Larson Opening Statement at Social Security Subcommittee Hearing on Social Security & Public Servants

Mar 22, 2016
Press Release

(Remarks as prepared)

I would like to thank Chairman Johnson for holding today’s hearing on the Windfall Elimination Provision (WEP).  It is long past time that Congress takes a look at this important issue.  The WEP affects over 1.5 million people who see their Social Security benefits reduced because they have worked both within and outside of the Social Security system.  Most affected by the WEP are public servants: teachers, firefighters, civil servants.  In my home state of Connecticut, 75,000 people—mostly teachers—work in non-covered employment and face the prospect of having their future benefits reduced by the WEP. 

As a former public school teacher in Connecticut myself, I get it. While the intent of the WEP is to equalize the benefit formula for workers with a similar earning history both inside and outside of the Social Security system, the WEP takes a one-size fits all approach that unfairly penalizes public servants.  

I have long supported fully repealing the Windfall Elimination Provision.  I am a cosponsor of H.R. 973, the Social Security Fairness Act, which would repeal both the WEP and another provision known as the Government Pension Offset (GPO), which reduces Social Security spousal and survivor's benefits for many workers with a public pension.  However, due to the cost to fully repeal, to date Congress has not acted, denying relief to those affected by the WEP.

I would like to commend Chairman Brady and Representative Neal for authoring H.R. 711, the Equal Treatment of Public Servants Act, and putting forth thoughtful legislation and a good faith effort to find a solution.   H.R. 711 would establish a new Public Servant Formula (PSF) that would take into account a worker’s entire earnings history rather than subjecting them to an arbitrary reduction as is done under the current WEP.  This is a great example of Democrats and Republicans coming together where there is common ground.

I also think we must use this hearing to conduct our due diligence and fully understand all the consequences for retirees under this legislation.  In particular, the proposal will increase benefits for some workers, but will decrease them for others. In addition, large numbers of people—who under current law are not affected by the WEP—would have their future Social Security benefits reduced under these proposals.

I am pleased that the Chief Actuary of Social Security is here to help us understand the full impact of the proposals on current and future retirees.  I just want to highlight a few numbers from his upcoming testimony:

Over a million beneficiaries would have higher benefits under the new formula – by an average $77 a month.  However, 14 million individuals would have lower benefits under the new rules – including some 7.5 million who would lose an average of $46 per month. Remember, the average retirement benefit is only $1,340 a month today.  $46 less a month isn’t a trivial amount of money for a senior living on a fixed income. I don’t think this is well understood, which is why this hearing is so important.

I am particularly concerned about people who worked a few years in a government job – perhaps teaching kindergarteners for a short time – but then left for private-sector employment.  They didn’t work long enough to earn a pension from the job, but under these proposals they would face a cut in their future Social Security benefits.  Under current law, they are not affected because they don’t receive a pension from their public-sector job.

We also need to look at the impact on our first responders, who often have second jobs and second careers, due to mandatory retirement rules.  Many of them have contributed to Social Security for so many years that they are fully or partially exempt from the WEP – yet under these proposals, they will be subject to the full reduction.  We need to know more about this.

I would like to insert into the record a letter from the National Education Association which underscores these concerns.

Lastly, I think this issue underscores how vital Social Security is to the lives of so many Americans.  We saw this during the crash of 2008 when 401K’s evaporated and how Social Security—backed by the full faith and credit of the United States government—was the one thing that could be counted on no matter what. 

Social Security is an incredible program where workers that pay an insurance premium in order to receive an earned benefit.  There is nothing like it on the private market that combines a pension, disability insurance, and survivors benefits with low overhead costs and portability from job to job.   Social Security is the foundation of our retirement system. 

I am pleased we are examining an important issue today, but I think we need to look at the entire program in order to come together to find a way to ensure Social Security both keeps up with the needs of Americans facing a retirement crisis as well as making the system sustainably solvent.  I have introduced legislation, the Social Security 2100 Act, which would do just that.  It is cosponsored by 89 of my colleagues and it is my hope we can look at this legislation further down the line.  

I look forward to this hearing so we can begin to fully examine all of these questions and hopefully work together to smooth out any of the rough edges that may exist in this proposal.  Once again, I thank Chairman Johnson for holding this hearing and I commend Chairman Brady and Representative Neal on their outstanding work.