GOP Looks to Get Rid of Social Security Penalty

Americans age 65 to 69 could be free to work in the next month or two without losing Social Security benefits like they do now, a Republican backing the change in rules said Saturday.

The House could vote as early as March 2 on a GOP plan to repeal the earnings penalty, Rep. E. Clay Shaw Jr. (R-Fla.) said in the weekly Republican radio address.

Passage could mean bigger benefit checks for older employees who stay on the job after they pass retirement age.

The legislation would erase a rule requiring the government to deduct $1 in Social Security benefits from every $3 over a prescribed limit earned by beneficiaries up to age 70. The limit is currently $17,000 a year. President Clinton said Monday he will sign the bill if it passes.

A House Ways and Means subcommittee, chaired by Shaw, approved the repeal unanimously last week.

“So hopefully, in a month or two, seniors and their families will be celebrating the end of the Social Security earnings limit,” he said.

Older Americans have lost literally billions of dollars in benefits because of the penalty, Shaw said.

If not repealed, the earnings limit would affect millions of baby boomers when they retire, Shaw said. Under current law, the limit rises to $25,000 in 2001 and $30,000 in 2002.

Shaw described the plight of a 66-year-old Florida constituent who received about $5,000 a year in Social Security benefits. If the woman, identified only as Janet, took a part-time job as a grocery store cashier, she could earn $18,500.

Because that is $1,500 over the current earnings limit, Janet would lose one-third of that amount, or $500, in Social Security payments, Shaw said. “That’s just not fair,” he said.

The bill moving through the House would apply to this year’s income. Even a part-time job can push a retiree’s income over the limit, Shaw said.

After two years of surpluses in the Social Security trust fund and projections for a decade of surpluses to come, lawmakers say repeal of the earnings limit will not hurt the strength of the retirement system.