Debt Ceiling Settlement? Will SSA Be Affected?

Brian Beutler at TPM reports that there may be a settlement of the debt ceiling crisis. The settlement would involve a special committee that would recommend further budget reduction measures. That  committee would report back in November. Congress would then have until December 23 to enact something to reduce the deficit by December 23. If nothing happened, automatic cuts would go into effect, including Defense and Medicare. There is nothing in the report suggesting that Social Security benefits would be cut. The Medicare cuts would be directed at providers rather than beneficiaries. We will have to wait on further details but Social Security's administrative budget might be cut which would give us the prospect of furloughs just in time for Christmas. There is also a strong probability that if Congress is able to do something about the deficit by December 23 that Social Security will be affected with the chained CPI being the starting point but not necessarily the ending point.

A Solution At Last!

Just when you think there's no hope for the debt ceiling crisis, there it is. All it takes to solve it is two coins.

From The Past

Courtesy of the Way Back Machine, take a look at Social Security's homepage as of June 13, 1997.

An Outlier

We have had recent talk of "outliers" at Social Security, Administrative Law Judges (ALJs) who approve or deny too many or too few claims or who just dispose of too many or too few cases, but in one way perhaps the most prominent outlier of all of Social Security's ALJs is Richard Harper, the Hearing Office Chief Administrative Law Judge (HOCALJ) in Charlotte. He is holding down this position even though he is 90 years of age.
He was  Administrative Law Judge In Charge (ALJIC), the old title for what is now HOCALJ, in 1978 when I interviewed for a job as a staff attorney. I took a job in Raleigh, where I was living, instead. He's still there.

I Don't Think You Can Enforce It That Way

There are early signs suggesting that Social Security's computer system is making it impossible for a new Social Security disability claim for months after a decision is issued by an Administrative Law Judge.

Roundup Of Debt Ceiling News

Here is this morning's news concerning the debt ceiling crisis that threatens Social Security payments among other things:

• House Speaker John Boehner was forced to postpone a vote on his party's plan for extending the debt ceiling because he did not have enough votes to pass it. It is unclear whether he can get the votes solely from among Republicans. Republicans in the House has no recent experience in negotiating for Democratic votes.The Republican dilemma changes the equation as the Associated Press notes: "Republicans will try again Friday. If they continue to fail, then President Barack Obama and Senate Democrats will have extensive leverage to shape a bill to their liking and practically dare the House to reject it and send the nation into default." On the other hand, Ezra Klein warns that "Anyone who says they know exactly what happens next is lying." By the way, one problem for Republicans is that their bill includes $17 billion for Pell grants, which got some Republican votes but which some other Republicans regard as pork.

• The Dow Jones Industrial Average was down 62 points yesterday. It is down 440 points on the week heading into today's trading. Interest rates on U.S. Treasury notes have moved sharply higher. Investors have pulled billions of dollars out of money market funds in recent days. Moody's is threatening to lower the credit ratings of 177 municipal bond issuers -- and yes, that is related to the debt ceiling impasse. If this sounds like developments that don't threaten you, trust me each and every person reading this is threatened by these developments.
• Update: The Dow is down by over 100 points in early trading.  Harry Reid, the Senate Majority Leader, has just told the Senate that "The last train is leaving the station" as he starts to move forward with his bill to raise the debt ceiling.
• Further update: The President is speaking to the country urging quick action. This is a tweet from an Agence France Presse (AFP) reporter: "Looks like US Senate votes at 1 am Sun, 7:30 am Mon, final #debt vote Tues, per a Dem aide. " This would then go to the House of Representatives which would decide whether we have a default. 
• Further update: It looks like House Republicans may bring a bill to the floor under which "The debt ceiling would be raised immediately but not by enough to get the government through next year. To get the second debt ceiling increase, House Republicans want a balanced budget constitutional amendment to pass both chambers first and be referred to the states." The Senate would never agree to that. 
• Further update: From Michael Shear writing on his New York Times blog:

Senate Democrats said Friday that they were prepared for an all-night battle on the Senate floor that could go into the wee hours of Sunday morning unless Republicans began negotiating on a bipartisan plan to raise the debt ceiling....

If Republicans filibuster that vote, Democrats say they are prepared to repeatedly require Republicans to object to the bill’s passage, keeping them in their seats for hours and creating a middle-of-the-night legislative spectacle for the cameras.

And from Ezra Klein:

John Boehner has a problem. He likes being Speaker of the House of Representatives. He would like to continue to be Speaker of the House of Representatives. But being Speaker of the House of Representatives means both leading the House Republicans and compromising to get things done. And in this Republican Party, at this moment, if you want to lead the House Republicans, you can’t compromise to get things done.

We’ve now seen the same farce play out four times. Republican leaders get close to a deal and then, just before they can close it, their members revolt and they have to pull back....

In order to have any chance of surviving as Speaker of the House, Boehner needs to produce legislation that is completely unacceptable to the White House and the Senate. Their opposition is a feature, not a bug. Consider how he sold his plan to Laura Ingraham: “President Obama hates it. Harry Reid hates it. Nancy Pelosi hates it. Why would Republicans want to be on the side of President Obama, Harry Reid, and Nancy Pelosi [is] beyond me.”

Why anyone would think that a plan loathed by the Majority Leader of the Senate and the President of the United States would be signed into law is beyond me. And since then, Boehner has moved the plan considerably to the right. But that’s because he’s not legislating. He’s just trying to survive.

It’s not just that Boehner’s party doesn’t like any of the viable compromises on the table. It’s that they don’t like compromise, full stop.

Expediting Vocational Assessment At Steps 4 and 5?

Social Security has requested approval from the Office of Management and Budget (OMB) for proposed "Regulatory revisions related to expediting the vocational assessment at steps 4 and 5 of the sequential review process."

New Non-Attorney Withholding Rules

Social Security published interim final rules in the Federal Register yesterday concerning direct payment of fees to some non-attorney representatives. The new rules contain numerous small changes.

New Online Social Security Search Webpage

The National Organization of Social Security Claimant's Representatives (NOSSCR) has created an online search webpage aimed at those doing research on Social Security. It includes separate searches on Social Security's website, the Social Security Act, Social Security regulations, Social Security rulings, Social Security acquiescence rulings, HALLEX, POMS and Google Scholar.

Roundup Of Debt Ceiling News

Today's news on the debt ceiling impasse that threatens to delay Social Security payments:

•  The House Republican leadership is putting extraordinary pressure on its members to accept its debt ceiling hike bill, pressure that  included an order to "get your ass in line." This is not sitting well with some prominent Republican supporters. The pressure may allow the House to pass the bill sometime today, although that is not assured.
• The Dow Jones Industrial average was down 199 points yesterday. and was down 378 points on the week as of yesterday's closing bell. The market is up a bit this morning on good home sales news.
• The Onion has a preview of the change that debt ceiling pressures may bring to Social Security.
• Ezra Klein, who is an astute observer, says that the Democrats may not be able to win this one but that they will have their chance in December 2012 when the Bush tax cuts are set to expire.
• The New York Times has a story on what the U.S. Treasury will do in case the debt ceiling isn't raised. According to the Times "Officials have said repeatedly that Treasury does not have the legal authority to pay bills based on political, moral or economic considerations" and is likely to pay bills in the order in which they come due.
• What is the difference between the debt ceiling bills in the House and the Senate? According to TPM they are pretty similar except the House bill would give authority to borrow $900 billion now and another $1.6 trillion next year but only "if and when Congress passes, and [the President] signs, legislation to reduce the deficit by $1.8 trillion." The point of this is to force dramatic cuts in Medicare and Medicaid and also to deflect attention away from the Ryan budget plan which would effectively end Medicare and Medicaid.

SSR 11-1p Not Intended To Affect Cases Where New Claim And Appeal Already Pending

I am hearing that Social Security has decided not to apply Social Security Ruling 11-1p, which prohibits the agency from taking a new claim while an old one is pending on appeal, to cases where a new claim and an appeal are already pending. I am also hearing that there will be an Emergency Message to Social Security employees on this new procedure shortly, perhaps today. Since it may be some time before this Emergency Message appears on Social Security's website, I would appreciate it if someone could forward a copy to me. I don't think this is intended to be any sort of secret.

New Ruling Will Prohibit New Claim While Appeal Is Pending

From Social Security Ruling 11-1p which will be published in the Federal Register tomorrow:

Under the new procedures we are adopting in this Ruling, generally you will no longer be allowed to have two claims for the same type of benefits pending at the same time. If you want to file a new disability claim under the same title and of the same type as a disability claim pending at any level of administrative review, you will have to choose between pursuing your administrative review rights on the pending disability claim or declining to pursue further administrative review and filing a new application.

On an initial cursory look at this Ruling, I do not see any statement concerning cases where a new claim and an appeal are already pending. I do not understand how Social Security could issue this ruling without stating what it intends to happen on cases already pending.

Update: The reason I did not see any statement concerning cases where a new claim and an appeal are already pending is because the Ruling does not address this situation. In important respects, this Ruling appears to have been drafted hastily with no consideration of history.

Roundup Of Debt Ceiling News

Today's roundup of news concerning the debt ceiling that threatens Social Security checks -- and the U.S. economy:

• The New York Times reports that the Treasury can probably continue to pay its bills for several days after August 2, probably until August 10. Great news. We can keep this crisis going another week!
• Republicans in the House of Representatives are in the sort of disarray normally seen among Democrats. The debt ceiling bill proposed by the Speaker of the House turned out not to save as much money as he had said so it is being revised. More important, the chances of passage of that bill in the House, even after revision, are looking worse and worse as the debt ceiling crisis reveals fault lines within the Republican party. Floor action on the bill has been delayed. If the House cannot pass the Boehner bill, Republican bargaining power decreases and the chances of default increase.
• To rally their troops in the House, Republicans played a video clip from the movie The Town. In the clip Ben Affleck says "I need your help. I can't tell you what it is. You can never ask me about it later. And we're going to hurt some people." He and another character then put on hockey masks, bludgeon two men with sticks and shoot a man in the leg.
• The Dow went down by 91 points yesterday.

There's Your Problem

From a 60 Minutes interview of John Boehner, shortly before he became Speaker of the House of Representatives:

J. BOEHNER: We have to govern. That's what we were elected to do.

STAHL: But governing means a -- compromising.

J. BOEHNER: It means working together. It means find...

STAHL: It also means compromising.

J. BOEHNER: It means finding common ground.

STAHL: OK, is that compromising?

J. BOEHNER: I made clear I am not going to compromise on -- on my principles, nor am I going to compromise...

STAHL: What are you saying?

J. BOEHNER: ... the will of the American people.

STAHL: And you're saying I want common ground, but I'm not going to compromise. I don't understand that. I really don't.

J. BOEHNER: When you say the -- when you say the word "compromise"...

STAHL: Yeah?

J. BOEHNER: ... a lot of Americans look up and go, "Uh-oh, they're going to sell me out." And so finding common ground I think makes more sense.

Roundup Of Debt Ceiling News

 Here's what's going on this morning:

• The President, as you know, spoke to the nation last night warning of the consequences of failing to raise the debt ceiling and calling for compromise. Congressional websites crashed after the President asked the public to contact their members of Congress. They are still crashing this morning. I cannot access House Committee websites. 
• The Republican Speaker of the House of Representatives spoke to the nation. He did not speak of compromise. He called upon the Congress and the President to accept a Republican plan to raise the debt ceiling.
• Robert Greenstein of the Center of Budget  and Policy Priorities believes that the Republican plan would require deep cuts in Social Security and Medicare for current retirees in the near future.
• Negotiations are still going on behind the scenes in Congress. 
• The Washington Post has an article that says that higher than expected tax receipts may extend the date that the government runs out of money to pay its bills by up to a week. The Treasury has not yet sent out a press release in response.
• The Dow was down by 88 points yesterday and has opened modestly lower this morning.
• Some analysts regard a downgrade of U.S. debt issues to be inevitable.

More Funding For Social Security Coming Out Of Debt Ceiling Hike?

Harry Reid, the Senate Majority Leader, has unveiled a plan to break the deadlock over the debt ceiling. Republicans in the House of Representatives are working on their own plan. The most likely scenario is that whatever the House does, that Reid's plan will pass the Senate late this week and then go to the House of Representatives, which will either pass it or reject it. If the House rejects it, the debt ceiling probably will not be hiked in time to allow Social Security checks to go out on August 3 and all hell will break loose. Even if the House Republican plan passes in the House, which is uncertain since there probably will be no Democratic votes for it and several dozen Republicans have vowed to vote against any debt ceiling hike, it is unlikely that there would even be time for the Senate to act on the House bill even if it wanted to if even one Senator decided to filibuster. There would probably be a lot more than one who would filibuster the House plan and some of them might be Republicans.

The summary of the Reid plan does contain this language which could actually result in a higher administrative budget for Social Security: "$40 billion in Program Integrity Savings. The proposal saves $40 billion by reducing fraud and abuse in mandatory programs. This includes: Continuing Disability Reviews and SSI redeterminations ..."

50/50 Chance That Debt Ceiling Goes Down To The Wire

 From ABC News:

A senior White House official says that there's a 50/50 chance that the current deficit reduction mess will not be resolved by this time next week, the day before the federal government may officially run out of money to pay all its bills.

"We may be here as we tick down to midnight," the official said. Treasury Secretary Tim Geithner has said August 2 the federal government runs out of funds, with incoming revenues far less than outgoing bills.

Appropriations Markup Delayed

The House Appropriations subcommittee markup of the appropriations bill that would include Social Security's administrative budget had been scheduled for Tuesday, July 26 but it has been postponed. No new date has been announced.

Poll: Who Do You Blame?

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August 3 Social Security And SSI Checks At Risk

The current status of raising the debt ceiling is that even if Republicans and Democrats could immediately agree on a plan, there is hardly enough time to pass a bill if recalcitrant Senators such as Jim DeMint (R-SC) and Rand Paul (R-KY) filibuster and they probably will. There is no agreement among the leaders and it is unclear whether Republicans in the House of Representatives will be willing to agree to anything. Many of them believe that failing to raise the debt ceiling would have only minor consequences and would be desirable. Financial markets will put pressure on everyone as the week goes along. 

There is a very real chance that the Social Security and Supplemental Security Income (SSI) checks due to go out on August 3 will be delayed. That would be terrible in and of itself but there is an enormous threat to the U.S. economy.

This Could Happen At A Social Security Office

From TPM Media:

Stop me if you've heard this one. A man goes into a public assistance office in Charleston, South Carolina in a kilt, tells them he's a member of the Irish Republican Army and asks for help for 25 fellow Irishmen in a hospital who need Medicaid.

A government employee follows the rules and explains the process for filling out a Medicaid paperwork and the qualifications they'd need to meet. She informs them that a federal law intended to protect patient privacy requires her not to divulge any information he's told her.

So what happens next? James O'Keefe's Project Veritas releases a deceptively edited video that makes the woman look like a terrorist sympathizer, though it isn't even clear if she knows the background of the IRA. ...

[And more on what happened at that public assistance office] The South Carolina Heath & Human Services employee explains that only U.S. citizens are eligible for Medicaid and says she's not making any promises that the 25 purported IRA members would qualify. 

Will The August Social Security Checks Come Out On Time?

Read this detailed report from the Los Angeles Times on how the debt ceiling talks broke down and tell me that you're still optimistic that the debt ceiling will be raised in time to prevent delays in issuing Social Social checks. I will grant that I have said in the past that we should watch the stock market to see how serious the threat is and the stock market may have been a bit nervous but there has been no sign of collapse.  It's hard for me to believe that anything other than the rapid collapse of financial markets will bring about a resolution of this problem.

By the way, notice that Republicans wanted to delay the announcement that they were withdrawing from talks with the White House until after the stock market had closed for the week. We'll have to watch to see what happens on Monday.

No Security Guard Involved In Feig Firing

When Commissioner Astrue fired Martin Gerry from his high level position at Social Security, Gerry was escorted from the building by a security guard. Also, his computer was seized and his office lock changed. I don't know what happened to Ephraim Feig's computer or office lock but he tells me that there was no security guard involved in his departure. The firing came while he was out of the office. When he returned days later he was allowed back into the building and spent about an hour talking with human resources before leaving.

Commissioner's Message: Field Office Hours To Be Reduced -- Policy Changes Coming

A Message To All SSA and DDS Employees

Subject:  New Social Security Field Office Hours

Given the tight budget situation, we must continue to make tough choices.  The latest decision is that, beginning August 15, 2011, we will close Social Security field offices to the public 30 minutes early each day.  For example, a field office that is usually open to the public Monday through Friday from 9am to 4pm will now close daily at 3:30 pm.

Reducing hours will allow field office employees, who will continue to work their regular hours, to complete interviews without using overtime.  That's essential because Congress provided us with nearly $1 billion less than the President requested for our budget this fiscal year, which makes it very hard to provide the amount of overtime that our usual business process requires.  

Field offices have lost nearly 1,600 workers over the past nine months, and we cannot afford to replace that staff. As a small measure to help deal with those losses, we will close field offices to the public on Friday, November 25, 2011.  Field office employees who work on that day will use the day for backlog reduction.  As we try to adapt to these difficult fiscal times, we need to remind the public that they can find many services and get up-to-date information online or via our 800 number.

Soon I will be announcing policy changes that will allow us to work more efficiently.  Please know that we are doing what we can to help you during these difficult times. 

Michael J. Astrue
Commissioner

Update: And Social Security has issued a press release saying the same thing.

As Bad As Delayed Social Security Checks Would Be, There Are Even Worse Things Threatened

I have no idea where we are going to end up with the debt ceiling negotiations. I doubt that anyone feels confident about what will happen. You can read about the current confusing state of negotiations. 

I have a bad feeling that this is all going to on Monday August 2 amid bitter recriminations and that the country will be plunged into a crisis with delays in Social Security checks, and that would be terrible, being not even the most urgent aspect. We would be looking at an incredibly fast moving economic crisis with a government paralyzed by Republicans in the House of Representatives whose deeply held philosophical beliefs would prevent any effective action to deal with the crisis.

A Little Light On LTD Carriers And The Companies They Hire To Represent Social Security Claimants

See the decision in Kisor v. Advantage 2000 Consultants, No. 10-1045-WEB (D. Kan. June 30, 2011), concerning a non-attorney group (Advantage 2000) hired by an administrator of a long term disability insurance (LTD) carrier (CIGNA) to represent a disabled person before Social Security and also to collect money from that disabled person if he was approved for disability benefits by Social Security. The Plaintiff's case was based upon provisions of the Kansas Consumer Protection Act. The Court held that the lawsuit was barred by federal pre-emption but that the Plaintiff could amend his complaint.  It is unclear what the effect of that amendment would be.

There is some interesting information in the order about the relationship between the insurer, CIGNA and Advantage 2000:

CIGNA pays A2K a flat fee for its social security representation services, and a contingency fee equal to an undisclosed percentage of the actual dollar amount repaid by A2K’s Social Security clients to CIGNA as a result of A2K’s COR services. A2K and CIGNA agreed that A2K would not disclose to its Social Security clients any information about how A2K is paid. ...

A2K’s Benefit Coordinator bonus program (“Bonus Program”) pays commissions to A2 Benefit Coordinators based upon the recovery of money from A2K’s Social Security clients for A2K’s LTD clients.

You Have To Watch The Stock Market To See If Your Social Security Check Will Keep Coming

Ezra Klein writing in his blog at the Washington Post about the efforts to extend the debt ceiling -- and keep the Social Security checks coming out on a regular basis:

It's pretty clear that if it was just John Boehner and Barack Obama in a room, they could come to a deal. If it was just the Senate that had to approve a bill, they could come to a deal -- perhaps even a big one. It's the House that's the problem. They rejected the $4 trillion deal the White House offered, suggesting they can't go big, and the Tea Party is whipping against the McConnell deal, which implies they can't go small. A lot of the dealmakers are, at this point, stymied. “We want to accommodate their needs,” Sen. Benjamin L. Cardin said of the House leaders. “We just don’t understand what their needs are.”

It's not clear they do, either. One common explanation for where we are in the talks is that we're waiting for the last minute. No deal struck before the last minute will be credible as the best deal Republicans could possibly get, because in this negotiation, time is leverage, and if the clock isn't one minute from midnight, that means there's leverage Republicans chose not to use. Until we hit that point, there's just not enough incentive for the House GOP to say "yes" to anything, not enough pressure to force them to say "yes" to anything, and there's an argument, popular among some conservatives, that it would in fact be a mistake to say "yes" to anything.

But what no one quite knows is what the House GOP will accept when the clock is one minute from midnight, or, in more pessimistic tellings, the Dow is 1,000 points below whatever it was at the day before. We're hearing talk that the "Big Deal" is being revived, but the bigger the deal, the tougher it is to pass quickly. And so if it is the case that we can't strike a deal until the markets are beginning to bottom out or the debt ceiling is about to cave in, it's a pretty good bet that we're not going to strike a big deal, and it's very hard to predict what sort of small deal the politics will permit at that point. Which is worrying. The political dynamics here imply a lot of uncertainty all the way to the end, but excess uncertainty is the one thing that could lead the market dynamics to turn sharply against us.

Got that? Worried that you won't get your Social Security check on August 3? Watch the stock market. Nothing will happen until the stock market plummets and maybe even that won't be enough to get House of Representatives Republicans to vote for a debt ceiling hike.

Senator Coburn Has A Plan For Social Security

Senator Tom Coburn (R-OK) has put forth a new proposal for cutting the federal deficits. It is by far the most ambitious proposal out there. The chances of this being adopted by this Congress are nil. My guess is that the chances of anything like this being adopted by a future Congress are virtually nil. However, I keep getting asked about it so here are its Social Security elements:

• Means test Social Security
• Increase full retirement age to 69
• Increase early retirement age to 64
• Switch to chained CPI method of computing cost of living adjustment (which slowly but significantly cuts Social Security benefits from what they would be under current law)
• Reduce spousal benefits from 50% of the Primary Insurance Amount to 33%
• Make continuing disability reviews the first priority in administering Social Security's disability benefits programs, ahead of adjudicating new claims for benefits
• Eliminate the medical improvement standard in continuing disability reviews
• Eliminate interim benefits for those who are appealing disability benefits terminations
• Remove the maximum collection amount for SSI overpayments
• Reduce SSI benefits by eliminating the $20 disregard
• Reduce SSI child's benefits for families with more than one child on benefits
• Eliminate the ability to file a new disability claim while another is pending on appeal
• Eliminate reconsideration (this would actually cost money)
• Close ALJ record one week prior to hearing
• Implement government representation at ALJ hearings (this one too would actually cost money since the evidence is that it does not affect the outcome in any significant way)
• Raise the category of "approaching advanced age" to at least 58-60
• Reduce disability benefits to the early retirement amount once a disability benefits recipient reaches early retirement age
• Allow Social Security disability applicants to use Ticket to Work while they are still applying for benefits
• Time limit Social Security disability benefits. After an unspecified length of time disability benefits recipients would have to reapply in order to stay on benefits, regardless of how sick they may be
• All disability benefits recipients for whom medical improvement is possible must have a "treatment plan" designed to return them to work
• Shift SSI management from Social Security to the states

Remember that I said that it appears to me that the chances of anything like this ever being adopted are virtually nil. 

I have to think that Coburn must either not be planning to run for re-election or that he feels that it is inconceivable that he could be seriously challenged when he runs for re-election.

The National Computer Center As Currently Planned May Not Be Needed?

I recently talked with Ephraim Feig, who used to be Social Security's Associate Chief Information Officer for Vision and Strategy. He was let go after working at the agency for only about a year and a half. Social Security also dramatically reorganized its Information Technology (IT) management shortly thereafter. Although Feig was happy to explain, I was at a disadvantage since I am a lawyer, not an IT expert.

I know more about how bureaucracies operate so I first concentrated on how it was that he came to leave Social Security. My understanding from Feig is that he and others in IT at Social Security were asked to meet with personnel at the Office of Management and Budget (OMB), which is part of the White House, and did so. Thereafter, Feig continued to be in contact with OMB. He talked with them about his vision for Social Security. Feig's superior, Frank Baitman, Social Security's Chief Information Officer (CIO) was aware of these contacts but the Commissioner may not have been aware. Feig does not profess to know exactly what happened to bring about the IT upheaval at Social Security but his contacts with OMB, which his supervisor, Social Security's CIO, was aware of, probably had something to do with it. Baitman, Feig's former boss, has also recently left Social Security.

Feig  was hired to develop vision and strategy. Social Security's planned National Computer Center was a major part of the vision and strategy for Social Security's IT future that was in place before Feig came to work at the agency. Feig disagreed with the National Computer Center, at least in the planned form, thinking it was overkill. He believes that because of the rapid development of computer hardware that mainframe computers would not be needed and that "commodity hardware" could handle Social Security's IT needs. Basically, the same process that puts more computing power in the smart phone in my pocket than I had in my desktop ten years ago has been happening in the datacenter world. However, Feig never talked with OMB about the planned National Computing Center, although the Commissioner may not have known this.

In what may be a not completely unrelated development,  the New York Times ran an article yesterday on plans to close 800 federal government data centers which are no longer considered necessary.

You may recall that just five months ago, Social Security was being questioned at a Congressional hearing, because it was not further along on the National Computer Center project. Neither Feig nor Baitman testified at that hearing but the man who, in effect, replaced Baitman, Kelly Croft, did testify. The House of Representatives had held another hearing on the same subject just a year before that.

One of Social Security's biggest IT problems is that it has many legacy systems written in COBOL, an antiquated computer language. It is virtually impossible to hire workers who already know COBOL. The Commissioner has talked frequently about the need to update from COBOL to modern computer languages. One of the major things that Feig was working on was planning this transition. Feig told me that Social Security has no existing plan that he is aware of to make this transition. Feig did acknowledge that Social Security is not the only large entity that still runs a lot of COBOL. Many banks still have major legacy systems running COBOL.

Feig is taking a break at the moment before considering his next career move.

By the way, you can see a video of Ephraim Feig talking about his vision while he was still working at Social Security.

Delay In Paying Back Benefits

I just heard today that a payment centers was holding up payment of back benefits to a client of mine because the back benefits were over $30,000 -- which is not an unusual amount  in disability cases that go to a hearing, much less those that go beyond -- because the client did not have direct deposit set up. They won't refuse to pay without a bank account but they do want to contact the client by telephone to see if there is a bank account they can make a deposit to. Since many people who lack a bank account also lack a telephone, this can be a problem. I have not heard of this before. I think it is new.

Retired ALJ Muirhead Passes

Retired Social Security Administrative Law Judge (ALJ) Jean Muirhead, who worked in Memphis, Falls Church and Nashville, has died at the age of 82. Before working at Social Security she served in the Mississippi Senate from 1968-1972. As a state Senator, she was a women's rights pioneer, authoring legislation allowing women to serve on juries in Mississippi and appointing the first girl to serve as a page in the Mississippi legislature.

Turnstiles At Social Security?

Social Security has posted a notice that it is interested in acquiring turnstile replacement parts.

I can't figure this out. The only turnstiles that I can remember seeing have been at sports arenas and subway systems. Why would Social Security have a turnstile?

The Right Wing Has A Dream

Wondering what the right wing has in mind for Social Security now that it is clear that privatization isn't politically feasible? The Heritage Foundation's plan is called "Saving the American Dream." This plan calls for "reforming" Social Security. The end result of these "reforms" is that Social Security would look almost identical to Supplemental Security Income (SSI) except that the retirement age would be 68 instead of 65.

Reuters Swings And Misses

Take a look at this Reuters Q and A on Social Security and the debt ceiling. At best, it is confusing. At worst, it is slanted. Why didn't they just read my Q and A on the same subject? As we approach August 3, accurate reporting on the debt ceiling and Social Security becomes more and more crucial.

ALJ Daugherty Resigns

From the American Bar Association Journal:

An administrative law judge who awarded Social Security disability benefits in every case he decided over a six-month period has resigned amid investigations into his conduct.

Judge David Daugherty of Huntington, W.Va., approved disability awards in all 729 cases he heard in the first half of fiscal 2011, the Wall Street Journal (sub. req.) reports. In 2010, he heard nearly 1,300 cases, and approved benefits in all but four of them.

Gang Of Six Back From Near Death Experience -- With Undisclosed Social Security Plan

 From TPM Media:

President Obama likes it. A wide array of Senators, including influential conservative Tom Coburn (R-OK), have given it their blessings. Out of nowhere, the Gang of Six's bipartisan plan for addressing the country's fiscal imbalance has returned from legislative hinterlands -- and has become the only viable, publicly available framework by which Congress can make good on its supposed desire for a grand bargain on deficit reduction.
But according to an aide briefed on the Gang of Six's negotiations, the fledgling framework is still too new and incomplete to be included in a package to raise the debt limit before August 2nd -- and it's more likely to become the basis for a bigger-deal in the weeks and months ahead.

"It will play into getting us through August 2nd in absolutely no way," the aide said. ...

The plan would also address Social Security's long-term shortfalls, through undisclosed reforms, on a separate table, so that any cuts or revenues would be funneled back into the Social Security Trust Fund to keep it solvent.

More On IT Shakeup At Social Security

From Information Week Government:

After a shakeup in the Social Security Administration's IT organization, the agency's CIO [Chief Information Officer], Frank Baitman, has abruptly resigned. His departure follows a decision by commissioner Michael Astrue to shift most of the agency CIO's responsibilities to deputy commissioner for systems, Kelly Croft....

Baitman's departure brings to a close a nine-year experiment with the agency's CIO's office that, according to some observers and former officials, never resolved the fractured line of authority between IT spending and operations that separated the CIO and the office of systems.

According to Feig, who left the agency in June, one of the primary reasons for the break-up of Social Security's IT [Information Technology] department was Astrue's perception that Baitman failed to advance the agency's strategic plan. In an interview with InformationWeek, Feig said there was a split on IT vision at the agency, with Baitman's office pushing an aggressive agenda to transform its IT systems while saving money over the long-term, and Croft sticking with the agency's old but proven mainframe systems, most of which still run the decades-old Cobol programming language.

Feig's downfall came after the Office of Management and Budget sought input on the strategic direction of Social Security's IT systems, and Feig, who joined the agency last year from the private sector, responded with a version of the strategy he was brought in to develop. Feig's strategy is described in a document titled, "SSA-2020: Vision and Strategy." However, the commissioner didn't endorse the vision's sweeping nature, and Feig said he was asked to leave for engaging the White House without authority to do so. ...

And Social Security's inspector general is working on an audit of the agency's software environment. The audit will address the agency's plans to evolve away from Cobol, its continued use of Cobol in an era of Web-based apps, its ability to hire and retain staff trained in Cobol, and the work involved in re-engineering the agency's Cobol code in modern programming languages. 

What Would You Do?

Bloomberg Government has a nice interactive piece on the choices facing the Department of the Treasury and the President should Congress fail to increase the debt ceiling. What would you do? 

Be aware that the problem is much more complicated than this indicates since it will be a day by day situation. Having enough money in hand to pay Social Security at some point in the month is not the same as having money in hand to pay Social Security when it is due. Also, and probably more important, there is the serious problem of rolling over existing debt. That debt will have to be paid off before more debt is issued. Paying off the existing debt that comes due in August will take a lot of money in hand. You would hope that thereafter new Treasury bills and bonds could be issued in the same amount as was just retired but it is not clear that people would buy newly issued Treasury bonds if the debt ceiling is not raised.

Down To The Wire

From the Washington Post:

The current timeline, according to aides in both parties, would call for the Senate to unveil its bipartisan plan [to raise the debt ceiling] later this week and begin to consider it Saturday. With a week of parliamentary hurdles to clear, the Senate could pass its bill by July 29, leaving the House just four days to consider whether to approve the plan before Aug. 2, when the country would no longer be able to pay its bills. ...

Obama met Sunday with House Speaker John A. Boehner (R-Ohio) and Republican Leader Eric Cantor (Va.) to discuss the way forward. While aides provided no details about the meeting, Treasury Secretary Timothy F. Geithner said in an interview Monday that he is “absolutely” confident a deal will be reached.“Despite what you hear, and this is a complicated place, Washington, people are moving closer together,” he told CNBC.

And if that House of Representatives vote on July 29 fails, there are tough days ahead forSocial Security recipients and everyone else in this country.

Why Is It That The Social Security Payments Due To Be Made On August 3 May Not Be Made On Time Or In Full?

Let me try to explain again why there is a threat to the payment of Social Security benefits in August. I'll do it in a Q and A manner. The problem is that the people who want and need to know this sort of thing are unlikely to read through this.

Question: How can there possibly be a threat to the payment of Social Security benefits -- Social Security is taking in enough money each month to pay benefits? 

Answer: Actually, Social Security is no longer taking in quite enough money to cover each month's benefits. Due to the aging of the baby boomer population, the trust funds are actually going down very slightly, although this may vary from month to month depending upon tax receipts. But that is not the real problem. The real problem is that the tax receipts don't arrive at the U.S. Treasury in one big lump sum at the beginning of each month. They come in drips and drabs throughout the month. A big chunk of Social Security payments are due to be made on the 3d of each month and there won't be enough money in the U.S. Treasury to make that payment on the 3rd of August.

Question: What's the Treasury got to do with it?
Answer: By law, the Secretary of the Treasury is the managing trustee of the Social Security trust funds. By law, all Social Security payments are made from the U.S. Treasury.

Question: Why doesn't Social Security just sell to the public some of those U.S. government bonds it is invested in?

Answer: It can't. The law says those bonds can't be sold to the public. They're non-marketable.

Question: If they can't be sold to the public, who can they be sold to?

Answer: They can be sold to the U.S. Treasury but if the debt ceiling isn't raised, the Treasury won't have money to buy back any of the bonds.

Question: Why not just sell some Treasury bonds to the public and use that money to redeem some of Social Security's non-marketable bonds?
Answer: To avoid going over the debt cap, the Treasury would have to redeem Social Security's bonds first and then sell Treasury bonds to the public. There wouldn't be money in the Treasury to redeem Social Security's non-marketable bonds.

Question: Does this mean that no Social Security benefits will be paid if the debt ceiling isn't raised?

Answer: No, it just means that the checks due to be paid on August 3 can't be paid in full, on-time. They can be paid, at least in part, later in the month. However, a failure to raise the debt ceiling would create chaos at the U.S. Treasury.. It is unclear exactly when payments would go out.

Question: You say that Social Security might not be paid in full but why?

Answer: Social Security's cash receipts do not quite cover the payments it needs to make but more importantly, failure to raise the debt ceiling would leave the government without the money to meet many crucial obligations. No one wants Social Security recipients to be left without part of their checks but no one wants to close federal prisons and release all of those prisoners. No one wants to stop Medicare and Medicaid. No one wants to stop paying soldiers in the field. No one wants to send all the air traffic controllers home. No one wants to stop paying those who work in the Border Patrol. Total up all these and many other crucial functions and you've got more money that needs to be paid than the government's cash flow. Something's gotta give. It is possible that Social Security payments would be reduced to help out in this impossible situation.
There's also a possibility that money that should be paid to Social Security beneficiaries would have to go to service the U.S. debt. Some U.S. bonds sold in the past will be coming due in August. Normally, this debt would be rolled over by issuing new bonds. The problem is that because of the debt ceiling, the Treasury won't be able to issue new bonds before paying off the old bonds. Where does the money come from to do that? This would be temporary but a big problem. Of course, the problem would become immense if the U.S. could not sell new bonds because of the chaos at the Treasury, which is a real possibility.

Question: Why are we so worried about the bondholders?
Answer: The U.S. Constitution says that the validity of U.S. bonds may not be "questioned." In any case, trying to stiff the bondholders would make it impossible for the U.S. to borrow money would certainly cause a collapse in world financial markets.

Question: This proves that the Social Security trust funds are a myth, doesn't it?

Answer: The nature of the Social Security trust funds has never been a secret. Most people have misconceptions about the nature of the trust funds. They think, literally, that there is some pot of dollar bills somewhere with their name on it or they think that there is some huge pot of dollar bills somewhere labeled "Social Security trust fund." The fact that there are common misconceptions about the trust funds does not make the trust funds a myth.. The U.S. government bonds in the trust funds are real. The existence of the trust funds is the crucial reason that Americans believe that they "own" their Social Security benefits. We should all agree that this sense of ownership is no myth. It is of crucial political importance. It is why there is almost no chance that those who want to destroy or dramatically alter Social Security will succeed. No other sort of trust fund has ever been a realistic possibility.

Social Security Wants Computer Fix For SSI Resources Issue

From a notice posted by Social Security on FedBizOpps.gov:

This is a SOURCES SOUGHT NOTICE.  It is NOT a solicitation for proposals, proposal abstracts, or quotations and in no way obligates the Government to award a contract.  The purpose of this notice is to obtain information, for planning purposes, regarding: (1) the availability and capability of potential sources that are capable of accessing detailed electronic data on property ownership for all 50 states, the District of Columbia and Northern Mariana Islands.  (Access to property information in U.S. territories and foreign countries is desirable but not mandatory);  (2) the ability to provide data elements related to a specific property which should include:  Social Security Numbers (SSNs) of owner(s); Names(s) of owner(s); full address of property including description and parcel number; tax assessed value; encumbrances if any i.e. mortgages, liens, etc.); dates of ownership; sale information (date and price); and use of property (i.e. commercial, residential, farm, etc.); (3) the ability to deliver data current, timely data in an electronic format protecting the personal information of Supplemental Security Income (SSI)  receipts; (4) provide access/search capability using SSN; and have ability to transfer multiple data records via an automated process; and develop routine management information reports and ad hoc request.

Nutty Death Master File Theories

A match made in hell: 9/11 conspiracy theorists meet the Social Security death master file.

Shakeup Continues At Social Security

Memorandum

Date:    July 15, 2011   

Refer To:  S7K

To:    Senior Staff

From:    Michael J. Astrue  /s/
            Commissioner   

Subject:    Executive Personnel Assignments - INFORMATION

I have several announcements to share.

San Francisco Regional Commissioner, Pete Spencer, will retire September 2, 2011.    Pete’s career started as a Management Intern in 1968 and from there he built an extensive resume within the agency that spans programmatic, administrative, and operational organizations.  He served as Senior Advisor and Executive Officer with the Bureau of Supplemental Security Income when it was in its infancy in the early 1970’s through 1979.  In the 1980’s, he served as Director of Labor and Employee Relations and Director of Human Resources.   In the 1990’s, he was Executive Staff Director for the SSI Modernization effort before moving to Operations as Acting Associate Commissioner for Public Service and Operations Support.  He later served as Assistant Deputy Commissioner for Legislation and Congressional Affairs, Assistant Regional Commissioner for Management and Operations Support in San Francisco, and Acting Deputy Commissioner for Budget, Finance and Management.   Pete also spent a year on assignment as Senior Policy Officer with the National Performance Review.

Pete exemplifies the finest qualities of a public servant, always focused on delivering service to the public with the highest standard of integrity.    

Following Pete’s retirement, Bill Zielinski, currently the Associate Director for Retirement and Benefits with the Office of Personnel Management, will return to be Regional Commissioner. 
Please join me in wishing Pete the very best in retirement and in welcoming Bill back to the agency. 

Chief Information Officer (CIO) Frank Baitman has announced his resignation effective  August 19, 2011.  With Frank’s departure, Kelly Croft, Deputy Commissioner for Systems, will assume the CIO responsibilities. Personnel from the immediate OCIO and the Office of Information Security will move to the Office of Systems. 

Mary Chatel, Senior Advisor to the Deputy Commissioner for Retirement and Disability Policy, will retire July 31, 2011. 

In the Office of Disability Adjudication and Review, Jim Julian is Acting Associate Commissioner for Executive Operations and Human Resources (OEOHR).  Kelly Salzmann, is Acting Deputy Associate Commissioner, OEOHR.

Little Progress On New Union Contract

The American Federation of Government Employees (AFGE), the labor union that represents most Social Security employees,  has posted an update on how its contract negotiations are going with Social Security. It is dated June 15 but it was just posted this week. It shows that there has been little or no progress.

Republicans Coming To Their Senses?

An increase in the debt ceiling is needed to keep the August Social Security checks from being delayed or reduced.  From the Los Angeles Times:

Republican leaders in the House have begun to prepare their troops for politically painful votes to raise the nation's debt limit, offering warnings and concessions to move the hard-line majority toward a compromise that would avert a federal default. ...

At a closed-door meeting Friday morning, GOP leaders turned to their most trusted budget expert, Rep. Paul D. Ryan of Wisconsin, to explain to rank-and-file members what many others have come to understand: A fiscal meltdown could occur if Congress fails to raise the debt ceiling.

House Speaker John A. Boehner of Ohio underscored the point to dispel the notion that failure to allow more borrowing is an option.

"He said if we pass Aug. 2, it would be like 'Star Wars,'" said Rep. Scott DesJarlais, a freshman from Tennessee. "I don't think the people who are railing against raising the debt ceiling fully understand that."

The warnings appeared to have softened the views of at least some House members who, until now, were inclined to dismiss statements by administration officials, business leaders and outside economists that the economic impact would be dire if the federal government were suddenly unable to pay its bills.

Freshman Rep. Steve Womack (R-Ark.) said the presentation about skyrocketing interest rates that could result from downgraded bond ratings was "sobering."

Grand Plan In The Works?

From Larry Kudlow writing at National Review Online:

As has been reported, [Senate Minority Leader Mitch] McConnell is negotiating now with Sen. Harry Reid for a large-scale package that will allow the debt ceiling to rise unless overturned by a two-thirds vote. If a White House debt-ceiling deal comes through with $1.5 trillion of spending cuts, that will be part of the package. Right now, it’s not completed because enforceable spending caps have not been determined.

The key part of the new McConnell package is a joint committee to review entitlements in a massive deficit-reduction package. Unlike the Bowles-Simpson commission, this committee will be mandated to have a legislative outcome — an actual vote — that will occur early next year. No White House members. Evenly divided between Republicans and Democrats. No outsiders. This will be the first time such a study would have an expedited procedure mandated with no amendments permitted. Also, tax reform could be air-dropped into this committee’s report.

Greg Sargent writing in a Washington Post blog reports that the McConnell package would force a major review of entitlement programs, such as Social Security and Medicare, with Congress being forced to vote on entitlement changes.

The Republican leader in the Senate wants to make sure there are Congressional votes on cutting Social Security and Medicare in an election. That sure sounds like a winner for Republicans!

Meanwhile, Senator Jim DeMint (R-SC) is pledging to do everything possible, apparently meaning a filibuster, to force the U.S. into default.

"If You Argue With A Fool, You've Got Two Fools"

 From John Avlon writing in the Daily Beast:

Call them Debt Ceiling Deniers. Believers in faith-based fiscal policy. Math-challenged cause-and-effect-skeptics. ...

The costs of courting conservative populists should be clearer than ever to reality-based fiscal conservatives inside the Republican Party.  Their “all-or-nothing” meets “what, me worry?” negotiating stance is not only the newest symbol of D.C.’s dysfunction—it is beginning to have an impact on the entire U.S. economy. ...

The fact that defaulting on our debt would raise interest rates—deepening the fiscal hole we’re in by compounding the size of our deficit and debt overnight—is not addressed.  Instead we are greeted with nihilistic bubble talk—at its best, economic incompetence and at its worst evidence of tactical Leninism—the belief that “the worse things get, the better they are for me politically.” ...

If you argue with a fool, you’ve got two fools.  Nonetheless, I thought a reality check might help some of the Republicans in Congress currently deciding how they’ll vote as we pedal ever closer to the cliff that is the August 2 deadline.

So I reached out to two former Republican chairmen of the Council of Economic Advisors, with presumably impeccable fiscal conservative credentials: Michael Boskin, who served under Bush 41, and Glenn Hubbard, who served under Bush 43.

"A real default would have severe ramifications in financial markets and the economy.  We need to maintain the full faith and credit of U.S. government securities," says Boskin, now a senior fellow at the Hoover Institution.  "The deficit and debt are primarily a spending problem that could condemn us to stagnation or stagflation if not seriously addressed soon. So trying to leverage the debt ceiling increase into spending control makes economic sense...The worst outcome is a default with no real spending control."

While you’re digesting that considered opinion, here’s Glenn Hubbard, advocate/architect of the Bush tax cuts and dean of the Columbia Business School.  “The debt ceiling must be raised—not doing so is irresponsible,” Hubbard emailed.  “The real discussion needs to be about to stabilize, then reduce America's burgeoning debt-to-GDP ratio…From here, the most sensible path would be an agreement on spending reductions.  Then should come a debate (post-raising the ceiling) over reducing entitlement spending versus raising taxes.  That debate can also address raising marginal tax rates (as the president proposes) versus limiting tax expenditures (as the [Bowles-Simpson] commission proposes).  These debates will be the domestic policy stage for voters to judge in 2012.”

Not Going Quietly

Ephraim Feig

Social Security recently did a major reshuffling of its information technology workforce. In the process Dr. Ephraim Feig, who was the Associate Chief Information Officer for Vision and Strategy, left. Apparently, Feig had produced a plan for modernizing Social Security's information technology systems. That plan was not approved by Social Security management. Reading between the lines, it appears that Feig took this anything but gracefully and either quit or was let go as a result. Feig has posted his complaints and his plan online. As best I can tell, one of the major sources of disagreement is that Feig believes that Social Security's planned new national data center is unnecessary. He recommends rebuilding Social Security's information technology systems from the ground up in a completely different way that he describes in only the most general terms. Here are some quotes from his plan (emphasis added):

There is no evidence that the quality of SSA’s [Social Security Administration's] services is significantly improving because of IT [Information Technology] investments in the past decade; there are areas where we know that customer satisfaction is actually down (customer satisfaction with our 800-number phone service dropped significantly). ...

SSA has gotten to the point where the more it invests in IT improvements the less efficient it becomes. In the past eleven years, SSA spent on IT a total of $4.1 Billion above the baseline (the average IT spending during the 1990’s), but it has gotten a lot less than that in return. ...

There are numerous reasons why SSA has not investigated truly modern alternative architectures. The first is that it is comfortable with what it has and scared of changing. There is good reason to be scared of big changes; historically, most have either failed or turned out to cost a lot more than originally anticipated. ... 

 SSA likes to view its enterprise as very large and complex. This justifies its requests for larger and larger budgets and also emboldens it to claim that it is efficient. SSA brags about new highs in daily transactions. It is not in the Agency’s DNA to try to simplify its processes and to reconsider its enterprise as relatively simple. The reality is that, when it comes to transactional IT, compared to modern large enterprises, SSA is moderate. ...

Our approach to modernization at SSA is entrepreneurial; we design and build a modern system from the ground up, and we transition to it, gradually retiring the old.

I do not understand IT well enough to evaluate Feig's plan but I have to be sympathetic with Social Security management. As Feig acknowledges, Social Security has been burned repeatedly with expensive IT projects that did not work. A complete rebuilding of Social Security's IT systems from scratch based upon only the vaguest of plans would have to be a hard sell.

What Else Can They Say?

From Social Security Emergency Message EM-11051 that went out to Social Security employees yesterday:

If an individual inquires about payment of Social Security or SSI checks due to concerns about the federal debt ceiling, provide the following response:

“We’re sorry but we don’t know.”

And Here's Why There's An Inpasse

The National Journal did a poll of Congressional insiders on the possible effects of failing to raise the debt ceiling by early August. 61% of Democrats thought this would have catastrophic consequences but only 15% of Republicans thought so. 3% of Democrats thought there would be only minor consequences while 29% of Republicans thought so.

A 1,000 point drop in the Dow might change a few minds. I know readers of this blog are more worried about Social Security checks and paychecks but stock market turmoil is going to happen well before the checks stop going out.

Is Cantor The Obstacle To Social Security Checks Going Out In August?

From TPM Media:

Behind the scenes, leading members of both parties have concluded that House Majority Leader Eric Cantor (R-VA) is an impediment to resolving the debt limit standoff, and should back down. Now, Democrats are publicly calling for him to get real or go home.

"House Majority Leader Eric Cantor has shown that he's shouldn't even be at the table," said Senate Majority Leader Harry Reid (D-NV) in a blistering floor speech Thursday morning. "And Republicans agree."

In a press conference shortly after Reid's floor speech, one of his top deputies, Sen. Chuck Schumer (D-NY) explained the Dems' frustrations.

"He is basically standing in the way," Schumer said. "It can't just be Eric Cantor deciding everything. If Eric Cantor decides everything, I fear we'll be in default."

Of course, if Democrats would just give Cantor what he wants, there would be no problem.

More Compassionate Allowance Conditions Added

A press release from Social Security:

Michael J. Astrue, Commissioner of Social Security, today announced 12 additional Compassionate Allowances conditions involving severe heart diseases, bringing the total number of conditions in the expedited disability process to 100. Compassionate Allowances are a way to quickly identify diseases and other medical conditions that, by definition, meet Social Security’s standards for disability benefits. These conditions primarily include certain cancers, adult brain disorders, and a number of rare disorders that affect children. 

“We have reached a significant milestone for the Compassionate Allowances program,” Commissioner Astrue said. “We have an obligation to award benefits quickly to people whose medical conditions are so serious they clearly meet our disability standards. We are now able to do precisely that for 100 severe conditions.”

The Compassionate Allowances initiative is one of two parts of the agency’s fast-track system for certain disability claims. When combined with the Quick Disability Determination process, Social Security last year approved more than 100,000 cases, usually in less than two weeks. This year, the agency expects to fast-track nearly 150,000 cases.

Social Security has held seven public hearings and worked with experts to develop the list of Compassionate Allowances conditions. The hearings also have helped the agency identify additional ways to improve the disability process for applicants with Compassionate Allowances conditions. “By definition, these illnesses are so severe that we don’t need to fully develop the applicant’s work history to make a decision,” said Commissioner Astrue. As a result, beginning in August, Social Security is eliminating this part of the application process for people who have a condition on the list.

 Here is the list of the 100 conditions. I cannot find a list just of the new 12. I have said before that the whole compassionate allowances program is virtually meaningless since anyone with any of the problems would have been approved quickly anyway.

Will Social Security Checks Go Out On August 3?

Will Social Security checks go out on August 3? Probably not, unless there is an agreement on an increase in the debt ceiling. Let me lay out where the problem with doing that lies.

Eric Cantor, the House Majority Leader, that is the second ranking Republican in the House of Representatives after John Boehner, the Speaker of the House of Representatives said yesterday that  “Currently, there is not a single debt limit proposal that can pass the House of Representatives." The reason he said this is that he knows that a debt ceiling bill that only reduces spending without any tax increase must pass the House of Representatives solely with Republican votes. Nancy Pelosi, the House Democratic leader has said as much. Cantor cannot count on all or even most Republicans in the House to vote for anything that is on the table at the moment. There are many Republicans in the House who have pledged not to vote for any increase in the debt ceiling under any circumstances and many others who say they will vote for a debt ceiling increase only if Democrats agree to enormous cuts in expenditures without any tax increases even though the President would veto such a plan if it ever passed the Senate, which it would not. 

You can view this situation in differing ways depending upon your political views but something has to give. Either Democrats must cave completely or some extraordinarily rigid Republicans in the House of Representatives must cave. Complicating matters is the belief among many Republicans that nothing serious will happen if the debt ceiling is not raised by August 2. They think that they are being lied to, that the Treasury can continue to pay bills after August 2, or that the Treasury's failure to pay bills won't be that big as deal as long as bondholders are paid or that the only bills that won't get paid by the Treasury are bills for things like Medicaid and Food Stamps that they would prefer not get paid. This is all rubbish as more reasonable voices on the right acknowledge.

I am getting the feeling that we are not going to get agreement until something dramatic happens. My guess is that the dramatic event will be the stock market going into a tailspin with the Dow losing 1,000 points or more in a day. Such an event cannot be that far off.

Staffing Problem At Appeals Council

Here is an e-mail I received today from an employee at my law firm:

Appeal was fax’d to AC [Appeals Council] on  5/17/11, I followed up on 6/8/11 and there was no record of it. I followed up again yesterday and was told it was still not input. I said I will fax again and she said I should not fax again because it is taking 7 – 8 months to input.  Really

Not Looking Good

From the New York Times:

The Federal Reserve chairman, Ben S. Bernanke, warned on Wednesday of a “huge financial calamity” if President Obama and the Republicans cannot agree on a budget deal that allows the federal debt ceiling to be increased [and Social Security checks for August to go out]. Moody’s, the ratings agency, threatened a credit downgrade, citing a “rising possibility” that no deal would be reached before the government’s borrowing authority hits its limit on Aug. 2. 

And the latest bipartisan negotiating session on Wednesday evening ended in heightened tension if not outright discord. Republicans said Mr. Obama had abruptly walked out in an agitated state; Democrats described the president as having summed up with an impassioned case for action before bringing the meeting to a close and leaving.

Across Washington, officials were weighed down with a sense that they were hurtling toward a crisis. Grim-faced lawmakers spent the day shuttling from meeting to meeting in search of a way out of the fix....

For months, the Republican leaders have emphatically pledged that there would be no increase in the federal debt ceiling absent huge cuts in government spending and fundamental changes in popular social programs, all without the whiff of a tax increase.
Now, with negotiations stalled and a potential default by the United States government just over the horizon, they are being held to those promises by their own rank-and-file, leaving them in a bind that is defying easy resolution and putting them at risk of being blamed if things end badly.

Behind closed doors and by phone, they groped for a solution and struggled to assert some kind of control over the situation as rank-and-file Republican members, especially in the House, grew more confrontational. 

Panic had not yet set in, but the worry and tension were evident as seasoned lawmakers of both parties whose experience told them that Congress always finds a white-knuckle way to avert disaster wondered if this was going to be the time when it did not. 

Senate Republican Leader Doesn't Want To Cut Off Social Security Checks Because "I Don't Want To Help Barack Obama Get Reelected"

From the Huffington Post:

Senate Minority Leader Mitch McConnell (R-Ky.), under siege from conservatives over his opt-out proposal for the debt ceiling debate, defended the idea in crassly political terms during an interview on Wednesday morning....

"[W]e knew shutting down the government in 1995 was not going to work for us. It helped Bill Clinton get reelected. I refuse to help Barack Obama get reelected by marching Republicans into a position where we have co-ownership of a bad economy," McConnell said.  "It didn't work in 1995. What will happen is the administration will send out notices to 80 million Social Security recipients and to military families and they will all start attacking members of Congress. That is not a useful place to take us. And the president will have the bully pulpit to blame Republicans for all this disruption."

And The Response From The Most Extreme Right Wingers

I cannot say how widespread the beliefs expressed below are among Congressional Republicans but the fact that there are some saying this is a sign of just how difficult a position the Republican leadership finds itself in. By the way the man talking here, Louis Gohmert, is a nut job by almost anyone's standard. His history includes promoting the idea that terrorists are planting terror babies in this country and that President Obama wants to establish an international Islamic caliphate.
Update: One reader wondered why I bother to post a video of a nutjob speaking, which is a fair question. Look behind Mr. Gohmert. That's Michelle Bachmann. She may be the leading candidate for the Republican Presidential nomination. I think Gohmert is isolated within the Republican party but I'm not sure. If Gohmert is actually speaking for a sizable number of Republican members of Congress, we're all in trouble.

Will Social Security Checks Go Out In August?

I wish I could reassure everyone that there is no threat to the August Social Security checks but I can't. They are truly at risk. If the debt ceiling is not increased by August 2, money will not be available to pay the Social Security checks due out on August 3.
Neither the existence of a dedicated funding source for Social Security nor the existence of the Social Security trust fund will keep this from happening. The FICA tax receipts do not line up exactly with the due dates on Social Security monthly payments. To oversimplify a bit, the U.S. Treasury ordinarily deals with this situation by either taking money out of or putting money into the U.S. government bonds that are the only thing that the Social Security trust funds may be invested in. When the U.S. reaches the debt ceiling, this whole system that ordinarily works smoothly goes haywire. It would be much like trying to keep your family's bank account from being overdrawn if you had an account balance that was measured in pennies. You would have to worry about exactly when  your account would be credited with deposits you make and exactly when a check you write clears the bank. The money will be available to pay those Social Security benefits later in August but the money may be used, in part,  for other purposes because failing to extend the debt ceiling puts the government into a situation where it lacks the money to pay many of its bills. In this emergency situation, the President could do something that would ordinarily be illegal, using money that is supposed to go to Social Security to pay other bills. If you are a Social Security beneficiary, it may make you mad as hell to think that Social Security money would be used to pay other bills but the other bills include paying soldiers in the field and VA benefits and FBI agents and air traffic controllers, for instance. No one wants Social Security recipients to fail to get all their benefits on time but no one wants to avoid paying those other bills.

At the moment, Congress has not extended the debt ceiling. The President and Democrats have put forward a couple of plans to extend the debt ceiling in conjunction with plans to cut future budget deficits. Both plans involved tax increases directed at corporations and wealthy Americans. Republicans have rejected both plans. To the best of my knowledge, Republicans have put forward no specific plan of their own to combine an extension of the debt ceiling with cuts in future deficits although they have stated that they want to reduce future deficits solely by cutting the budget. The Senate Republican leader has put forward a plan to extend the debt ceiling without any cuts in future deficits coupled with an extremely odd plan that would allow the President to increase the debt ceiling  on his own for the next couple of years but also providing that Congress could vote to reject increases in the debt ceiling initiated by the President. This is such as odd plan that so far Democrats do not seem to know what to make of it. Among Republicans, this plan has gotten support from the Republican Speaker of the House of Representatives but is being criticized by many rank and file Republicans. There are also serious divisions among the Republican leadership in the House of Representatives since the number two Republican in the House of Representatives may be trying to undermine the Speaker.

One can say that everyone seems to be getting more serious about the debt ceiling. The prospect of Social Security checks not going out is a major reason for this seriousness. However, at this point, it is far from clear that anything can be passed in either house of Congress. One real problem is that the public and many members of Congress do not understand the gravity of the situation. My best guess is that there will be turmoil in financial markets in the near future if nothing is done -- in addition to a lot of recipients of federal benefits -- to concentrate the attention of the Congress.

Addendum:  If you happen to believe the threat to Social Security benefits is something that a lying Kenyan socialist contrived to scare Americans, I suggest you read David Frum's blog. He has solid right wing credentials.

Addendum: I keep hearing the question: How can this happen? Isn't Social Security a separate account? The answer is that Social Security is a separate account but it is a separate account at the U.S. Treasury. What happens when money is deposited into that separate account? It doesn't sit there in a huge pot of dollar bills. Normally, it is invested in U.S. government bonds. The problem is that failing to raise the debt ceiling puts the Treasury into an impossible bind. It cannot obey the law which requires it to make a lot of payments, including Social Security. The Treasury, and ultimately the President, has to pick and choose which payments get made and which do not. The Treasury also is in a bind because it cannot manage the nation's money properly since cash receipts do not match up with demands to make disbursements. Normally, the Treasury borrows short term money to make sure it can make disbursements without having to worry about when it receives money.
You can certainly look at this situation as proof that the Social Security trust funds aren't "real." However, there are real, practical problems with investing the Social Security trust funds in anything other than U.S. government bonds and there is no practical way for Social Security to do its banking with anyone other than the U.S. Treasury. There is just too much money involved for any private bank to handle it.

Addendum: The Congressional Research Service (CRS) has compiled a very complete report on the way the debt cap can affect government operations, including a detailed look at its effects on Social Security. Please read it if you want a fuller explanation of why Social Security checks may not be paid, at least in full, at the beginning of August if the debt ceiling is not lifted. The CRS is part of the Library of Congress and does research for members of Congress. It is thoroughly non-partisan.