Average Retirement Age Has Gone Up

From a report by Alicia Munnell of the Center for Retirement Research at Boston College

This Is How Some Overpayments Happen

     Social Security has created a "Work Site",  a website that's supposed to encourage return to work but it includes no information on how a disability recipient is supposed to notify the agency if he or she has returned to work. You're supposed to call the agency's 800 number but given the wait time on those calls, many claimants get frustrated and give up.  

     I looked into this because I just had a former client tell me he had called to tell Social Security that he had returned to work part time. He was told that since he was only earning $800 a month that it would be no problem. He received no written receipt of his report of return to work even though he called twice. That's wrong. He should have gotten a written receipt, especially since his Trial Work Period has now begun. There's no lower limit on earnings that are supposed to trigger the issuance of a written receipt.

New Procedure For Some Blindness Cases

     Social Security has finally devised a procedure for dealing with claimants who are working and who allege that they have become statutorily blind while already on disability benefits without regard to blindness. Different standards apply to work activity in blindness cases. I had a case like this some years ago. Everyone conceded that a different standard applied to those who are statutorily blind but they kept saying that my client hadn't been adjudicated statutorily blind so they couldn't apply that standard even though we kept presenting evidence that she had become statutorily blind. At the time they had no procedure for adjudicating blindness after a person had already been found disabled for other reasons. Eventually, we got the sort of resolution indicated in this new procedure but it took a couple of years.

Guilty Plea In New York

     From the New York Times:

A Long Island lawyer who led a huge scheme to defraud the Social Security Administration pleaded guilty on Friday, receiving a reduced sentence in return for promising to help federal investigators find other people cheating the disability insurance system, prosecutors said.  ...

He faced a maximum sentence of 25 years on the top charge of grand larceny, had he gone to trial. In return for his assistance, he was promised a sentence of one year in jail ...

What's In A Name?

     The Institute of Medicine is recommending that Chronic Fatigue Syndrome (CFS), also known as Myalgic Encephalomyelitis (ME), be renamed as Systemic Exertion Intolerance Disease because "the term “chronic fatigue syndrome” can result in stigmatization and trivialization." CFS leads to a fari number of Social Security disability claims. I doubt that a new name is going to reduce the stigma problem. 

     Below are the diagnostic criteria proposed by the IOM panel -- and note that the panel still refers to "CFS/ME" even as they recommend a new name!

If These Are Your Best Arguments, You're In Trouble

     Andrew Biggs, who was Deputy Commissioner of Social Security during part of the George W. Bush Administration, has written an article for the National Review giving reasons why the cap on wages covered by the F.I.C.A. tax that supports Social Security shouldn't be raised. Here are the arguments and my take on them:

• There's always been a cap on wages covered by F.I.C.A. So what? Full retirement age used to be 65. It's now 66 and heading to 67. Biggs would undoubtedly prefer it be raised to 70, if not 80. He's being selective about what changes he opposes. We have to change something.
• The cap is necessary so that Social Security won't be considered a "welfare" program. That's rich coming from Biggs who wants to means test Social Security. Why would increasing the wage cap make Social Security into a "welfare" program anyway? And what's wrong with programs devoted to improving the welfare of the American people?
• Raising the cap wouldn't solve the entire long term Social Security funding problem. No one proposal will. Biggs has no one solution for Social Security's long term funding problems. He favors a series of massive benefits cuts. Why does one proposal have to solve the entire problem?
• We ought to solve the problem of rising health care costs before we do anything about Social Security. What does that have to do with the F.I.C.A. cap? Anyway, Biggs undoubtedly opposes the Affordable Care Act which is actually doing something about health care costs.
• Most other countries have wage caps on the their Social Security taxes. Why is that important? I thought the right was big on American exceptionalism.
• It's a big tax increase. It will make U.S. tax rates higher than those is Scandinavia. It's a tax increase only for the wealthiest Americans, a group that has fared extremely well in recent years while the rest of the country has fared poorly. The wealthy can afford it. On Scandinavian tax rates, Biggs is citing income tax rates that don't include Social Security charges. Here's what I'm finding as the maximum tax rates in Scandinavia: Denmark 61%, Finland 61.96%, Norway 47.2%, Sweden 57%. I think we'd be well below those rates even if we remove the wage cap. Besides, Scandinavians have a high standard of living and much better social security than the U.S.. Why should we fear that?
• When we fix Medicare and Medicaid tax rates are going to go up. Glad to hear that Biggs supports higher taxes to support Medicare and Medicaid but how is that relevant to this discussion?
• An economic study shows that a rise in the wage cap won't generate as much revenue as predicted. That's not exactly what the study cited by Biggs says. In fact, the study makes no bold prediction about the effect of an increase in the wage cap. It suggests more study which is always the way with these studies. If anything, the study suggests the opposite of what Biggs is representing it to say. Anyway, here's what the report actually said so you can judge for yourself, if you can stay awake as you read it: "We have eight main findings. First, the workers who would experience an increase in marginal tax rates from an increase in the taxable maximum are mostly married males – a group thought to have relatively small elasticities. There are, however, a significant number of self-employed workers among this population which could suggest somewhat higher responsiveness. Second, the recent empirical evidence showing large behavioral responses to taxation is largely irrelevant to this question as it mostly focuses on broader concepts of income for which elasticities are likely to be higher and on demographic groups such as wives of high earners that are not particularly common in the subset of the population whose incentives would be altered by an increase in the taxable maximum. In the few studies that have also focused on narrower concepts, elasticities fall dramatically when the tax base is something closer to earnings. Third, the earnings distribution of workers around the current taxable maximum is inconsistent with a model in which people are highly responsive to the payroll tax rate. Fourth, this is true even for the self-employed, a group that is often thought to have significant control over its reported earnings. Fifth, in panel data on high-earnings married men, we see a tremendous increase in earnings over the 1980s and 1990s, but no break in the trend around the TRA86 or OBRA93 tax acts. Sixth, the rise in earnings for the high earners is so much greater than for other income groups that it seems completely implausible that the other income groups could serve as reasonable control groups for the high earners. Seventh, the overall weight of our evidence does not support the Eissa (1995) finding of a large behavioral response to taxation by wives of high earners. Eighth, we think there remains considerable uncertainty about the relevant elasticities for high earners – uncertainty that will be very difficult to eliminate without much larger samples of such taxpayers than are available outside the U.S. Treasury. Our policy simulations suggest that with an earnings elasticity of 0.5, lost income tax revenue and increased deadweight loss would swamp any benefits from the increase in payroll tax revenue. In contrast, with an elasticity of 0.2, the ratio of the gain in OASDI revenue to lost income tax revenue and deadweight loss would be much greater. Thus, knowing whether the elasticity is closer to 0.2 (or below) versus 0.5 is critical to deciding on whether this would be a wise policy."

Online Social Security Card Replacement Coming

     From today's Federal Register:

We propose to revise our regulations to allow applicants for a Social Security number (SSN) card to apply by completing a prescribed application and submitting the required evidence, rather than completing a paper Form SS-5, Application for a Social Security Card. We also propose to remove the word ``documentary'' from our description of certain evidence requirements. These changes would provide flexibility in the ways in which the public may request SSN cards and allow us, in the future, to implement an online SSN replacement card application system, which we are currently developing.

    Can this be done securely?

Mutually Exclusive Goals

     I watched today's hearing before the House Social Security Subcommittee on the impending shortfall in the Social Security Disability Trust Fund. I noticed that Republican members were insistent on two points. One was that Social Security disability recipients should know that Congress won't allow their benefits to be cut. The other was that there must be no transfer of funds from the Retirement and Survivors Trust Fund to the Disability Trust Fund. However, these are mutually exclusive goals, unless we increase taxes and I don't think the Republican members will agree to that. 

     So what is the Republican plan? They're the majority party in Congress. They can't just sit back and criticize the plans that others come up with. They need a plan of their own. I look forward to reading the plan that meets both their goals.

You're Not Likely To Get What You Want When You're Afraid To Even Say What You Really Want

     Here's the witness list for the 2:00 hearing today before the House Social Security Subcommittee on "the financial status of the Disability Insurance (DI) and Old Age and Survivors Insurance Trust Funds, and the available legislative options to ensure full DI benefits continue to be paid":

• Charles P. Blahous III, Ph.D., Public Trustee, Social Security and Medicare Boards of Trustees
• Ed Lorenzen, Senior Advisor, Committee for a Responsible Federal Budget
• Webster Phillips, Senior Legislative Representative, National Committee to Preserve Social Security and Medicare

     It's Orwellian for the Republican majority to talk about wanting to assure that "full DI benefits continue to be paid" when it's clear they want dramatic cuts in DI. I suppose this language suggests that Congressional Republicans realize that they don't have public support for significant cuts in DI.