Congress dragged me back in the game, so now I want to win.
Social Security is a game. It’s not like roulette, where the risk corresponds to the reward. It’s not much like blackjack where there is a clear strategy to narrow the odds. Social Security is more like that Fun Fair “Mystery Fishing” game where every player gets a prize, but there are better prizes and worser prizes.
It’s often said that Social Security is a Ponzi scheme because current workers are paying current retirees. Don’t worry about that, it’s necessary and reasonable. If every worker’s SS taxes were invested until that worker is ready to retire, the Social Security Administration would have an investment portfolio bigger than the New York Stock Exchange.
Social Security is dreadfully complicated, but the salient issue is that it is not a pension. The amount of money a person gets out is not proportional to the amount of money the person put in. It’s designed so that everybody gets a prize depending on their circumstances. Widows, orphans, slackers and rock stars all get something provided they qualify to be in the game.
Since I worked in the private sector until I was 35, I am in the game. Beyond that, being a summer camp instructor for 15 years yielded enough quarters to be fully eligible.
Because Social Security is not a pension, but a program designed to give everyone a prize, in 1983, Congress passed the Windfall Elimination Provision (WEP). Anyone who had a job that doesn’t pay into Social Security and gets a pension, has their Social Security reduced by up to 60%.
That does not make sense for a pension, but it does make sense for a Mystery Fishing game. A person who gets a pension already has a prize, so give that person a crappier prize.
Imagine a person who paid into Social Security until reaching 30 years old, and then, at 67, registers for retirement with the Social Security Administration.
If the person had never worked again, Social Security would send this much money every month.
If, instead of not working, that person took a job as a teacher, police officer, fire fighter or other government worker for 30 years, Social Security knows the person is getting a pension, so doesn’t need such a big bag of money. They would send this much each month.
The reasoning is that the person is getting a prize, so the widows and orphans need a prize too. It’s mandatory charity without the tax deduction.
This happened to me. I didn’t think it was such a bad deal because after 5 years of Social Security checks, I will have gotten back everything that I and my employer had paid in. However, they had my money for 30 years. The time value of money means my balance would have grown.
Using online financial calculators, I found that if the rate of return is 3.5%, it is a fair deal. There are assumptions and simplifications built into that, but it’s good for a first approximation.
A week ago, the Social Security Fairness Act, repealing the Windfall Elimination Provision, was passed by Congress with strong, bipartisan support. When Biden signs it, it becomes a law, retroactive to December of last year.
My Social Security benefit would be 150% more than it currently is. I have prizes stashed all over the place, but still,
This came out of nowhere, but blew up on Teacher forums in November when the Senate was getting ready to vote on it. When it passed a week ago, there was rejoicing all around.
Nobody has mentioned it in four days, and it’s looking to me like Biden may not sign it. The budget impact is not significant. About $20 Billion per year, and nobody cares about the budget anyway.
All Biden has to do is sign, and it’s a law. Biden is mentally feeble, so it’s up to his advisors. They don’t even have to tell him about it. Dr. Jill continued to teach a college course during Biden’s term, so she might be predisposed to support teachers.
A “pocket veto” is when the president doesn’t sign a bill, and allows it to expire. If that happens, it would be a gigantic “Screw You” from somebody to somebody.
Dr. Jill may be bitter about how Biden was replaced by Harris in the presidential election. This would be a way to damage the Democratic Party by telling teachers to sod off.
Biden or his handlers may be pissed off and interested in sowing chaos. Executive orders and presidential pardons are coming fast and surprising people. Hunter Biden was pardoned, and so were 1500 criminals who aren’t particularly sympathetic. Most of the people on death row were taken off of the kill list.
My Ohio Senator, Sherrod Brown, sponsored the bill. He doesn’t seem to be one of the crazier Democrats, but was voted out of office. He may be angry, and have no interest in advocating for the bill.
It wouldn’t have been an issue if it had never passed the House and Senate with so much support. Now, I’m interested to see if a message is being sent and how it will be received.