Jul 26, 2012

Danger Ahead

     According to a Senate Appropriations Committee report(page 77), the Social Security Administration would suffer a major blow if the budget cuts provided for in last year's budget deal are applied uniformly across the board to all domestic agencies. Social Security would lose 5,000 employees and all of the agency's employees and all Disability Determination Services employees would suffer approximately six weeks of furloughs. The average processing time at the initial level on disability claims would raise from 111 days to 180 days and the number of pending disability claims would nearly double from 861,000 to almost 1.5 million by the end of the fiscal year.
     Let me state again that this report assumes that the sequestration would be applied uniformly across all agencies. Neither the appropriations bill reported out of committee in the Senate nor the appropriations bill reported out of subcommittee in the House would do that. They would cut Social Security but not as badly as the sequestration. We have not heard exactly what the results would be under the House or Senate bills but there would still be considerable pain for Social Security. That does not mean that this report means nothing. We are a long way from any appropriations bill passing Congress. I can certainly predict that it will not happen before the election and probably won't happen for six months or more into the fiscal year, which begins October 1, 2012. This report shows what will happen if we go into a Continuing Funding (CR) Resolution to keep government going, which is almost certain to happen, and the CR is at the sequestration rate, which may or may not happen, and Social Security is not protected -- which is a very real possibility. These dramatic reductions in Social Security's administrative budget could happen before the election and could extend well past the election regardless of who is elected President. It could even last the entire fiscal year.
     Don't assume that Social Security will be protected from this disaster. Other agencies have their own arguments for protection from sequestration. Exempt Social Security and some other agency gets hit even harder. If Congress can't pass an actual appropriations bill that deals rationally with sequestration, how will it get its act together well enough to craft a CR that makes a rational allocation of the pain of sequestration?


Anonymous said...

I don't really see SSA laying people off. Maybe furlough some. There are a wave of retirements looming. Laying people off would be penny wise and pound foolish.

Anonymous said...

If the so called "off the cliff" strategy is successful, funding could be legislated in January, resulting in a temproary furlough, say 2 weeks.

A slowdown in SS claims processing would occur, but would be temporary.