Video From The White House Social Security Anniversary Event

There Was A Celebration Of Social Security's 89th Birthday At The White House

 Click on each image to view full size.

On This Day In 1935 FDR Signed The Legislation Creating Social Security In The United States

 

    Notice the only woman in the picture. That's Frances Perkins, who may deserve more credit for the bill's passage than anyone.

Some Thoughts On The New Commissioner

     I hope that the new Commissioner, Martin O'Malley, doesn't suffer from the illusion that his management skills will rescue the Social Security Administration. I'm not knocking his management skills which may be excellent. It's just that for literally decades Social Security's leadership labored under the belief that good management could overcome appropriations that declined in real dollars. They tried ever more desperately as service declined. The peak of this management hubris was former Commissioner Barnhart's ill-fated "plan" to overhaul the agency's hearing functions and make everything vastly better without additional funding. It sold well to Congressional committees who were happy to hear Barnhart promise to pull a rabbit out of a hat but her "plan" wasn't much of a plan to begin with -- more of a plan to develop a plan. Such as the "plan" was, it made no sense. All she was able to accomplish was to delay the complete collapse of her "plan" until after she left office. Let's not repeat that disaster.

    Please, Commissioner O'Malley, don't fall into the trap of believing that your management abilities will make a world of difference. They won't. 

    However, there is something O'Malley can do that would help, and that's lobbying. I have read the book written by the first head of what is today the Social Security Administration, Arthur Altmeyer, on The Formative Years Of Social Security. I don't recommend the book. I was expecting accounts of how a huge agency was built from the ground up, creating systems that to some extent must still exist. How did they make sure everyone got a Social Security number? How did they handle data processing at a time when the finest data processing equipment available (and there was some) was at the caveman level? How did they hire all the people needed? How did they record all the wages? How did they compute benefits? There is almost none of that in the book. Instead, the book is mostly a dry account of how Altmeyer lobbied Congress for legislation needed to complete the Social Security Act with additional benefits. Altmeyer was quite successful at this, although not successful enough to get disability benefits, which were added after he left office. Altmeyer must have mostly delegated actual management of the new agency to others while he did what was most needed and what he was best at. 

    There is no law requiring that a Social Security Commisisoner spend his or her time tied down with day to day operations. Let others who know the agency better do that. O'Malley should spend most of his time lobbying within the Administration and with Congress for better operational funding. That's where he's needed and where his skills can make a difference.

Happy 88th Birthday, Social Security

 

And you made it despite constant Republican warnings that you were about to collapse.

It's Complicated

     The question is often asked: "Why is Social Security even discussed in terms of the federal budget? Benefits are paid out of the trust funds, not general revenues." The answer to this question requires knowledge of some complicated history. Here it is from Social Security office agency history:

... From the beginning of the Social Security program its transactions were reported by the administration as a separate function in the budget. This is sometimes described in present usage by saying that the Social Security program was "off-budget." This was the budget representation of the Social Security program from its creation in 1935 until 1968. ...

In early 1968 President Lyndon Johnson made a change in the budget presentation by including Social Security and all other trust funds in a"unified budget." This is likewise sometimes described by saying that Social Security was placed "on-budget."

This 1968 change grew out of the recommendations of a presidential commission appointed by President Johnson in 1967, and known as the President's Commission on Budget Concepts. The concern of this Commission was not specifically with the Social Security Trust Funds, but rather it was an effort to rationalize what the Commission viewed as a confusing budget presentation. ...

In the 1983 Social Security Amendments a provision was included mandating that Social Security be taken "off-budget" starting in FY 1993. This was a recommendation from the National Commission on Social Security Reform (aka the Greenspan Commission). The Commission's report argued: "The National Commission believes that changes in the Social Security program should be made only for programmatic reasons, and not for purposes of balancing the budget. Those who support the removal of the operations of the trust funds from the budget believe that this policy of making changes only for programmatic reasons would be more likely to be carried out if the Social Security program were not in the unified budget." ...

[I]n the Omnibus Budget Reconciliation Act (OBRA) of 1990 the law was changed to stop the use of the Trust Funds for any function in the unified budget, including calculations of the deficit. ... The BEA budget treatment of Social Security basically remains the law to the present day. Specifically, present law mandates that the two Social Security Trust Funds, and the operations of the Postal Service, are formally considered to be "off-budget" and no longer part of the unified federal budget. ...

However, those involved in budget matters often produce two sets of numbers, one without Social Security included in the budget totals and one with Social Security included. Thus, Social Security is still frequently treated as though it were part of the unified federal budget even though, technically, it no longer is. ...

    One crucial way that Social Security is treated as part of the budget is in the way that Congress handles appropriations for Social Security's administrative budget. Technically, Social Security doesn't receive an appropriation. It's called a Limitation on Administrative Expenditures (LAE). Social Security's LAE is lumped in with the Labor-HHS appropriations bill, probably because Social Security used to be part of HHS. The Labor-HHS bill is the one that's always most controversial with Republican legislators. They work hardest at keeping the Labor-HHS bill as low as possible, which hurts Social Security. The agency could be moved out of the Labor-HHS bill. Probably, a statute could even be passed allowing administrative expenditures as needed without a specific annual LAE but that's not going to happen since it would reduce the powers of the appropriations committees in Congress, not that those powers have been exercised to any significant extent apart from keeping the agency on a starvation diet.

A New Argument For Using General Revenues To Augment The Trust Funds

     From the Center for Retirement Research at Boston College:

... The fact that in 2033 Social Security would be able to pay only 77 percent of scheduled benefits should focus our collective minds.  ... [I]f the cost of currently scheduled benefits simply exceeds what today’s workers are paying into the system, the traditional proposals to reduce benefits or raise payroll taxes would be most relevant.  

However, the cause of the shortfall lies elsewhere.  Specifically, the program’s “pay-as-you-go” financing – with the exception of the recent build-up and spend-down of the current modest trust fund – makes the program look expensive.  This financing approach is the result of a policy decision in the late 1930s to pay benefits far in excess of contributions for the early cohorts of workers.  The decision essentially gave away the trust fund that would have accumulated and, importantly, gave away the interest on those contributions.  The “Missing Trust Fund” provides a strong justification for an infusion of general revenues into the program.  ...

Nothing Has Changed

 

It’s Been A Few Years

 

Happy 87th Birthday, Social Security!

 

    The woman in the photo is Frances Perkins, who may deserve the most credit for the creation of Social Security.  I've always thought that Perkins was looking into the future when this photo was taken.

Black History In Social Security's Early Days

   

The "Black Cabinet"

   From Black Past (emphasis added):

The Black Cabinet was an informal advisory group of African American civil servants who lobbied for African Americans to receive equal access to federal benefits and employment and job training programs associated with President Franklin Roosevelt’s New Deal. Often promoting programs closely aligned with the demands of working-class Blacks, they encouraged First Lady Eleanor Roosevelt and white liberals to press FDR on institutionalizing support for racial justice within his New Deal administration. ...

The leaders included Mary McLeod Bethune, founder of the National Council of Negro Women, economist Robert C. Weaver in the Department of the Interior; educator Ambrose Caliver in the Works Projects Administration (WPA) and the Office of Education; lawyer William Hastie in the Department of the Interior; former National Urban League Executive Director Eugene K. Jones in the Department of Commerce; social worker Lawrence W. Oxley in the Department of Labor; and sociologist Ira De A. Reid in the Social Security Administration. ...

Officially this group called itself the Federal Council on Negro Affairs, but it was popularly known as FDR’s “Black Cabinet.” Its central leadership usually met every Friday for group updates and planning sessions...

Is OASIS Still Around?

 

    Social Security used to publish an employee magazine called OASIS. Is OASIS still being published?

     Extra points if you know why it was/is named OASIS.

Note That It Was An IRS Form In 1950

 

AARP Concerned About Idea Of SSA Administering Paid Leave Plan

     From the AARP:

...  Lawmakers are considering a paid leave benefit that is funded by taxpayers.  Such paid leave benefits would be administered through an existing federal agency.  Currently, the Social Security Administration is being considered to manage the paid leave benefit.

AARP sought to understand the views of voters 50-plus on the topic.  While there is broad support for such a program, older voters are concerned that administering this benefit through the SSA would negatively impact the administration of Social Security benefits to retirees. ...

     This is the first I've heard that Social Security might be involved in administering a paid leave plan. If that's to happen, the agency certainly needs a lot more resources. It would be a throwback to the 1960s when Social Security was running Medicare and to the 1930s and early 1940s when Social Security was running a number of other programs. Social Security's administrative funding was vastly better in those days.

Happy 86th Birthday, Social Security!

 

Social Security’s First Home

 

Originally built for Coca Cola, the Candler Building in Baltimore was Social Security’s  first home

Why I'm Concerned About How Social Security Spends Increased Appropriations

      In an earlier post I mentioned my fear that Andrew Saul would attempt to spend the increased appropriations likely to come Social Security's way next year on contractors rather than on increasing the federal workforce in order to reduce backlogs. Let me go through two episodes from Social Security history that will explain my concern.

     When Jo Anne Barnhart became Commissioner of Social Security in November 2001 Social Security was suffering from bad backlogs at the hearing level which were a matter of great Congressional concern. The obvious thing to do about the backlogs would have been to hire additional employees. However, Barnhart, a highly skilled snake oil salesperson, put forward two plans to avoid doing anything of the sort. First, she wanted to streamline the process. If you were around for that fiasco, you'll remember that Barnhard delayed and delayed in producing a plan to streamline the process. She only came up with one as her term as Commissioner was coming to an end. Once people saw her plan, just about everyone's response was "Are you kidding me? In what way is this any better?" She made sure that none of her plan was to be implemented until after she left office. Once she was gone, her plan was quickly abandoned as unworkable. Second, Barnhart, knowing that Congress wanted to spend money on solving the backlog, proposed spending huge sums of money making a switch from paper files for disability claims to electronic files. Doing this wasn't a bad thing. However, there has to be some kind of balance. In Barnhart's case, there was no balance. She lavished money on contractors developing an electronic file system while refusing to hire additional employees to actually get the work done in the meantime. The result was that backlogs soared to previously unimaginable levels. It was taking about a year to get a hearing when Barnhart took office, which was already way too long. By the time she left office it was up to insane levels -- about two years on average and worse in some areas of the country! Even after the electronic files came into effect, there was never any proof that they improved productivity, even though I'm sure that Social Security would have loudly trumpeted that proof had it existed.

     At least, Barnhart's spending on electronic files had long term benefit even if done in a way that caused disaster for six or seven years. Michael Astrue was responsible for a plan that spent a lot of money on contractors but which produced little if any long term benefit for Social Security. The Social Security Administration is heavily dependent on computers. By the time Astrue took office, Social Security's National Computer Center building, where the heavy duty computing was done, was antiquated. Social Security also lacked any offsite backup in case of disaster. Astrue proposed and got Congress to fund not one but two hugely expensive computer centers, with the second one near me, somewhere near Durham (the address is apparently a secret, not that I have any interest in visiting it), as a backup. These may seem like necessary expenses but have you heard of cloud computing? By the time Social Security was constructing these big, expensive computer centers (around a billion dollars if I remember correctly), other government agencies were rapidly dumping their computers centers in favor of cloud computing. Don't take my word for it that Social Security's data centers were unnecessary. The guy who was in charge of building the National Computer Center became a whistleblower because he felt the project was oversold and wasteful. Another guy that Social Security hired to develop a computing strategy vision for the agency was fired because he kept saying Social Security was wasting money on the computer centers.

     It's not that I think that Barnhart wanted to create a disaster or that Astrue wanted to waste money. It's that I think they and other Republicans have two simple, unshakeable convictions:

• Federal employees = Bad
• Federal contractors = Good

     My opinion is that while federal contractors have their place, federal employees are the ones who actually get the work done. To cope with backlogs, we first need an adequate workforce at Social Security. We should spend money on federal contractors to the extent they help federal employees get the work done. Don't put the cart before the horse by insisting that additional funding has to be spent on contractors rather than on workforce.

     I fear that with additional appropriations coming Andrew Saul will be very receptive to federal contractors trying to sell him on grand, expensive schemes and very unreceptive to any plans coming up through the bureaucracy for increasing Social Security's workforce. 

     You may not have seen the actual appropriations language the Congress uses when it gives money for Social Security's operations but I have. The legislative language typically imposes few limits or restrictions on how Social Security Commissioners spend the agency's operating funds. I don't trust Andrew Saul. There's no reason Democrats in Congress should trust Andrew Saul. The next appropriations bill should force Saul to use additional funding to hire an adequate workforce. Saul should be prevented from making significant new commitments for contractors without specific outside approval.

Where It Started

 

Happy 85th Birthday!

The Guy Who Invented Social Security

Otto von Bismarck