From The Hill writing about Tuesday's hearing before the House Social Security Subcommittee on future funding of Social Security benefits:
“The immigration surge, we project from 2021 to 2026, will result in about $1 trillion in additional revenue” over a ten year period, Dr. Phillip Swagel, director of the Congressional Budget Office (CBO) told lawmakers during a Tuesday hearing. ...
Republicans — including former president and presidential candidate Donald Trump — have increasingly pointed to immigration as a drain on social safety nets for the elderly in recent months, including Social Security and Medicare.
Top budgetary experts bucked those claims during Tuesday’s panel as they argued immigrants could have a positive impact on Social Security. ...
Rep. Ron Estes (R-Kan.) pressed [Stephen] Goss [Social Security's Chief Actuary] on whether the SSA accounted for the “impact of illegal immigrants” in their yearly report.
“Absolutely, we always have,” Goss responded. “The bottom line really is that immigration of any form is actually a positive in the realm we are now where the birth rates in the country are as low as they are.” ...
Isn't it obvious that illegal immigrants help the Social Security trust funds? They contribute but can't get anything in return. Of course, this won't be obvious if you believe that illegal immigrants are just "given" Social Security benefits as soon as they arrive but, of course, that's a myth believed only by the credulous.
... that a “business arrangement” exists, such that the SSI applicant or recipient is not considered to be receiving ISM [In Kind Support and Maintenance] in the form of room or rent, when the amount of monthly required rent for the property equals or exceeds the presumed maximum value (PMV).
This sounds awfully tedious, and it is, but the estimate of Social Security's Chief Actuary is that it will increase SSI payments to about 41,000 people by an average of $132 a month.
The new regulations will not go into effect until September 30, 2024.
Unfortunately, there is nothing in these new regulations to help those who have an agreement to pay for their room and board once they get some income, that is, a loan of room and board. There are a lot of people in this situation and Social Security is treating them harshly.
From Marketwatch:
When Alan Greenspan and his committee supposedly “fixed” Social Security’s funding crisis in the early 1980s, the program was supposed to remain solvent well into the 2050s.
Instead, the trust fund is scheduled to run out of money in 2034 — decades ahead of schedule. What went wrong?
Stephen Goss, who has been the Social Security Administration’s chief actuary for more than 20 years, posed this question recently during a retirement conference hosted by the Harkin Institute. And his answer may surprise some people.
Sure, birthrates have collapsed from the heady days of the baby boom, he said, and that trend hasn’t helped. But it’s nothing new: The big fall started in 1965, nearly 20 years before the Greenspan Commission.
And yes, people are living longer than they used to. But that isn’t a surprise, he added —actually, the decline in mortality is pretty much in line with expectations. The forecasts have proven “remarkably accurate,” he said.
So what changed? In a word: inequality.
Goss argued that rising income inequality — with fast growth at the top and slow growth everywhere else — is the mystery ingredient that has thrown Social Security’s finances into turmoil earlier than planned. And the big change took place in the 17 years after the Greenspan Commission made its projection, from 1983 to 2000, he said.
During that time, incomes for the best-paid 6% of earners rose by 62% in real, inflation-adjusted terms, he said. For the other 94%, incomes rose by just 17%.
The net result was that the lion’s share of U.S. income growth was above the Social Security cap, and wasn’t subject to the program’s payroll taxes. The percentage of incomes subject to the program’s tax collapsed from around 90% in the early 1980s to barely 82% by the turn of the millennium. …
U.S. Senators Bill Cassidy, M.D. (R-LA), Mike Crapo (R-ID), and Senate Finance Committee Republicans sent a letter to the Government Accountability Office (GAO) requesting the agency monitor the Managing Trustee’s flagrant disregard for statutory deadlines. Required by law, the Medicare and Social Security Trustees reports are to be issued no later than April 1, yet the 2021 and 2022 reports were issued August 31 and June 2, respectively. ...
The Biden Administration has repeatedly ignored Congressional inquiries as to why the trustees reports have not been submitted in a timely manner. Neither Treasury Secretary Yellen nor the Board of Trustees have signaled any intent to modify internal procedure regulating management of the report schedule, nor have they adopted previous GAO recommendations to improve communication with Congress. It is the responsibility of the Treasury Secretary to provide these reports to Congress in a timely manner, as required by law, or provide Congress and the American people with explanations for late work. ...
These delays are annoying but it's not like the Trustees Reports have arrived on time during Republican administrations. I suspect the delays have to do with staffing at Social Security's Office of Chief Actuary but I don't know. The delay certainly isn't a major problem.
I'll jump in with a very rough estimate, $457,000. Let me explain my methodology. The amount of benefits paid last year to all Social Security disability recipients was $145,470 million. The number of people approved for Social Security disability benefits last year was 671,952. Divide $145,470 million by 671,952 and you get about $249,000. That's what I'm coming up with as a rough estimate of the value of the cash benefits. The amount of Medicare benefits paid for Social Security disability recipients was $139,996 million in 2021. Divide that by the 671,952 who were approved for benefits last year and you get $208,000 as an average value for the Medicare. Total that with the cash benefits and you get $457,000.
I don't expect you to say QED!
Why divide the gross benefits paid in a year by the number added to benefits in that year? My reasoning is that the average length of time that a person stays on disability benefits is the total number of people drawing benefits divided by the number approved per year. The total benefits paid in a year is the summation of the amounts paid to claimants still on benefits who were approved over the years. That number is effectively the amount for one year's cohort of claimants going on benefits multiplied by the average length of time they stay on benefits. I told you that my method was crude but try coming up with a better formula yourself!
Let me list some objections that I can think of for my methodology and my response:
As I said above, if you don't like my methodology try coming up with something better. If you do, please share it with us.
Also, start to think about the process used to adjudicate Social Security disability claims. Is the process commensurate with the value of what's at stake for the claimants and the taxpayers?
... Considered separately, the OASI [Old Age and Survivors Insurance] Trust Fund reserves become depleted in 2034, and, for the first time since the 1983 Trustees Report, the DI [Disability Insurance] Trust Fund reserves do not become depleted within the 75-year long-range projection period. ...
From Marketwatch:
… According to the just-released analysis, Social Security’s Old Age and Survivor Insurance (OASI) trust fund will remain solvent a year longer than previously thought. This is the trust fund from which Social Security benefits are paid. …
This new analysis was produced by the Congressional Budget Office (CBO), the non-partisan agency that analyzes the budget impact of various legislative proposals. To put its findings in context, it’s helpful to remember that every year the office of Social Security’s chief actuary updates its assessment of the OASI trust fund’s solvency. Its annual report typically is released in the spring.
No such report has been forthcoming this year, however. In an email, the chief actuary’s office told me that the decision about when to release its annual report is not theirs to make but instead is made by the U.S. Treasury Department. An email earlier this summer to that department asking for when this report will be forthcoming went unanswered. …
Anyone want to speculate on why Treasury is holding this up?
I was looking for something else but happened upon an estimate that Social Security's Office of Chief Actuary made last year of the costs of extending SSI to all U.S. territories. The cost would be $23.4 billion over a ten year period with the vast majority of that for Puerto Rico. There's no projection presented of the number of claimants who would become eligible for benefits.
The issue of whether it is constitutional to deny SSI benefits to U.S. citizens who reside in U.S. territories will be heard by the Supreme Court this fall. It is also possible that President Biden will formally propose this as a change in the statutes.
To assist in estimating the effects of the final rule, SSA conducted a case study in 2017covering approximately 1,400 initial DDS-level decisions made in 2015. In comparing determinations of these sample cases using the prior criteria and new criteria, a small number of determinations were expected to change from allowance to denial under the new rule, primarily because their case files do not contain all of the medical evidence required under the new rule.
So it's not really the Chief Actuary's office that did this study. It was actually done by the people who proposed these new Listings and it was done based upon an earlier version of the Listings rather than the final version.
Why is the Chief Actuary putting this out as if his office did it and as if it was based upon the actual Listings adopted? I know why Social Security management would want this coming from the Chief Actuary. He has credibility. Current management doesn't. I don't know why he would put his name on a study his office didn't do. I don't think this is going to age well.
And, oh yeah, I'd like to see the actual study itself instead of some brief summary of it.
Nancy Altman, the President of Social Security Works and a member of the Social Security Advisory Board (SSAB), writes for The Hill on the harsh new musculoskeletal Listings that went into effect on April 2. I wish there had been far more criticism of these rules, enough to have stopped them from going into effect. They just seem to technical to most people. That word "musculoskeletal" isn't in most people's vocabulary.
By the way, there's still not been a public release of the study that supposedly showed that the new Listings won't affect the number of disability claims being released. I'd really like to see that.
Social Security has released FAQs on the new musculoskeletal Listings due to go into effect on Good Friday. Here is an excerpt:
Q4: What percent of decisions do adjudicators make using these revised rules?
A4: We decide claims involving musculoskeletal impairments primarily at step 5 of the sequential evaluation process where we consider a claimant’s residual functional capacity (RFC), age, education, and work experience. Specifically, we make 90 percent of allowances due to a musculoskeletal impairment using the medical-vocational rules at step 5 of the sequential evaluation process, which have not changed. The remaining 10 percent of the people who apply for disability benefits and are found disabled after an initial review due to a musculoskeletal impairment meet (or medically equal) a musculoskeletal disorders listing. We do not expect this to change because of these final rules.
Q5: How do these changes affect vulnerable populations?
A5: Our Office of the Chief Actuary’s (OCACT) primary conclusion for these rules are that the net effect of the new listings will be very small for both Social Security Disability Insurance (SSDI) and SSI. OCACT estimated that for SSI, there would be a very small net increase in SSI awards of roughly 180 annually. For SSDI, there would be a very small net reduction in disability awards of roughly 260 annually due to these listings.
OCACT estimated that implementation of these final rules will result in a net increase in SSI payments of $67 million over fiscal years 2021-2030, and a net reduction in scheduled Old-Age, Survivors, and Disability Insurance (OASDI) benefits of $263 million over the same period, assuming implementation in January 2021. Our Office of Budget, Finance, and Management estimates administrative savings of less than 15 work years and $2 million annually.
It is important to note that while the estimated effects of changes from allowance to denial and from denial to allowance are largely offsetting, the actual net effect for either program, SSDI or SSI, could potentially be either a small cost or a small saving.
Seriously, you're telling us these new Listings will make almost no difference in the number of claims approved? What was the point of the new Listings then? Social Security isn't claiming that these have anything to do with advances in medicine.
Why is the Chief Actuary's office trying to evaluate whether a change in the Listings will result in more or fewer claims being approved? It's outside their field of expertise. How is it even conceivable that these new Listings would increase the number of SSI claims approved, even in a small way? There's nothing to these new Listings other than a tightening of criteria across the board.
Why hasn't the Chief Actuary released their study? There were repeated questions about this on a conference call I listened to yesterday and Social Security refused to answer the question, even though the Chief Actuary, Steve Goss, was on the call. Their partial answer to another question suggested that the Chief Actuary's office may have only looked at claimants age 50 and older. The largest effect of these new Listings, however, will be on claimants under the age of 50. I guess the Actuary's projection is how they sold this to OMB and the Biden Administration, making it an important document. I think we ought to be able to see it.
I will say this. If they start being more reasonable in determining Residual Function Capacity (RFC) at the Initial and Reconsideration levels it would be possible to offset the negative effects of these new Listings. However, prior experience tells me to expect the exact opposite. Again, there was never any point to the Listings changes other than to deny more claimants. Any other reasons Social Security has given for these changes have been nothing more than window dressing.
Social Security's Office of Chief Actuary has released the numbers on the performance of the Disability Insurance Trust Fund in 2020. Things went pretty well despite the high unemployment caused by the pandemic. The Trust Fund ended 2020 having gained about two and a half billion dollars since the end of 2019. We'll have updated long term projections in a few months but if you were dreading (or hoping) for a Disability Insurance Trust Fund collapse due to the pandemic, it hasn't happened. See the table below. As always, click on the image to view it full size.
 |
| Stephen Goss |
If Trump loses, I fear that there will be major acts of retribution before Inauguration Day. I hope that Goss is not at risk.
Some Democratic Senators asked Social Security's Chief Actuary what the effect would be upon the Social Security Trust Funds if the President's proposal to end the F.I.C.A. tax that supports the Trust Funds is ended, without any replacement. Trump didn't say that this would be without a replacement but he didn't specify a replacement. The response, of course, is that the Trust Funds would quickly run out of money and be unable to pay benefits. The Chief Actuary's response has now appeared in campaign ads.
Some Republican Senators took offense at this and sent the Chief Actuary a letter complaining about his letter. I'd say they should blame the President for making a bone-headed proposal that would inevitably sound foolish in a TV ad. Responding to Congressional inquiries is part of the Chief Actuary's job. He can't very well say "I'm not going to answer your question because the answer would make the President sound foolish and irresponsible and I don't think he meant to sound that way."
The Chief Actuary has now responded. Here's part of the final paragraph of the letter:
... While it is never desirable for the Office of the Chief Actuary to engage in matters with political implications, it appears that this is unavoidable to a degree, as long as we are asked to provide objective and factual answers to questions posed by members of Congress. Our answers have always been as direct and objective as possible, and we regret that even clear answers may be taken out of context or used for purposes other than intended. ...
From Jennifer Rubin writing for the Washington Post:
Biden was referring to Trump’s suggestion to eliminate the payroll tax, the funding mechanism that supports Social Security and Medicare. The Associated Press explained: “These taxes raised $1.24 trillion last year, according to the Congressional Budget Office. Over a 10-year period, Trump’s idea would blow a $16.1 trillion hole in a U.S. budget that is already laden with rising debt loads.”
The chief actuary of the Social Security Administration, Stephen Goss, sent a letter last week to Senate Democrats, explaining, “If this hypothetical legislation were enacted, with no alternative source of revenue to replace the elimination of payroll taxes on earned income paid on January 1, 2021 and thereafter, we estimate that [the Disability Insurance] Trust Fund asset reserves would become permanently depleted in about the middle of calendar year 2021, with no ability to pay DI benefits thereafter.” Goss added, “We estimate that [the Old Age and Survivors Insurance] Trust Fund reserves would become permanently depleted by the middle of calendar year 2023, with no ability to pay OASI benefits thereafter.”
In a sign that this issue may have hit a nerve, the Chairman of the Senate Finance Committee and the senior Republican on the House Ways and Means Committee have written Stephen Goss, Social Security's Chief Actuary, to complain about his response to the hypothetical question. However, Goss had little option but to respond to the hypothetical question. That's what his office does. He can't refuse to answer questions because he thinks a question because it seems political. All the questions are political.
Republicans have long thought that Goss is against them. I think the problem is that they keep putting forward foolish proposals because they have never bothered to try to understand how Social Security works or even given much thought to the politics of Social Security. It's not Goss' fault the GOP keeps coming up with untenable ideas.
... Over the period 2020 through 2029, we estimate the program expenditures for the OASDI program would be increased by $34.3 billion, with the trust funds being fully reimbursed for the added cost on an annual basis with transfers from the General Fund of the Treasury. Over the long-range 75-year period, we estimate that enactment of the Bill would increase OASDI program cost and program income each by 0.02 percent of taxable payroll, thus having no significant effect on the OASDI actuarial balance. ...
The Social Security Board of Trustees today released its annual report on the long-term financial status of the Social Security Trust Funds. The combined asset reserves of the Old-Age and Survivors Insurance and Disability Insurance (OASI and DI) Trust Funds are projected to become depleted in 2035, one year later than projected last year, with 80 percent of benefits payable at that time.
The OASI Trust Fund is projected to become depleted in 2034, the same as last year’s estimate, with 77 percent of benefits payable at that time. The DI Trust Fund is estimated to become depleted in 2052, extended 20 years from last year’s estimate of 2032, with 91 percent of benefits still payable. ...
View the 2019 Trustees Report at www.socialsecurity.gov/OACT/TR/2019/.The change in the estimate for the Disability Trust Fund must be the most massive correction every made by the Chief Actuary in Social Security's long history. That correction tells me that the Disability Trust Fund projection is nearly meaningless. The Chief Actuary doesn't know what's going on. Nobody does.
