Goodbye, Social Security?

Firedoglake (FDL) has an excellent piece on the danger posed to Social Security by the "temporary" reduction in FICA. His conclusion is that this "will lead inexorably to killing Social Security" because Congress will never allow FICA to go back up. This doubles the 75 year projected shortfall in the Social Security trust funds which will lead to pressure to cut benefits, probably by means-testing benefits. According to FDL we can say "Good bye, Social Security. You did a great job for 75 years. Apparently, the President is ready to pull the plug on you, if not on Grandma herself."

Update: It will be interesting to see how major advocacy organizations react to this. I will be paying attention.

Further update: I should note that the FDL piece was by Nancy Altman, co-director of Social Security Works so we have heard from one important group. As far as I can tell, the others are silent so far. AARP, I'm looking at you. National Committee to Preserve Social Security and Medicare, I'm looking at you.

Medicare Prescription Drug Regulations

From today's Federal Register:

We are adding a new subpart to our regulations, which contains the rules we will apply to determine the income-related monthly adjustment amount for Medicare prescription drug coverage premiums. This new subpart implements changes made to the Social Security Act (Act) by the Affordable Care Act. ... These rules describe the new subpart; what information we will use to determine whether you will pay an income-related monthly adjustment amount and the amount of the adjustment when applicable; when we will consider a major life-changing event that results in a significant reduction in your modified adjusted gross income; and how you can appeal our determination about your income-related monthly adjustment amount. These rules will allow us to implement the provisions of the Affordable Care Act on time that relate to the income-related monthly adjustment amount for Medicare prescription drug coverage premiums, when they go into effect on January 1, 2011.

Regulations Tomorrow On Application Withdrawal And Suspension

Social Security will publish final regulations in the Federal Register tomorrow to:

... establish a 12-month time limit for the withdrawal of old-age benefits applications, allow one withdrawal per lifetime, and limit the voluntary suspension of benefits for purposes of receiving delayed retirement credits to months for which you have not received a payment. We are making these changes to revise current policies that have the potential for misuse.

This is being done because "Recent media articles have promoted the use of our application withdrawal process as a means for retired beneficiaries to increase their benefits or acquire an “interest-free loan.” Social Security's opinion is that:

This "free loan" is not free. It denies the Trust Fund and the Federal Government the use of these monies and the potential returns on the use of those funds. Moreover, the processing of withdrawal applications uses resources that we could use to serve others. Our nation faces significant challenges resulting from the potential number of future retirees. Current market and economic conditions have exacerbated these challenges

The regulations address benefit suspensions:

We currently allow beneficiaries to suspend past, current, and future old-age benefit payments. Beneficiaries who suspend past payments must repay benefits received during the period of suspension. This policy also has the potential for misuse. Our current policy allows workers to apply for old-age benefits prior to FRA [Full Retirement Age], begin receiving reduced benefits, suspend the benefits retroactively, repay benefits, and earn DRCs f[Delayed Retirement Credits] or the period of suspension. Workers earn DRCs for each month retirement is delayed past FRA up to age 70. As a result, workers who retroactively suspend old-age benefits to earn DRCs receive a higher monthly benefit amount. Because beneficiaries could use retroactive voluntary suspension as a vehicle to repay benefits and then reapply for higher benefits at a later age, we are revising this policy.

Social Security is dispensing with the normal regulatory process to adopt these regulations without allowing a comment period. That is unusual, perhaps unprecedented, for something of this importance.

Don't Delay

From TriCities.com, the website of the Bristol Herald Courier and WJHL, which are located in the Southwestern corner of Virginia, where it abuts the Northeastern corner of Tennessee:

The Johnson City Office of the Social Security Administration says that since 2007, the number of folks filing for disability locally has risen by thirty four and a half percent.

According to Attorney Tony Seaton, "To give Social Security credit, they make that process difficult on purpose, because otherwise everybody with a sore back would want to be on disability. Its kind of a complicated bureaucratic process., and it becomes very frustrating for a lot of people."

If you are thinking of filing a Social Security disability claim, before going to the Social Security Administration, Lawyer Tony Seaton offers one piece of advice… make sure your medical history records are in order.

Seaton's advice is terrible. Disabled people need no encouragement to delay filing Social Security claims. Most delay for months and many delay for years. They certainly do not need some vague instruction to "make sure your medical history records are in order." What does that mean anyway?

The best advice for disabled people is to get on with filing their Social Security disability claims. Do not worry about getting the advice of your doctor or getting some test or surgery. Do not worry about gathering medical records. Put aside any fantasies that recovery is just around the corner. Just get on with filing the claim! It almost never happens that a claim is denied because a claimant forgot to write down something on a claim form. That is not the problem. The process takes many months, often years. Delaying filing a claim is a terrible mistake. If the claimant is uncomfortable with filing the claim on their own, they should hire a lawyer before filing the claim. Maybe they should hire a lawyer before filing the claim in any case, but they should never delay filing the claim.

FICA Tax To Drop For One Year

From the New York Times:

President Obama announced a tentative deal with Congressional Republicans on Monday to extend the Bush-era tax cuts at all income levels for two years as part of a package that would also keep benefits flowing to the long-term unemployed, cut payroll taxes for all workers for a year and take other steps to bolster the economy. ...

It would reduce the 6.2 percent Social Security payroll tax on all wage earners by two percentage points for one year ...

I have a couple of concerns:

• If the reduced payments into the trust funds are not made up in some fashion, Social Security's long term financing problem will be made significantly worse. It will be fine in a sense if they are made up out of general revenues -- or more accurately, out of Treasury borrowing -- but this puts us possible on a path towards the end of a dedicated financing mechanism for Social Security, which puts Social Security at more risk. Of course, there are some on the left who may favor this because FICA is regressive but there are even more on the right who would favor this since it would make it easier for them to categorize Social Security as "welfare."
  
• This recession is not going to end in the next year. How do you allow the FICA tax to go up dramatically a year from now? If you do not let it go back up, Social Security has an impossible long term financing problem without applying general revenues which leads us back to my first point.
  

Update: The Washington Post says that the FICA reductions will be made up to the Social Security trust funds out of general revenue.

Colvin Nomination Revived

The Senate Finance Committee has scheduled a hearing for Thursday to consider the nomination of Carolyn Colvin to become Deputy Commissioner of Social Security. The nomination had been blocked for unknown reasons for well over a year.

A Class Act

From Paul Krugman's blog:

...[C]utting Social Security is one of those things you’re for if you’re a Very Serious Person....

But why Social Security? There was a telling moment in 2004, during one of the presidential campaign debates. Tim Russert, the moderator, asked eight or nine questions about Social Security, trying to put the candidates on the spot, while asking not once about Medicare, which serious people – as opposed to Serious People – know is the real heart of the story. Why the focus on Social Security? ...

The answer, I suspect, has to do with class.

When medical expenses are big, they’re big; even the very affluent are grateful when Medicare pays the bills for their mother-in-laws bypass or dialysis. The importance of Medicare, in short, is obvious to all but the very rich.

Social Security, by contrast, is something that matters enormously to the bottom half of the income distribution, but no so much to people in the 250K-plus club. ...

So going after Social Security is a way to seem tough and serious — but entirely at the expense of people you don’t know.

E-Mail Delivery Of Social Security News Ends

While Social Security News is very much up and running, I am permanently shutting down e-mail delivery of Social Security News. Changes at Blogger have made it impractical to continue e-mail delivery.

Please come to this website to read Social Security News.

Errors In SSI Attorney Fee Payments

From a recent report by Social Security's Office of Inspector General (OIG):

The objective of our audit was to determine whether the Social Security Administration (SSA) accurately paid authorized fees to attorneys and non-attorney representatives (referred to collectively as representatives) for Title XVI claims, through its One-Time Payment system. ...

We reviewed 250 randomly selected Title XVI claimant representative fee payments issued through SSA’s One-Time Payment system during the 2-year period July 1, 2007 to June 30, 2009. ...

In total, 95 (38 percent) of the 250 randomly sampled Title XVI claimant representative fees had payment errors totaling $68,532. Projecting our sample results to the population, we estimate that approximately 10,306 fees had about $7.4 million in payment errors during the period July 1, 2007 to June 30, 2009. ...

Of the 82 overpayment errors, 44 (54 percent) occurred because SSA employees did not properly offset the Title II benefits. Additional overpayments occurred when SSA employees did not always consider the Title II attorney fee amount previously paid, resulting in combined Title XVI and II fees that exceeded the applicable fee limit.

I am not seeing anything like this sort of error rate in my fees. Maybe the local field offices I am dealing with are doing a much better job than is the case nationally.

Operations Building Renamed For Robert Ball

A press release from Michael Astrue, Commissioner of Social Security:

I am extremely pleased that the United States Senate has joined the House in passing legislation to name the Operations Building at Social Security headquarters in Baltimore as the “Robert M. Ball Federal Building.” Bob Ball was the longest-serving Commissioner of Social Security, and his dedication to the agency and its programs lasted until his death in 2008.

I want to thank Maryland’s two Senators, Barbara Mikulski and Benjamin Cardin, for their leadership on this issue. I also thank the Chair of the Committee on Environment and Public Works, Senator Barbara Boxer, and Ranking Member, Senator James Inhofe, who cleared the bill for Senate passage. I look forward to the President’s signing of the bill.