On one issue, Congress, President Clinton, Democrats, and
Republicans sang together like a barbershop quartet last week,
Their tune: End Social Security's retirement-earnings limit.
The unusual nonpartisan harmony in Washington makes it most
likely that 65- to 69-year-olds will be able to earn as much as they
like this year without losing any Social Security benefits.
Prospects for a bill eliminating the limit are "golden," says
Trent Duffy, a House Ways and Means Committee spokesman. It sailed
through a subcommittee markup unanimously in 47 seconds last
"It was like the Kentucky Derby," recalls Mr. Duffy. A bang of
the gavel by the chairman of the Social Security subcommittee, E.
Clay Shaw Jr. of Florida, and it was approved.
The Republican legislator turned to the ranking Democrat, Robert
Matsui of California, and said: "You are a much better friend than
you are an enemy."
Under present law, Social Security benefits are reduced by $1 for
every $3 earned above $17,000. That rule cost about 800,000
recipients all or some of their benefits last year, Social Security
Commissioner Kenneth Apfel told House lawmakers last week.
To some of these seniors, the benefit loss feels like a 33
percent tax on top of the income and payroll taxes they already pay
on their wages. The total burden could reach 65 percent for higher-
Yet, in the long run, the earnings limit provides Uncle Sam with
virtually no added revenue. That's because those who lose some
benefits get them back as an increased Social Security retirement
benefit if and when they reach 70.
Ending the limit means seniors won't have to play "the life-
expectancy lottery," says Duffy.
The restriction is a "perverse policy," says Leora Friedberg, an
economist at the University of California, San Diego. They distort
the retirement/work choice of seniors. Many older people decide to
work only until they reach the $17,000 earnings level, or not work
If the bill passes, the Social Security Administration will pay
an additional $22.7 billion in benefits over the next 10 years.
Ultimately, that amount will be offset by lower benefits thereafter
since those getting more benefits now won't be entitled to delayed-
retirement credits later.
It means part of the Social Security revenue surplus will be used
to pay extra benefits - and not cover federal deficits caused by
spending on highways or other federal programs, as has been the case
for years. …