By Bo Erickson
WASHINGTON (Reuters) – The U.S. Congress passed a measure early on Saturday to increase Social Security retirement payments for some retirees who receive public pensions – such as former police officers and firefighters – in a move critics warned would jeopardize the program’s finances would weaken further.
Shortly after midnight, in a bipartisan vote of 76-20, the Senate passed the Social Security Fairness Act, which would repeal two decades-old provisions that can reduce benefits for people who also receive a pension.
The House approved the bill last month by a vote of 327-75, meaning Senate approval will result in Democratic President Joe Biden signing it into law. The White House did not immediately respond to a question about whether Biden intended to do so.
The bill repeals a decades-old change to the program that was intended to limit federal benefits to some higher-earning workers with pensions. Over time, more municipal employees, such as firefighters and postal workers, also faced salary caps.
Most Americans do not participate in pension plans that pay a defined benefit, relying instead on the money they can save and Social Security. According to the Labor Department, only one in 10 U.S. private-sector workers has retirement insurance.
The new provisions affect about 3% of Social Security recipients – a total of just over 2.5 million Americans – and the workers and retirees affected by these provisions are important stakeholders to lawmakers, and their powerful interest groups have pushed for a legislative solution.
Some of them could receive hundreds of dollars more per month in federal benefits because of the law, pension experts said.
Some federal budget experts warned that the change could harm the program’s already shaky financial position, with the bill’s price tag expected to be about $196 billion over the next decade, according to an analysis by the nonpartisan Congressional Budget Office.
Emerson (NYSE:) Sprick, deputy director of economic policy at the Bipartisan Policy Center, said in an interview: “The fact that there is such overwhelming support in Congress for exactly the opposite of what policy researchers agree on is pretty frustrating .”
Instead of eliminating the current formulas used to determine retirement benefits for these workers, changes were made to provide the Social Security Administration with more precision about how much money these public employees should expect to receive.
The Committee for a Responsible Federal Budget, a nonpartisan fiscal policy think tank, also warns that the additional costs will impact the future of the program.
“We are hurtling toward our own financial demise,” the group’s president, Maya MacGuineas, said in a statement.
“It is truly astonishing that at a time when we are just nine years away from fully depleting the trust fund for the largest program in the country, the Legislature would consider expediting this by six months.”
Republican Sen. Ted Cruz said on the Senate floor Wednesday that the bill as it stands would “throw Grandma over the cliff.”
“Any senator who votes to impose $200 billion in costs to the Social Security Trust Fund is sacrificing the interests of the seniors who paid into Social Security and received those benefits,” he said.
Proponents of the bill said the future of Social Security could be clarified at a later date.
Asked about the impact of this legislation on solvency, Senator Michael Bennet, a sponsor of the bill, told Reuters: “These are much longer-term issues that we need to address together.”
