Federal Government Grabs Billions
from Maine’s Economy
Many Retirees’ Pensions to be Cut in Half; Maine’s Leaders United
in Opposition
It’s
amazing what happens without our knowing it. Except for recently retired civil
servants and a few policymakers, most folks never saw the above headline. It
was never published. Yet this event has occurred every year for the last thirty. It has slowed our state economy, increased our taxes, and slashed the retirement income
of Maine’s civil servants: our
state workers, our game wardens, our children’s educators, our social workers, and more recently, our professional police
and firefighters. This year, however, Maine’s
Congressmen may be able to reverse the curse.
Since
the late 1970s, two arcane “offset” rules in Social Security regulations have prevented thousands of Mainers from receiving
the Social Security payments they rightfully deserved. These rules were intended
to prevent double-dipping by the wealthy, but have instead victimized low-to-moderate income civil servants. Most of these people are taken by surprise. Based on their
statements, retirement looks pretty good. They retire. If they’re lucky, they get half of what they’d hoped for.
Peggy
Muir, of Bowdoinham, lost her husband Bryce in a tragic accident last year. Each
year of his working life, Bryce had paid into Social Security. By the time he
died, he had paid in tens of thousands of dollars. And year after year, his annual
statement from Social Security showed “Estimated Benefits” of hundreds of dollars a month.
Yet because Peggy is a public school teacher here in Maine, she received
only a “one-time death benefit” of $255. Furthermore, Social Security has told
her she will receive nothing more from the tens of thousands Bryce paid in to Social Security.
Peggy
is one of thousands in Maine with a similar experience. You don’t generally hear about it, because they tend to suffer silently -- perhaps blaming themselves,
or more likely, seeing no recourse at the federal level. Check your pay stubs. Check your spouse’s stubs. Check back
over the years. If you don’t see at least 7% deducted consistently under FICA,
you may be in the same boat as Peggy. In fact, by the estimate of Eben Elwell,
a former State Treasurer from Bowdoinham, Maine stands
to lose approximately $6 billion in “offset” Social Security benefits as the current workforce retires.
In
part, these offsets are an accident of history. When Social Security was founded
in 1935, existing public pension systems were excluded. A generation later, these
systems were allowed to join if they chose to. Maine,
and 13 other states, did not. Since then, the federal government has failed to
build an equitable bridge between Social Security and the non-joining systems.
Were
the Social Security Trust Fund treated as a trust fund, this search for equity might have been easier. Instead, our FICA deductions are rolled into the federal budget -- and spent. This is the great irony of the so-called “Social Security crisis.” We
can only avoid such a crisis if those predicting the crisis stop spending our national trust fund on political earmarks, tax
cuts for the wealthy, and other super-sized misadventures. Congress made a good
start last month, but there is a long road to recovery ahead.
Here
in Maine, a trust fund is a trust fund.
Public pension money is invested, not spent. Over the last forty years
-- thanks in part to Elwell’s policies in the 1960s -- our Maine State Retirement System (MSRS) has increased its cash reserves
one hundred fold, to $10.4 billion as of December 2006. It is high time our federal
government began to show the same trustworthiness as Maine’s Retirement Board.
This
may well be the moment for such reform. Shoulder to shoulder, Republican and
Democrat alike, Maine’s Representatives Allen and Michaud, and Senators Collins
and Snowe, are supporting the Social Security Fairness Act of 2007. So too is
House Speaker Nancy Pelosi (D-California), who has helped gather over 200 cosponsors for this legislation to repeal the offsets,
and return these billions to Maine’s economy. In addition, the key opponent of
this Act, Rep. Clay Shaw (R-Florida) has lost his bid for reelection. In previous
years, Shaw and other Republican leaders had blocked the bill in committee, preventing an up-or-down floor vote.
Maine’s
123rd Legislature is likewise prepared to voice strong support for this legislation. Last Thursday, I presented a bill to the Legislative Council, the ten elected leaders of our Senate and
House. The bill, entitled “A Joint Resolution Memorializing the Congress of the
United States to Support the Social Security Fairness Act
of 2007,” received ten “yeas” – one for each member of the Council. Soon, I hope,
my resolution will again be passed unanimously – and this time on the floors of the House and Senate.
I
encourage my readers to call our Congressional Delegation toll-free at (866) 327-8670,
and thank them for supporting the Social Security Fairness Act of 2007. Tell
them you realize this Act would restore billions to Maine’s economy. Tell them that this is about not just fairness, but also trust. Social
Security is a compact between generations. As America
ages, we could all stand to know that our nation’s greatest trust fund will be safeguarded rather than spent, and its promises
honored for all.
Seth Berry is a public employee who began his service immediately after college. Fortunately for them, neither he nor his spouse plan to work in the private sector.
For
information on the Social Security offsets, visit these links:
http://www.nea.org/socialsecurity/index.html
www.dingomt.com/ssoffsetlaw/SS_GPO.htm
www.narfe.org/departments/hq/guest/print.cfm?ID=912
www.artcinc.org/social_security_offset_informati.htm
www.coloradoea.org/media/FAQs.pdf
www.iaff-fc.com/services-deferred_LM5.aspx
