Social Security: Proposed Changes to the Earnings Test Page: 3 of 6
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A concern with the bill was that one of its effects would be to reduce benefits for
workers turning age 65 in 2000. (Workers receive the higher exempt amount and the 1 for
3 reduction not in the month they actually attain the full retirement age, but at the
beginning of that year. Simply eliminating the test for those above the full retirement age
would mean that in the year of attainment, for months before attainment of age 65 the
lower exempt amounts and the 1 for 2 reduction would apply.) A provision added in the
Chairman's mark would, for 2000 only, allow workers turning age 65 to continue to
receive the current-law higher exempt amount and the 1 for 3 reduction rate for months
before they turn age 65. The House of Representatives approved H.R. 5 on March 1,
2000 by a vote of 422-0.
On March 22, 2000, the Senate approved H.R. 5 by a vote of 100-0. A manager's
amendment changed the House provision affecting workers turning age 65 in 2000 to
make it applicable to all future workers for the year they reach the full retirement age (i.e.,
after 2000 workers would continue to receive the current-law higher exempt amount and
the 1 for 3 reduction rate for months before they turn the full retirement age). On March
28, 2000, the House of Representatives approved the Senate version of H.R. 5 by a vote
of 419-0. President Clinton signed the measure into law on April 7, 2000.
Legislation in the 107th Congress. H.R. 1731, introduced by Representative
Sessions, would have repealed the earning test for recipients who have attained the age
of 62, effective in 2002. H.R. 3497, introduced by Representative Shaw, would have
gradually raised the exempt amount for recipients under the full retirement age over the
period 2002 through 2006, and would have repealed the test entirely in 2007.
Legislation in the 108th Congress. H.R. 75, introduced by Representative
Shaw, would gradually raise the exempt amount for recipients under the full retirement
age over the period 2004 through 2008, and would repeal the test entirely in 2009. H.R.
2311, introduced by Representative Sessions, would repealed the earning test for
recipients who have attained the age of 62, effective in 2004.
Arguments for liberalizing or eliminating the earnings test. A common
complaint among affected recipients is that they are being denied a benefit that they have
"bought and paid for." Social Security has always been described as a program in which
benefits are paid as an "earned right" rather than as a welfare program. The concept that
workers earn rights to benefits through a lifetime of "contributions" to the program,
avoiding any perceived stigma of collecting "handouts" or submitting to a demeaning
"needs test" is often cited as one of the reasons for broad public acceptance of the
program. Thus, to some critics it seems inappropriate to impose what appears to them to
be a form of needs test, which deprives workers of benefits that they have "earned." As
this thinking goes, many workers have been led to regard Social Security as a
government-run savings plan. Their acceptance of the payroll tax is facilitated by the idea
that they will get the money back some day, and they do not readily accept the rationale
that access to "their" money should be withheld just because they continue to work.
The test is criticized as a severe disincentive for the "young retired" to work. Critics
say that not only do they suffer a reduction in their standard of living because of the test,
the country loses valuable experience and skills as well. They see the test as a relic of the
Great Depression, when concern over massive joblessness led to a perception that retired
workers should be discouraged from rejoining the workforce. Moreover, they see the test
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Social Security: Proposed Changes to the Earnings Test, report, June 23, 2003; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc809231/m1/3/: accessed November 20, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.