Achieving Social Security Equity For Black And Hispanic Americans

     From How Can Changes to Social Security Improve Benefits for Black and Hispanic Beneficiaries? by Richard W. Johnson and Karen E. Smith:

• ... Racial and ethnic differences in annual and lifetime Social Security benefits are substantial. We project that average lifetime benefits received by adults born between 2001 and 2010 are 19 percent less for Black beneficiaries than white beneficiaries and 14 percent less for Hispanic beneficiaries than white beneficiaries. Black and Hispanic beneficiaries ages 62 and older in 2080 are projected to be about 10 percentage points more likely to receive limited incomes in 2080 than white beneficiaries. 
• Various benefit enhancements, including creating caregiver credits, making the benefit formula more progressive, and adding a new minimum benefit to Social Security, would disproportionately help Black and Hispanic beneficiaries. 
• However, these benefit enhancements would only modestly narrow racial and ethnic disparities in Social Security benefits. Adding a new minimum benefit tied to years of covered employment would have a particularly modest effect, because relatively few beneficiaries receiving limited benefits complete long careers. 

The policy implications of the findings are: 

• The effectiveness of benefit enhancements depends crucially on how those adjustments are structured. Policy details, including eligibility for the enhanced benefit and the presence of any benefit caps, shape how much low-income beneficiaries would receive and how well targeted the adjustments are.
• Achieving equity in Social Security benefits for Black and Hispanic adults would likely require substantial progress toward equality in labor market outcomes. ...
  

What’s Going On With Social Security’s Appropriations?

      Have you wondered about Social Security’s Fiscal Year 2024 appropriations situation? Wanted nonpartisan information?  The Library of Congress’s Congressional Information has you covered in its recently released report Social Security Administration (SSA): FY2024 Annual Limitation on Administrative Expenses (LAE) Appropriation: In Brief. They explain why it’s technically not an appropriation but an LAE. What the report doesn’t say is that the situation for Social Security and almost all other federal agencies is a mess because the Republican majority in the House of Representatives is in complete disarray.

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?

How Are The Trust Funds Invested?

    

     Have you ever wondered about how the Social Security trust funds are invested? Probably you know they're invested in U.S. government bonds but you wonder about the mechanics. Here are all your answers in a report by the Congressional Research Service. 

     By the way, if you don't like the idea of the Trust Funds being invested in government bonds, how would you have them invested? Are you comfortable with the U.S. government owning trillions of dollars in corporate stocks and bonds? Isn't that more than a little socialistic? How would the government decide what to buy and sell? How would it vote on elections of corporate boards of directors? What happens when the markets go down in value?