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Law Articles : Grassley Works to Repeal Social Security Earnings Limit

TUESDAY, FEB. 22, 2000
(202) 224-3932


WASHINGTON - Sen. Chuck Grassley, chairman of the Special Committee on Aging, today announced that he will help advance legislation to ease a burden on older Americans who wish to continue working. Grassley will co-sponsor the Social Security Earnings Test Elimination Act of 2000.

"People are living longer. They want to work longer," Grassley said. "The government shouldn't get in the way. Older workers have paid into Social Security their entire careers. They deserve to receive their Social Security benefits and earn income without facing a stiff penalty. Many Iowans have contacted me in frustration over this issue."

Grassley said the Social Security earnings test limits the amount of money a person older than 65 and younger than 70 can earn without having his or her Social Security benefits reduced. Benefits are reduced by $1 for each $3 of earnings over $17,000. This test provides a disincentive for older Americans to work by reducing their Social Security benefits based on the amount of income they earn. About 800,000 older workers lose part or all of their benefits because they stay on the job after age 65, Grassley said.

Grassley said several factors build a strong case for repealing the limit:

  • A growing awareness that Americans must save more money for retirement. Many people report a need to work past the retirement age because Social Security alone is inadequate retirement income.

  • An increasing demand for older workers. Employers praise older workers for desirable qualities and skills.

  • A tight labor market. In Iowa, the jobless rate in December was 2.2 percent, below the national rate of 4.1 percent. Employers are pulling out the stops to recruit and retain quality workers.

  • An evolving definition of what it means to be "old." People are living longer and in better health. The traditional retirement age comes too soon for older Americans who want to work or need to work past age 65.

  • An over-arching goal of keeping Social Security financially solvent. Absent significant changes, Social Security is scheduled to go bankrupt in 2034. One of the reasons for the financial difficulties is the declining number of workers to Social Security beneficiaries. Repealing the earnings limit could boost the number of older Americans in the workplace, paying into Social Security.

Grassley said he will be an original co-sponsor of the Social Security Earnings Test Elimination Act of 2000, introduced today by Sen. John Ashcroft (R-Mo.). Grassley also is a key sponsor of Social Security legislation that repeals the earnings limit. The repeal is part of the Bipartisan Social Security Reform Act, S. 1383, sponsored by Grassley and Sens. Judd Gregg (R-N.H.), John Breaux (D-La.) and Bob Kerrey (D-Neb.). Grassley also has successfully worked to increase the earnings limit to $30,000 by 2002.

Grassley said the prospects of passing the repeal this year are good. A House subcommittee has passed a repeal measure. A full House vote is scheduled for March 1.

The Senate could pass the House bill or move legislation through the Finance Committee and to the floor. President Clinton has signaled his intent to sign legislation repealing the earnings limit.

Grassley said repeal of the earnings limit should not detract from the overall mission of saving Social Security.

"Fixing the earnings limit is important, but it still leaves us with a Social Security system that needs work," Grassley said. "We have to continue pushing for passage of our bipartisan legislation to improve and strengthen Social Security for future generations of older Americans."