CATEGORY: EDT Editorials
Editorial, Friday, March 24, 2000
Senate action Wednesday lifting the “earnings cap” for Social Security recipients aged 65 to 69 opens the way for millions of Baby Boomers (the post-World War II generation) to both continue productive and needed jobs and receive benefits for which they have paid taxes all their working lives.
The Senate voted 100 to 0 (following by about three weeks a 422 to 0 House vote for virtually the same bill) to stop reducing Social Security benefits if recipients 65 to 69 earn more than $17,000 over their pension payments from the Social Security system.
The penalty currently reduces benefits by $1 per month for every $3 dollars earned in excess of the limit. The earnings penalty causes some eligible beneficiaries to defer benefits for which they have paid because it would require giving up too much of what they choose to earn in working past the historically practiced retirement age of 65.
The Senate’s bill differs in a minor amendment added to what the House had passed, but Speaker Dennis Hastert, an Illinois Republican, said it would pose no hurdle in speeding the bill to President Clinton. The president, a Democrat, paused on a trip to India to say he would sign the bill when it reaches his desk.
As Sen. Daniel Patrick Moynihan (age 73, and retiring at the end of this term) noted in the final Senate debate, the Depression-era earnings limit/penalty wasn’t envisioned for an era in which people can earn sizable incomes sitting at a computer terminal. The limit, for Depression-era retirees, was a kind of protection against their working in sometimes harsh and physically dangerous jobs well toward the end of their life expectancy. It also reflected the Depression’s widespread unemployment and other economic conditions unique to that troubled time.
Repeal should refresh and sustain the supply of skilled and experienced workers in the American job market at a time when many positions can’t be filled for want of qualified employees.
Senatorial comments before passage weren’t wholly positive because some seized the moment to point out that the reform does nothing to ensure the system’s long-term survivability. Nebraskan Bob Kerrey (also retiring from the Senate but well below the 65-year-old threshhold), for example, said failure to deal with the costs of Social Security for eligible enrollees in the fourth decade of this century places a heavy burden on people under age 40 today. They will reach retirement as the crisis reaches critical mass.
The earnings limit repeal isn’t without increased cost projections itself. It’s anticipated that $22 billion will be required during the next 10 years as people choose both full benefits and work. However, that increasing will level out when the people aged 65 to 69 reach age 70 the point at which the earnings cap would have repealed under the old law and their benefits would have risen to full levels.
The cost also will be offset somewhat because the changes don’t affect a gradual increase in the standard retirement age to 67 during the next two decades. That increase will reduce by two years the time heavier demands are placed on the system.
Higher incomes for retirees almost certainly will help sustain the strong economy that, in part, drove the House and Senate to the repeal. It had been sought for years by some members and many retirees, but the sustained economic expansion and demand for skilled, experienced workers became a persuasive factor.
The earnings limit penalty repeal, it should be noted, does not apply to people choosing early retirement at reduced benefit levels, nor does it in any way increase benefits for people solely dependent on Social Security income in retirement and during the expensive frailties of advancing age.
The issue obviously is politically popular. It is a win-win bonanza for both parties and the Clinton administration.
Its effect will be immediate because it would become retroactive to Jan. 1, 2000, for people already receiving reduced benefits because of too-high earnings from ages 65 to 69.
The House and Senate, now that they’ve pleased 800,000 immediately eligible beneficiaries and millions more waiting their turn, must muster the fortitude to make much harder decisions. Tougher issues remain: benefit limits and/or new revenue to keep the system working past 2033. That’s when actuarial experts project it will go broke, a scenario that sends shivers down the spines of members in both political parties.