House lifts income cap on Social Security

Measure would allow Americans ages 65-69 to earn what they can

March 02, 2000|By LOS ANGELES TIMES

WASHINGTON -- The House passed legislation yesterday that would repeal the long-standing earnings limit on Social Security, enabling Americans 65 to 69 years old to earn as much money as they want each year without losing any federal retirement benefits.

The measure, passed on a 422-0 vote, would affect 800,000 Americans and would take effect retroactively to Jan. 1. Under current law, seniors ages 65 to 69 who earn more than $17,000 a year lose $1 in benefits for each additional $3 earned. Those 70 and older have no earnings limit.

"Why in the world would we want to discourage any American, whether they're 17 or 67, from working?" said Republican Rep. Bill Archer of Texas, chairman of the House Ways and Means Committee. "Americans are living longer now and older Americans can work, they want to work. And they shouldn't be punished by an outdated law."

Republicans made the bill a major element in their tax program this year after failing to push a broad tax-cut bill into law in 1999. But Democrats, sensing a sure-fire political issue, quickly signed on. The Senate is expected to approve a similar measure promptly.

President Clinton, who had opposed eliminating the earnings limit, has come to see it as an election year bonanza. Two weeks ago he surprised reporters by saying that he would be "thrilled" to sign the legislation if it is not encumbered by additions he could not accept.

"We should reward every American who wants to and can stay active and productive," Clinton said.

Although the legislation is popular with lawmakers and senior citizens, analysts cautioned that it could complicate efforts to shore up the Social Security trust fund, which is facing a projected shortfall, with expenses expected to exceed revenues beginning in 2014 as baby boomers start to retire.

"This [legislation] is great. But it is really only the beginning of what we have to do" to ensure Social Security's future, said Rep. Robert Menendez, a New Jersey Democrat.

Proponents of the plan argued that the penalty on earnings for retirees has become unrealistic as Americans live longer, and that it has heightened the nation's labor shortage by discouraging seniors from taking jobs when many businesses need workers.

The measure would cost the Social Security trust fund $22.7 billion over the next 10 years, the Social Security Administration estimated, but it said the measure's fiscal impact would be negligible in the long run because the loss would be offset by increased revenue from payroll taxes.

It also would increase the national labor pool by an estimated 5 percent, not including seniors who now lose government benefits because they work, sponsors said, and save up to $150 million in administrative costs.

Passage of the bill was the latest effort in a new Republican strategy to send major elements of the GOP's tax package to the floor piecemeal, thus avoiding a Clinton veto of a more costly omnibus tax cut measure, as occurred in 1999.

Besides the earnings-limit bill, Republicans have pushed through legislation to reduce the marriage penalty, the quirk in the tax code that often forces couples to pay more in taxes than if they had filed as single taxpayers.

Last month, 48 Democrats joined Republicans to pass the marriage penalty legislation. Yesterday, 205 Democrats and both independents in the House voted to end the earnings limit for Social Security.

Clinton has vowed to veto the marriage penalty measure. While he and the Democratic leadership support reducing the penalty, they oppose the Republican-drafted bill as too expensive and too favorable to affluent taxpayers.

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