Social Security overhaul boosts benefits but raises fiscal sustainability concerns. Credit: EconoTimes

The Social Security Fairness Act has cleared Congress, offering increased benefits for retirees with public pensions. Critics warn the $196 billion measure could deepen financial instability in the already strained Social Security system.

Congress Approves Social Security Changes Amid Heated Debate

Early on Saturday, the United States Congress approved a plan to increase Social Security retirement benefits for certain public pension recipients, including retired police and firefighters. Opponents said the plan will further deplete the program's funds, Investing.com reports.

The Social Security Fairness Act, which would eliminate rules that might lower payments for individuals who also receive a pension that have been in place for two decades, was approved by the Senate in a 76-20 bipartisan vote just after midnight.

After last month's 327-75 House vote, the measure will now go to Democratic President Joe Biden for his signature pending Senate ratification. Concerning the timing of a response about Biden's intentions, the White House was slow to react.

Reversing Federal Benefit Caps for Public Servants

A modification to the program that restricted federal benefits to certain higher-earning workers with pensions was made decades ago, but that adjustment would be reversed under the bill. Firefighters and postal workers were among the many public servants whose salaries were eventually capped.

A large portion of the American population relies on personal savings and Social Security rather than defined benefit pension systems. Statistics from the United States Department of Labor show that only 10% of private sector employees have access to pension plans.

Advocacy Groups Drive Push for Reform

A legislative fix has been advocated for by the prominent advocacy groups representing the workers and retirees who are impacted by the new requirements; these individuals make up around 2.5 million Americans, or about 3% of Social Security beneficiaries.

Retirement experts have speculated that some individuals may see a monthly increase in federal benefits of hundreds of dollars due to this bill.

An analysis by the non-partisan Congressional Budget Office estimates that the plan will cost around $196 billion over the next decade, which has some government budget experts worried that the change will worsen the program's already precarious finances.

Critics Highlight Financial Risks of the Bill

According to Emerson Sprick, an economist and associate director of the Bipartisan Policy Center, "the fact that there is such overwhelming support in Congress for exactly the opposite of what policy researchers agree on is pretty frustrating."

Revisions to the present formulas for calculating these workers' retirement benefits have been proposed, and the Social Security Administration has been more forthcoming with correct information regarding the amount of money these public sector employees can anticipate.

The program's survival is in jeopardy due to the additional expense, according to the independent fiscal think tank Committee for a Responsible Federal Budget.

Warnings Over Social Security Solvency

"We are racing to our own fiscal demise," stated Maya MacGuineas, president of the corporation.

"It is truly astonishing that at a time when we are just nine years away from the trust fund for the nation's largest program being completely exhausted, lawmakers are about to consider speeding that up by six months."

With the current wording of the bill, Republican Senator Ted Cruz warned on Wednesday that it will "throw granny over the cliff" when speaking on the Senate floor.

Proponents Push Back on Concerns

"Every senator who votes to impose $200 billion dollars of cost on the Social Security Trust Fund, you are choosing to sacrifice the interest of seniors who paid into Social Security and who earned those benefits," according to him.

Proponents of the bill argued that the fate of Social Security can be decided upon in due course.

In response to a Reuters question regarding the bill's potential effects on the government's ability to pay its bills, Democratic Senator Michael Bennet stated: "Those are much longer term issues that we have to find a way to address together."