Dec 17, 2012

Sequestration Would Be A Disaster For Social Security

     While there are reports of some progress in the fiscal cliff negotiations, the parties remain far apart and agreement is uncertain. One of the consequences of failure to reach agreement and the one that is of the most importance for the Social Security Administration is sequestration, a sudden, dramatic cut in the agency's operating budget effective January 1. Sequestration would be far worse for Social Security than a government shutdown. In a government shutdown, most of Social Security continues to operate. A Senate Finance Subcommittee report gives some idea of what sequestration would mean for Social Security:
In fiscal year 2012 SSA’s [Social Security Administration unnecessarily stated in the possessive form] had an administrative budget of $11.45 billion. This represents less than 1.5% of the over $800 billion it will pay in benefits. The sequester would cut SSA’s administrative budget by $890 million in fiscal year 2013. As a result, in fiscal year 2013 SSA would lose 5,000 staff through attrition and the loss of temporary hires. In addition, SSA’s approximately 65,000 employees and 15,000 State Disability Determinations Services employees would face approximately 6 weeks of furloughs.
Degradation of Basic Services
... The processing time for the 3.2 million Americans who will file disability claims would increase from 111 days in fiscal year 2012 to an estimated 180 days in fiscal year 2013. The number of pending disability claims would increase from 861,000 in fiscal year 2012 to almost 1.5 million by the end of fiscal year 2013. As field offices and telephone-service centers close their doors for 30 days throughout the year, the waiting time for the 45 million field office visitors and 63 million 1-800 number callers would increase dramatically.
Combating Waste, Fraud, and Abuse
This year the SSA will conduct 435,000 continuing disability reviews, to ensure individuals receiving disability benefits are still disabled, and 2.4 million SSI redeterminations, to ensure individuals receiving SSI still meet income and resources limitations. Combined, these two program integrity activities are expected to save $5.9 billion over 10 years, approximately $8 for each $1 spent. Under the sequester, SSA would be able to conduct 35,000 fewer continuing disability reviews and 500,000 fewer SSI redeterminations. This would cost the Federal government $500 million over 10 years from otherwise preventable waste, fraud, and abuse.


Anonymous said...

What if the fall over the "cliff" only lasts a month or two? How would that affect these projections? Would sequestration cuts affect the payment center so as to delay payment to claimants and attorneys in January? Anyone have any input on these questions?

Anonymous said...

Save some bucks--the 800 # is a waste--any Title 2 they handle can be done on the internet, and they are completely useless on T16.

Anonymous said...

With increasing numbers of people receiving SSA benefits (including disability benefits)and benefits now at a much higher average amount than in the past, any analysis stating benefits paid "represents less than 1.5% of the over $800 billion it will pay in benefits" is very misleading. Why factual, the numbers are not relevant to any argument as to what should be the cost of administering SSA. Is there an administrative cost difference in taking a paying benefits for someone eligible for a $900 retirement check vs. someone eligible for a $2000 retirement check? This would look more as a significant difference if expressed as a % of benefits paid but in reality, there is little or no difference in administrative costs. What about the reduced administrative costs achieved via eServices as SSA shifted work to the public instead of having it done by SSA employees? I understand that there is a cost to do business, just make an honest and complete case when asking taxpayers to pay the bill and do not play the latest version of "find the pea under the shell" to shift focus from actual needs.