A Report On Social Security's Operating Budget

     The Congressional Research Service of the Library of Congress produces reports to aid Congress in carrying out its duties. They've recently issued a report titled Social Security Administration (SSA): Trends in the Annual Limitation on Administrative Expenses (LAE) Appropriation Through FY2021 that's worth a look. It tells you everything you ought to know, even though for most people the subject, like the title of this report, seems dreadfully boring.

    Let me first explain this LAE business. Since most of Social Security's administrative budget comes from the Social Security's trust funds rather than general revenues, technically the agency doesn't get an appropriation but instead is given a limit on how much it can draw from the trust funds for its administrative expenses -- a Limitation on Administrative Expenses or LAE.

    The main story that I take from this report is that Social Security's workload has gone up while its LAE has gone down. That's not good for those who have to deal with the agency.

    Let's talk about the workload first.  Here's a chart showing the number of claimants drawing benefits from 2010 on:

You can see that since 2010 there's been a big increase from 58 million receiving benefits to 70.2 million receiving benefits. 

    Here's a chart showing what's happened to the LAE, apart from the amount specifically dedicated to program integrity, in constant dollars since 2010:

Notice that in price indexed dollars, the LAE went down from about $13 billion in FY 2010 to around $11 billion in 2021. I think that excluding program integrity funds gives the most accurate picture of what the agency can spend actually answering the telephone, taking and adjudicating claims and processing claimants on and off benefits. Note that Social Security didn't receive significant additional funding for the Covid-19 pandemic, which certainly disrupted its operations and increased its expenses so things are actually worse than they appear.

    Any rational person looking at this history shouldn't be surprised by what has happened since 2010 -- increased backlogs in answering the telephone, taking claims, adjudicating them and processing claimants on and off benefits. The severity of the resulting problems have been somewhat disguised since the agency's hearing backlog has gone down since 2010. That's highly visible but everything else has gone to hell and that's mostly invisible except to those who actually have to deal with the agency, which is almost everyone eventually, but not that many people at any onetime. Be glad if all you have to do is to file a retirement claim. The agency prioritizes them since they're easy. For everything else, get ready to wait and wait and wait.

    Social Security is a mess. The inadequate LAE is why it's a mess. Why has there been so little outcry from Congress?