Nov 7, 2012

I Hate To Be Gloomy, But ...

     A Republican sweep of the White House, House of Representatives and Senate might have had devastating effects on Social Security but the result we got -- basically the status quo -- leaves Social Security at great risk. Yes, the new Commissioner will be an Obama appointee. Yes, Democrats will have a somewhat increased majority in the Senate. However, the following problems remain:
  • I have noted over the decades of following Social Security that the House Social Security Subcommittee seems to have more influence over the Social Security Administration than the White House and Senate combined. Republicans will continue to control the House Social Security Subcommittee. They are not big fans of the concept of social insurance.
  • Republicans in the House of Representatives will continue to have a choke hold on Social Security's administrative budget. They have been extraordinarily irresponsible yet they too won re-election. Their irresponsibility is unlikely to change.
  • The entire federal establishment, including Social Security, is facing even more dramatic appropriations cuts as a result of sequestration, scheduled to begin on January 1, 2013. That word, "sequestration," may seem foreign to you but you're going to hear it more and more over the next two months or so. Sequestration would cut Social Security's operating budget much further, to the point that furloughs would be inevitable. The only question is how the furloughs would be implemented. While no one expects sequestration to continue though the rest of the fiscal year, it is entirely possible, if not probable, that we will see sequestration for at least part of January and possibly for quite a bit longer.
  • The Disability Trust Fund will temporarily run out of money in 2016. This is related to the baby boom population reaching its most disability-prone years. The inevitable solution is to allow borrowing from the Retirement and Survivors Trust Fund. This has been done before.  However, we have all seen Republican hostage-taking over the last two years. Will House Republicans try to take Disability Insurance Benefits hostage? I have seen no sign of a Republican agenda for the Social Security disability programs but they may be working on one. It would be great if inter-fund borrowing was included in the resolution of the "fiscal cliff" negotiations but are Democrats focused on this problem which will not come to a head for another three or four years? One frustrating thing for Republicans has to be the fact that there is report after report showing that large amounts of money are being wasted in the Social Security disability programs but almost all of this waste can be attributed to Republicans starving the agency's administrative budget! At the least, the Disability Trust Fund situation serves as a check on the new Commissioner. He or she will find it difficult to do anything that can be seen as benefiting the disabled since he or she will constantly be reminded that the Disability Trust Fund is going bankrupt.

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