Lawmakers in the House and Senate are working to repeal a Depression-era law that reduces the Social Security benefits seniors receive if they hold jobs that pay more than $17,000 a year. The measure has a wide appeal among seniors and President Bill Clinton, who failed to initially endorse the measure, is seeking to reap political capital this election cycle by supporting it.
Under the existing law, workers ages 65 to 69 who earn more than $17,000 lose at least $1 in Social Security retirement fund benefits for every $3 in additional earnings. The outdated law last year cut Social Security benefits for about 800,000 seniors who kept working at age 65. The benefits withheld from working seniors are gradually provided after a worker turns 70 but sadly, many would-be recipients die before they are being able to collect them.
Last week, the the House Ways and Means’ Social Security subcommittee passed a bill which would eliminate the penalty on seniors who work. Florida Rep. E. Clay Shaw Jr., chairman of the subcommittee, said that given the bipartisan and White House support for the bill, it could be made into law within a month or two.
Mr. Clinton previously had “reservations about fixing this problem,” said Mr. Shaw, who along with Rep. Sam Johnson, Texas Republican, is the chief sponsor of the measure. But “I am pleased … President Clinton now says that he will sign this bill. We intend to hold him to that pledge,” added Mr. Shaw.
Repealing the earnings penalty would cost the government $22.7 billion over 10 years, according to Republican estimates. Despite the fiscal costs, the measure is supported by some high-profile economists, such as Federal Reserve Chairman Alan Greenspan. Mr. Greenspan has said in the past that an ongoing economic expansion and low unemployment rate could eventually pressure wages higher and spur inflation. By removing a disincentive on seniors to join the labor force, the overall number of workers could rise modestly, thereby alleviating some of that pressure on wages.
Congress’ initiative to repeal the Depression-era bill highlights the cycle of growth that has created new jobs across the country. Lawmakers are considering how to eliminate an “earnings penalty” on seniors because jobs are plentiful during this technology-driven economic expansion. The benefits of this expansion should remind policy makers of the importance of fiscal and regulatory policies that foment technological innovation.
Mr. Clinton, meanwhile, will surely jockey to claim credit for the bill to help seniors, as he has done with many other measures pushed forward by Congress. Sharing credit is fine, now that the president has come around, but the Republican legislators who sponsored the measure should make clear they are the original innovators. There ought to be no doubt who is reforming the government.