Trying To Undermine Social Security From The Inside

     From Alex Lawson, writing for Common Dreams:

Mitch McConnell and his fellow Republicans have a problem. They hate Social Security, because it is popular, effective, and doesn’t make any money for their billionaire donors. But their voters love Social Security. Ninety-four percent of Republicans oppose benefit cuts.

McConnell understands the political dangers of being openly hostile to Social Security. So instead, he is plotting to sabotage it from within. The latest instrument of that sabotage is Andrew Biggs, a senior fellow at the billionaire-funded American Enterprise Institute. Biggs is McConnell’s pick to serve on the Social Security Advisory Board (SSAB) ...

Biggs served as an associate commissioner of Social Security under former President George W. Bush and was instrumental in Bush’s push to privatize Social Security. ...

Biggs supports raising the retirement age, and has testified before Congress that people should work longer. ...

Biggs also wants to turn Social Security from an earned benefit into a poverty-level flat benefit. That means huge cuts for middle class workers who’ve been paying into the program their entire lives. It would destroy Social Security’s political popularity by turning it into a welfare program—a sitting duck for Republicans to make even larger cuts. ...

     Biggs came under serious criticism at the hearing on his nomination.

    The good thing about this nomination is that the SSAB isn't much of a platform from which to launch attacks on Social Security. For better or worse, it's pretty obscure. Also, while Republicans like to talk about privatizing Social Security, raising the retirement age or turning it into something they can deride as "welfare," they have virtually no interest in actually doing anything along these lines.

SSAB Nominations Advance

     The Senate Finance Committee has scheduled a hearing for January 31 on four nominations, including these three to the Social Security Advisory Board:

• Andrew G. Biggs, of Oregon
• Kathryn Rose Lang, of Maryland
• Sharon Beth Lewis, of Oregon

It's An Idea

    From The Case For Using Subsidies For Retirement Plans To Fix Social Security by Andrew Biggs and Alicia Munnell:

The U.S. Treasury estimates that the tax preference for employer-sponsored retirement plans and IRAs reduced federal income taxes by about $185-$189 billion in 2020, equal to about 0.9 percent of gross domestic product.1 However, the best evidence suggests that the federal tax preferences do little to increase retirement saving.  ...

The [report] concludes that it makes little sense to throw more and more taxpayer money at employer plans and IRAs. In fact, the case is strong for eliminating the current tax expenditures on retirement plans, and using the increase in tax revenues to address Social Security’s long-term financing shortfall. ...

    This doesn't appeal to me. It's very unlikely to pass. There aren't specific tax revenues involved, just a reduction in tax preferences. I'd be more in favor of dedicating revenues from the estate tax, excise taxes and tariffs to Social Security but I doubt that would be enough to matter much. It's becoming more and more obvious to me that the only solution to the long term funding shortfall is an infusion of general tax revenues. The things that people discuss, raising full retirement age and lifting the cap on wages covered by the FICA tax, even together, aren't nearly enough to solve the long term funding problem.

Biggs And Lewis Renominated

     The President has renominated Andrew Biggs and Sharon Beth Lewis to serve on the Social Security Advisory Board (SSAB). Biggs is only renominated because the President essentially has to nominate him. Certainly, he would not be nominated otherwise. As a Social Security employee -- a Social Security employee! -- he campaigned with then President George W. Bush for the partial privatization of Social Security. It's understood that Social Security Commissioners don't do this sort of thing. It's way beyond the pale for underlings. What Biggs did was quite a few years ago but it's not been forgotten. Remember, though, that the SSAB has only a limited role. Biggs on the SSAB doesn't move us one inch closer to privatizing Social Security.

Biggs Nomination

     The President has nominated Andrew Biggs to become a member of the Social Security Advisory Board.

    During the George W. Bush Administration, Biggs was Deputy Commissioner of Social Security -- only in an acting capacity if I remember correctly. Biggs openly plotted partial privatization of Social Security and campaigned for it with George W. Bush while serving as Deputy Commissioner. That was beyond the pale in my opinion. Completely inappropriate. As I recall saying at the time, Biggs was put in a position where he was supposed to be making the trains run on time but what he actually wanted to do was to blow up the locomotives and tear up the tracks.

    As you may recall, George W. Bush's campaign to partially privatize Social Security went nowhere because it was a disaster politically. I have no idea why Republicans would want a man who is partially responsible for that fiasco in a position of honor.

    Why is President Biden nominating Biggs? I don't know but there must be some deal. He certainly wouldn't be nominated by this White House based on his merits. I have no idea what the White House is getting in return.

Saul Vows To Hang On

     From the Baltimore Sun:

Three months after Donald Trump left office, unions and congressional Democrats say the man he left in charge of the vast Social Security system is making it harder for millions of Americans to get disability benefits and is undermining federal workers’ rights.

Andrew Saul, 74, one of the few remaining holdovers from the Republican president’s administration, told The Baltimore Sun through a spokesman that he intends to lead the Baltimore County-based Social Security Administration until his term ends in January 2025. ...

Saul’s defenders say he has been the subject of unwarranted criticism that is politically motivated.

“I just don’t see any case” for firing Saul for neglect or malfeasance, said Andrew Biggs, a resident scholar at the conservative American Enterprise Institute. ...

     You may recall that when Andrew Biggs was a Social Security employee he thought it was OK for him to go around the country with then President George W. Bush campaigning for the partial privatization of Social Security.

Arguments On Increasing Social Security Benefits

     Congressman John Larson, the Chairman of the House Social Security Subcommittee, is pushing the Social Security 2100 Act which would increase benefits by about 2%, change the Cost of Living Adjustment (COLA) formula to make it more favorable to those receiving benefits, set a minimum benefit level and cut taxes for some low income people. It would also increase taxes for most workers, particularly for those with wages over $400,000 a year. The net result would be to put Social Security into low term actuarial balance.

     John Biggs of the American Enterprise Institute, a right wing "think tank" has released an argument against any increase in Social Security benefits on the grounds that retirees are better off now than in the past, largely because of private pension plans. I think there's more than a little sleight of hand in his arguments on defined contribution plans. He uses the increase in defined contribution plan assets as proof that there is no "retirement crisis" even though there is no way around the fact that the increase in defined contribution plans has happened because of the decline in defined benefit plans which afford far greater retirement security than defined contribution plans. Still, he certainly marshals facts in support of the thesis that most retirees are better off today than they were in the past. I'm just not sure that's going to continue as defined benefit plans continue their decline and more workers shift into the "gig economy." I know that's not the case now for lower income workers.

Andrew Biggs Is Still Annoying -- And Wrong

     When George W. Bush campaigned for the partial privatization of Social Security, Andrew Biggs, a Social Security employee, was at his side. That rankled me. I felt it was deeply inappropriate for a Social Security employee to take on such a politicized role. Bush later nominated Biggs to become Deputy Commissioner of Social Security. Senate Democrats blocked that nomination, suggesting that I wasn't the only one rankled by what Biggs did.
     After his stint at Social Security, Biggs landed a job at the American Enterprise Institute, a Koch brothers front organization.
     Biggs has a blog at the Forbes website on which he's posted a response to the Social Security discussion at the Democratic Presidential debate Tuesday night. The ideas of expanding Social Security and lifting the cap on wages covered by FICA both came up in the debate. Biggs makes the point that lifting the FICA cap wouldn't generate enough revenues to fund an increase in Social Security benefits. This is accurate but it's also rich coming from someone who campaigned for completely undermining Social Security's finances. President Bush never released a plan for partially privatizing Social Security but he was promising to keep paying benefits to everyone already drawing benefits or near retirement age, to not increase the FICA tax and yet to divert much of the FICA tax receipts to private accounts. Put all of that together and it would cost trillions of dollars. Did Biggs and Bush ever put forward a plan for paying for this? Of course not. Republicans never have to pay for their Social Security plans. Only Democrats have to pay for their plans.

     Biggs points out that raising the FICA cap wouldn't be enough to assure that no further change would have to be made anytime in the next 75 years to protect Social Security's funding. He seems to believe that means there's no point in raising the FICA cap. Right. Lifting the FICA cap would only assure program funding until 2080 so obviously that idea is worthless. In fact, if you remove the FICA cap, you could do some modest benefit increases and still assure the future of the Trust Fund well into the future. That was what the Democratic Presidential candidates were talking about.
     I think that Biggs will have to come up with some better arguments to convince the American people that it's a bad idea to raise taxes on the wealthy in order to give higher Social Security benefits to many.

If These Are Your Best Arguments, You're In Trouble

     Andrew Biggs, who was Deputy Commissioner of Social Security during part of the George W. Bush Administration, has written an article for the National Review giving reasons why the cap on wages covered by the F.I.C.A. tax that supports Social Security shouldn't be raised. Here are the arguments and my take on them:

• There's always been a cap on wages covered by F.I.C.A. So what? Full retirement age used to be 65. It's now 66 and heading to 67. Biggs would undoubtedly prefer it be raised to 70, if not 80. He's being selective about what changes he opposes. We have to change something.
• The cap is necessary so that Social Security won't be considered a "welfare" program. That's rich coming from Biggs who wants to means test Social Security. Why would increasing the wage cap make Social Security into a "welfare" program anyway? And what's wrong with programs devoted to improving the welfare of the American people?
• Raising the cap wouldn't solve the entire long term Social Security funding problem. No one proposal will. Biggs has no one solution for Social Security's long term funding problems. He favors a series of massive benefits cuts. Why does one proposal have to solve the entire problem?
• We ought to solve the problem of rising health care costs before we do anything about Social Security. What does that have to do with the F.I.C.A. cap? Anyway, Biggs undoubtedly opposes the Affordable Care Act which is actually doing something about health care costs.
• Most other countries have wage caps on the their Social Security taxes. Why is that important? I thought the right was big on American exceptionalism.
• It's a big tax increase. It will make U.S. tax rates higher than those is Scandinavia. It's a tax increase only for the wealthiest Americans, a group that has fared extremely well in recent years while the rest of the country has fared poorly. The wealthy can afford it. On Scandinavian tax rates, Biggs is citing income tax rates that don't include Social Security charges. Here's what I'm finding as the maximum tax rates in Scandinavia: Denmark 61%, Finland 61.96%, Norway 47.2%, Sweden 57%. I think we'd be well below those rates even if we remove the wage cap. Besides, Scandinavians have a high standard of living and much better social security than the U.S.. Why should we fear that?
• When we fix Medicare and Medicaid tax rates are going to go up. Glad to hear that Biggs supports higher taxes to support Medicare and Medicaid but how is that relevant to this discussion?
• An economic study shows that a rise in the wage cap won't generate as much revenue as predicted. That's not exactly what the study cited by Biggs says. In fact, the study makes no bold prediction about the effect of an increase in the wage cap. It suggests more study which is always the way with these studies. If anything, the study suggests the opposite of what Biggs is representing it to say. Anyway, here's what the report actually said so you can judge for yourself, if you can stay awake as you read it: "We have eight main findings. First, the workers who would experience an increase in marginal tax rates from an increase in the taxable maximum are mostly married males – a group thought to have relatively small elasticities. There are, however, a significant number of self-employed workers among this population which could suggest somewhat higher responsiveness. Second, the recent empirical evidence showing large behavioral responses to taxation is largely irrelevant to this question as it mostly focuses on broader concepts of income for which elasticities are likely to be higher and on demographic groups such as wives of high earners that are not particularly common in the subset of the population whose incentives would be altered by an increase in the taxable maximum. In the few studies that have also focused on narrower concepts, elasticities fall dramatically when the tax base is something closer to earnings. Third, the earnings distribution of workers around the current taxable maximum is inconsistent with a model in which people are highly responsive to the payroll tax rate. Fourth, this is true even for the self-employed, a group that is often thought to have significant control over its reported earnings. Fifth, in panel data on high-earnings married men, we see a tremendous increase in earnings over the 1980s and 1990s, but no break in the trend around the TRA86 or OBRA93 tax acts. Sixth, the rise in earnings for the high earners is so much greater than for other income groups that it seems completely implausible that the other income groups could serve as reasonable control groups for the high earners. Seventh, the overall weight of our evidence does not support the Eissa (1995) finding of a large behavioral response to taxation by wives of high earners. Eighth, we think there remains considerable uncertainty about the relevant elasticities for high earners – uncertainty that will be very difficult to eliminate without much larger samples of such taxpayers than are available outside the U.S. Treasury. Our policy simulations suggest that with an earnings elasticity of 0.5, lost income tax revenue and increased deadweight loss would swamp any benefits from the increase in payroll tax revenue. In contrast, with an elasticity of 0.2, the ratio of the gain in OASDI revenue to lost income tax revenue and deadweight loss would be much greater. Thus, knowing whether the elasticity is closer to 0.2 (or below) versus 0.5 is critical to deciding on whether this would be a wise policy."

Advisory Council For "McCrery-Pomeroy SSDI Initiative"

     I've already written about my concern that the "McCrery-Pomeroy SSDI Initiative" which is supposedly going to come up with bipartisan solutions for the fact that the Social Security Disability Trust Fund will probably run out of money in the not too distant future, is sponsored by The Committee for a Responsible Federal Budget (CRFB), which has a long association with Pete Peterson's crusade against Social Security.
     I've now seen a list of individuals who have agreed to be part of the Advisory Council for this project. Here's the list:

•  Michael Astrue
•  Lawrence Atkins
•  Andrew G. Biggs
•  Barbara Butz
•  Mary C. Daly
•  Marty Ford
•  Steve Goss
•  Ron Haskins
•  Andrew Houtenville
•  Andrew Imparato
•  Neil Jacobson
•  Stanford Ross
•  C. Eugene Steuerle
•  William Taylor
•  Rebecca Vallas

      You can read the biographical blurbs on the Advisory Council members. No person, including members of this group, can be accurately described in the shorthand way that I'm about to, so I won't describe them individually, but I still think it's useful to break these Advisory Council members into several rough groups. You could certainly argue with my groupings. Here's a rough guide to how I think these Council members break down based upon past positions held or views publicly expressed:

• Very favorable to Social Security Disability claimants -- 3
• Moderately favorable to Social Security Disability claimants -- 2
• Neutral or unknown -- 4
• Moderately hostile to Social Security Disability claimants -- 2
• Very hostile to Social Security Disability claimants -- 3
• Mostly interested in Social Security spending as much money as possible on rehabilitation -- 2

     In a sense this is a balanced group. Some of the members of this Advisory Council have actually met Social Security disability claimants. I wish more had. The main thing about this group is that a unanimous recommendation is pretty much out of the question. There's just too big a spread of viewpoints. Bipartisanship in Washington? Get real.
     I hope this group wastes lots of Pete Peterson's money on something that may not matter once it becomes clear that the Disability Trust Fund is going to last at least into 2017. Please, hold public hearings at expensive hotels all over the country. Travel to other countries to see what's happening abroad. Demand huge per diems. Commission lots of expensive studies. Pete Peterson can afford it.
     For those Advisory Council members who care about such things, remember that when I and others talk about Social Security disability claimants who have been denied becoming homeless or committing suicide, we've not making it up. It happens all the time. These are not abstract issues. Real people's lives are affected in horrific ways when Social Security disability claims are denied.
     From where I stand, it would be far better to let the Disability Trust Fund run out of money and have Social Security disability benefits cut by a certain percentage than to agree to something that reduces the number of people granted Social Security disability benefits. Lowered benefits would hurt but SSI puts a floor under the income of disability recipients. Medicare and/or Medicaid wouldn't be cut. Reduced benefits wouldn't last. A change in the definition of disability would be permanent

Criticism Of Andrew Biggs' Testimony

     Michael Hiltzik wasn't favorably impressed by Andrew Biggs' testimony before the Senate Finance Committee yesterday.

I Agree With Andrew Biggs

     Andrew Biggs, former Deputy Commissioner of Social Security and long time warrior in the (losing) battle to privatize Social Security, has a surprising blog post. He opposes chained CPI, describing it as "bad policy that both liberals and conservatives may come to regret." His post is brief and directs readers to a longer piece he wrote for the National Review but the link he gives is bad. Probably, it's just a technical glitch but an argument against chained CPI probably isn't the sort of thing that the editors at National Review would enjoy publishing.
     Biggs views may be evolving. About a year ago, he wrote an article suggesting that privatizing Social Security might be unconstitutional.

What Is This?

     While a Social Security employee, Andrew Biggs campaigned with then President George W. Bush for partial Social Security privatization. In case you don't know, that's definitely not the done thing, even for Social Security Commissioners. In fact, especially for Social Security Commissioner and other high ranking officials as Biggs was at the time.The Social Security Administration tries hard to stay out of any long term financing issues apart from having the agency's Office of Chief Actuary provide technical support to everyone involved in the debate. Bush later nominated Biggs to become Deputy Commissioner of Social Security. He could not get confirmation so Bush gave Biggs a recess appointment to the position. After Bush left office and Biggs' term as Deputy Commissioner ended, Biggs went to work for the American Enterprise Institute, a right wing think tank.
     Biggs has now authored a piece for Our Generation on Social Security disability insurance. Our Generation describes itself as "membership-based nonprofit, nonpartisan advocacy organization founded in 2009 to research, educate and promote long-term free market solutions to today’s public policy concerns." The piece that Biggs wrote is only nine pages and was certainly nothing researched in depth or, at least, any research is not reflected in the piece. Our Generation makes a point of noting that the piece was edited by its executive director. In the piece Biggs recommends:

• Tightening eligibility requirements, although he does not say how;
• Doing continuing disability reviews. These are already being done but at a low level due to lack of administrative funding. Biggs doesn't explain how he would want these done differently or how he would pay for anything more than what is being done now.
• Include incentives for employers to keep individuals on the job such as "experience rating" for the disability portion of the F.I.C.A. tax or requiring employers to carry short term disability benefits to help workers deal with the waiting period for Social Security disability benefits. How the latter would help escapes me. Neither would be a bit acceptable to the people paying Biggs' salary.

Another Pointless Attack On Social Security

     From the Associated Press:

People retiring today are part of the first generation of workers who have paid more in Social Security taxes during their careers than they will receive in benefits after they retire. It's a historic shift that will only get worse for future retirees, according to an analysis by The Associated Press. ...

"For the early generations, it was an incredibly good deal," said Andrew Biggs, a former deputy Social Security commissioner who is now a scholar at the American Enterprise Institute. "The government gave you free money and getting free money is popular."

If you retired in 1960, you could expect to get back seven times more in benefits than you paid in Social Security taxes, and more if you were a low-income worker, as long you made it to age 78 for men and 81 for women. ...

A married couple retiring last year after both spouses earned average lifetime wages paid about $598,000 in Social Security taxes during their careers. They can expect to collect about $556,000 in benefits, if the man lives to 82 and the woman lives to 85, according to a 2011 study by the Urban Institute, a Washington think tank.

     This "study" is misleading since it ignores the value of Social Security disability, survivors and dependent benefits. A person who remains healthy to retirement age and has a spouse who has earned wages at about the same rate never uses any of these benefits but a person who buys homeowners insurance receives nothing tangible from the insurance until they suffer some calamity such as their home burning down. That does not mean that homeowners insurance is useless. The study stacks the deck against Social Security by assuming that the married couple had similar incomes. If one spouse had a significantly higher income there would be dependent benefits which would change the equation dramatically. The equation would also be changed dramatically if the couple had a child who became disabled before age 22 or if they had to adopt one of their grandchildren. By the way, I can't find this study at the Urban Institute website.

     The best answer to this attack is to point out that the public just isn't buying it. See this survey issued in July 2012 by the Hofstra University  Center for Suburban Studies:

     So continue the attacks on Social Security, Republicans.The attacks play well on Fox News, so they must be good politics, right?

Biggs Taking A Bizarre Turn

Andrew Biggs, the former Social Security Deputy Commissioner during the Bush Administration who may be the biggest promoter of Social Security privatization, now thinks that privatizing Social Security just might be unconstitutional.

CBS Scare Tactics

From the Columbia Journalism Review:

If there were prizes given for the most one-sided, misleading story about Social Security this year, a segment aired on the CBS Evening News before Thanksgiving would make a great candidate.

In a breathless recitation of the horrors befalling the system, CBS painted a grim picture of Social Security, using scare words and phrases like “the system is headed for a crisis,” “the government is confronting a painful reality,” and “there’s no debating that we’re running out of time.” How’s that for opinion journalism on a news show?

Perhaps to substantiate the segment’s conclusions, CBS piled on quotes from those people in favor of cutting Social Security benefits and raising the retirement age. Here was Andrew Biggs, currently a resident scholar at the conservative American Enterprise Institute, saying: “Americans are living longer, but they’re retiring earlier and saving less. Something in that equation has to give.” Biggs was a deputy Social Security commissioner in the Bush II administration and a Social Security analyst at the Cato Institute, which has been a leader in the efforts to privatize the system. CBS did not mention those credentials.

Exactly

Andrew Biggs, writing on his blog, gives three reasons why liberals are not interested at the moment in addressing Social Security's long term financing issues. I think his third reason is the only one that really matters:

Time is on their side: If we knew the share of the Social Security deficit that must be filled with higher taxes, it would make sense to apply those tax increases immediately. Spreading a tax increase (or benefit cut) over as many people as possible lowers the necessary increase on each person. But delaying reform puts more people into the system, after which point their benefits are effectively sacrosanct, and tilts the political calculus toward tax increases and away from benefit cuts. It’s like the conservative “starve the beast” strategy in reverse.

Actually, though, the benefits are already sacrosanct. Right wingers just don't accept this well-established fact.

One Reaction To The News That There Will Be No COLA This Year

Word is beginning to filter out that since there has been no increase in the cost of living that there will be no cost of living adjustment (COLA) for Social Security benefits this year. The Associated Press quotes Andrew Biggs, former Deputy Commissioner at Social Security who is now in residence at a right wing think tank, as saying that "If you're the ruling party, this is not the sort of thing you want to have happening two weeks before an election."

Now You Tell Us

From Andrew Biggs, writing in the National Review, a conservative magazine:

Personal accounts [to add onto or substitute for Social Security] are a valid choice, and one I’ve supported in the past and continue to support. But accounts aren’t exclusive to tax increases or benefit cuts; they don’t, as I’ll explain, reduce the need for these other choices. One problem for the Bush administration’s reform drive in 2005 was that many congressional Republicans had bought into the idea that accounts reduce or eliminate the need for tax increases or benefit cuts. Finding out they don’t may have taken some wind out of their sails. ...

[O]nce transition costs are accounted for, the total rate of return on a personal-accounts-based program would be about the same as the current system. ...

Also unchanged would be the program’s financing shortfall, even assuming that account holders gave up a share of their traditional benefits. A pay-as-you-go program like Social Security is always in the hole, such that each generation honors the benefits of the preceding one while hoping their own claims will be honored by the following generation. No generation can break away from this cycle without either ponying up extra cash (tax increases) or defaulting on its promises (benefit cuts). Neither solution is costless. ...

The only way personal accounts could fix Social Security on their own is if accountholders gave up traditional benefits far in excess of the taxes they put into accounts. For instance, individuals might put half their taxes into an account but give up all their traditional benefits. This would fix Social Security, but it’s not clear that most (or even many) workers would take the deal. You might come out ahead if you got solid investment returns, but you could also fall far short. This is just asking accounts to do more than they reasonably can.

As you may recall, Biggs was sent by the Bush Administration to work at Social Security to promote privatization of Social Security. Unlike the Commissioner of Social Security at the time, and all other Social Security employees, Biggs actively campaigned with President Bush for partial privatization of Social Security. He now works at the Cato Institute, a right wing "think tank." The Koch brothers were instrumental in creating Cato and still give it heavy support. With reasonable talk like this, you have to wonder how long Biggs will be able to stay at Cato.

Wonder How This Story Got In The Times

From the New York Times:

Social Security is paying roughly $50 million a year too much to people who collect state pensions but fail to declare that income, according to the system’s inspector general.

The overpayments go to retirees who have held state jobs and also worked in the private sector — teachers who worked on their summer breaks, for instance, or police officers who retired young enough to form their own companies.

If the workers do not declare their state pension income, they appear to be low lifetime earners in the Social Security system. ...

“This is somebody else’s money they’re playing with,” said Andrew G. Biggs, a former deputy commissioner for Social Security, now an economist with the American Enterprise Institute. “The people who are in the Social Security system who don’t get good state pensions, this is taking money away from them.”

It is odd that I do not remember this report from Social Security's Office of Inspector General nor can I find it online. Was this leaked to Biggs before it was officially released? While not insignificant, in Social Security terms, this is small potatoes.