larger problem with the legislation is it gives workers who earn salaries not covered by Social Security disproportionately generous benefits compared to workers covered under the system for all their earnings," he said, adding that this group of workers are "claiming to be victims of unfair treatment" to gain favor above other U.S. workers.

Similarly, Andrew Biggs of the American Enterprise Institute told Newsweek that the act does not address a long-running discrepancy like proponents for the act have said. "Rather, the Social Security Fairness Act restores windfall Social Security benefit payments to public sector employees who participate in a government pension plan as a substitute for Social Security," he said, noting that the act is a "massive disappointment."

While this new law will impact millions of Americans nationwide, it varies from state to state. For instance, public employees in 15 states, including California, Illinois and Massachusetts, often work jobs that Social Security doesn't cover. As many critics have pointed out, these retirees stand to gain the most from the repeal. Meanwhile, retirees in states where workers consistently pay into Social Security – like Florida and New York – may feel they are subsidizing others.

Critics of the new law have also stated that the act doesn't address deeper structural issues. Many non-covered workers never qualify for public pensions or face lower benefits than Social Security. The Concord Coalition argues that expanding Social Security coverage to all public employees would be a fairer, long-term solution.

Social Security reform will remain a pressing issue as the depletion dates grow nearer and lawmakers debate the best path forward to improve the program’s sustainability. For now, retirees and taxpayers in the public sector should stay informed and take the time to understand how this new law impacts them.

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