(Bloomberg) — Millions of Americans may see their Social Security benefits increase under a bill headed to President Joe Biden’s desk — though critics warn that the measure comes at the cost of pushing the fund further toward insolvency.
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If signed by the president before the new Congress convenes on Jan. 3, the law would boost Social Security payments to more than 2 million beneficiaries, according to the Congressional Research Service. The increases — as much as $550 a month for some retirees — would be retroactive to December 2023.
Those beneficiaries are mostly those who have received foreign pensions or government workers such as police officers, firefighters and teachers who contributed to a federal or state pension plan but didn’t pay Social Security taxes.
The legislation, called the Social Security Fairness Act, eliminates two formulas that reduced benefits for these workers who receive foreign and government pensions in addition to Social Security. Those provisions, known as the Windfall Elimination Provision and the Government Pension Offset, were enacted more than 40 years ago in response to an increase in retirees who hadn’t fully paid into Social Security and to more dual-income couples retiring.
Sponsors of the law say the old Congress over-corrected, and unfairly withheld earned benefits from retirees and their spouses.
While the White House hasn’t said whether Biden would sign the bill, it passed both chambers with bipartisan majorities: 327-75 in the House last month and 76-20 in the Senate early Saturday morning.
The Congressional Budget Office estimated that the bill would hasten Social Security’s insolvency — now projected to come by 2034 — by another six months and add $196 billion to budget deficits over the next 10 years. As a result, a typical couple retiring in 2033 may see lifetime benefit cuts of $25,000, according to the Committee for a Responsible Federal Budget.
The Senate rejected an amendment from Senator Rand Paul, a Republican from Kentucky, that would have pushed back the retirement age to 70. Only three senators supported the amendment.
–With assistance from Lillianna Byington and Steven T. Dennis.
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