Thanks for your answer about wep and gpo.
It looks like it's very clear gpo shouldn't be an issue.
However in regards to wep. My wife does normal benefits based upon US work history. Since technically draws her own after applying for spousal benefits, and her TOTAL will be 50% of my PIA (the difference being her spousal benefit) is it possible the reduction we were notified of is a WEP reduction on her record?
Even if that was the case, it seems like they should apply the wep reduction to her benefit first and and still bring her to a total of 50% of my PIA.
The technical person we spoke to indicated her total benefit is actually a combination of her benefit with the spousal benefit bringing her up to 50% and then reduced 2/3 of her Canada Pension
Yes, it sounds probable that what you were notified of is how your wife's own Social Security retirement benefits will be reduced by WEP (Windfall Elimination Provision). And, yes, if your wife is receiving a combined amount based on both her own Social Security retirement benefits and spousal benefits, then a WEP reduction in her own benefit rate should result in a roughly proportional increase in her spousal amount.
However, whether or not your wife will end up with a combined benefit equal to exactly 50% of your primary insurance amount (PIA) depends on your wife's age at the time she claimed benefits. Her combined rate should end up at 50% of your primary insurance amount (PIA) provided that she claimed benefits at full retirement age (FRA) or later.