Debt Ceiling Deal Causes No Cuts For Social Security Until At Least 2013

     Nate Silver at the New York Times makes it clear. The debt ceiling deal will cause no cuts in the operating budget of Social Security or any other domestic agency until at least fiscal year 2013. The expiration of the  Bush tax cuts at the end of 2012 may prevent any cut in Social Security's operating budget.

     There is less to this debt ceiling agreement than meets the eye. There is little chance that the "super committee" that has been set up will recommend anything. Even if it does, there is even less chance the recommendation will be adopted. The failure to adopt something will have little immediate effect. Even down the road, the effect should be limited if President Obama is re-elected. If he is not re-elected, there will be problems but there would be problems for Social Security anyway.

     By the way, I really like the idea of using the super committee as a means of forcing Republicans in Congress to vote for enormous cuts in Social Security and Medicare.

So What Just Happened?

     You have heard about the debt ceiling agreement reached yesterday. Here's what you may not have heard:

• It is far from clear that this can pass the House of Representatives. Many Republicans members oppose increasing the debt ceiling. It will take Democratic votes but most Democrats in the House oppose the agreement. However, Wall Street appears to believe that this will pass since the market is up this morning. 
• If the bill does not pass, we are in default. Probably, the August 3 Social Security payments will go out on time -- probably -- but anything beyond that will be delayed.
• The bill would cap domestic spending for the next 10 years. This means that it will be difficult for Social Security to get a larger budget or even to hold onto the operating budget it already has.
• The bill, if passed, sets up a process whereby a special 12 member joint committee of members of both the House and the Senate will recommend measures in November to dramatically cut the budget. Congress will then vote on the recommendations on December 23. If the committee cannot agree or if Congress does not enact the recommendations, automatic budget reductions kick in. The reductions exclude Social Security and apparently exclude Supplemental Security Income (SSI) and other poverty programs. Medicare is excluded except for provider payments.

     Unless Republicans on the joint committee are willing to include significant tax increases, I have a hard time imagining what the joint committee could come up with that Democrats would perceive as better than what happens if nothing is done and the automatic budget reductions kick in. After all, if the alternative is dramatic cuts in Social Security, Medicare, Medicaid, SSI, Food Stamps and Unemployment Insurance Benefits, what is so terrible about percentage cuts?

     I have this vision of how this joint committee will work. Democrats will come up with one plan, Republicans will come up with another plan and the two sides will be unable to come to any agreement. The joint committee has a vote on the rival plans. They deadlock 6-6 on the Democratic plan. When the Republican plan comes up, one of the Democrats votes "present." This means that the vote is 6-5 in favor of the Republican plan and it goes forward. Republicans in Congress are then forced to vote to dramatically reduce Social Security and Medicare. The plan fails, the country is left with the automatic cuts, and Republicans have to explain their votes to dramatically cut Social Security and Medicare when the election comes up.

     The question I wonder about is what would be the percentage reduction in appropriations for agencies such as Social Security if nothing is passed by December 23? I cannot seem to find the answer. Whatever the reduction is, furloughs at Social Security would be inevitable.
     Update: I am doing some very rough calculations and come up with a reduction in Social Security's operating budget of about 4% if no further agreement is reached. I am basing this upon the fact that the current agreement would call for $1.2 trillion in cuts over ten years. Divided by ten that would be $120 billion in cuts in this year's budget but that would be further divided in two between defense and non-defense spending and the Bloomberg business calculator figures on domestic expenditures-- although that is based solely on August 2011 expected expenditures, so I multiplied that by twelve. This is rough at best and there's certainly a chance that I have erred in some way. I hope someone can give us a more accurate number soon. A 4% cut in Social Security's operating budget would definitely cause furloughs and significantly reduced service but it would not cause the collapse of the Social Security Administration, at least in the short run.
    I do not know what effect the planned National Computer Center would have on this. Suspending that project would certainly save money. Isn't there a vacant data center building in the D.C. area that Social Security could take over so it doesn't have to build from scratch? That would be quicker and cheaper. If that project goes forward despite what has happened, I think some explanations are in order.
     Further update: I am reading that the cuts in domestic spending will be delayed until 2013 -- after the Bush tax cuts are due to expire. If I understand correctly, that would save Social Security from any immediate cuts in its administrative budget. The end of the Bush tax cuts, which is certain to happen, at least in part, will help avoid cuts after 2013. If I am understanding this agreement correctly, there will be huge pressure on Republicans to agree to tax increases and little pressure on Democrats to agree to anything.

New POMS On "Expedited Vocational Assessment"

Social Security has published some changes to its Program Operations Manual Series (POMS) that may explain the proposed regulatory changes it recently sent over to the Office of Management and Budget (OMB) for approval. The POMS change has the title, "Expedited Vocational Assessment at Steps 4 and 5 of Sequential Evaluation." The proposed change sent over to OMB has the title, "Expedited Vocational Assessment Under the Sequential Evaluation Process" so it sounds like these are the same thing. Why is Social Security already implementing a rule when it just asked OMB to approve a proposed rule?

Emergency Message On New Claims While Appeal Pending Does Not Help

Social Security has issued a new Emergency Message (EM) on the new Ruling which seeks to prevent a claimant from filing a new claim while an old claim is pending on appeal. The EM does not expand upon the Ruling in any meaningful way. It does not even address the question of what to do about cases where a new claim and an appeal are both already pending.

Debt Ceiling Settlement? Will SSA Be Affected?

Brian Beutler at TPM reports that there may be a settlement of the debt ceiling crisis. The settlement would involve a special committee that would recommend further budget reduction measures. That  committee would report back in November. Congress would then have until December 23 to enact something to reduce the deficit by December 23. If nothing happened, automatic cuts would go into effect, including Defense and Medicare. There is nothing in the report suggesting that Social Security benefits would be cut. The Medicare cuts would be directed at providers rather than beneficiaries. We will have to wait on further details but Social Security's administrative budget might be cut which would give us the prospect of furloughs just in time for Christmas. There is also a strong probability that if Congress is able to do something about the deficit by December 23 that Social Security will be affected with the chained CPI being the starting point but not necessarily the ending point.

A Solution At Last!

Just when you think there's no hope for the debt ceiling crisis, there it is. All it takes to solve it is two coins.

From The Past

Courtesy of the Way Back Machine, take a look at Social Security's homepage as of June 13, 1997.

An Outlier

We have had recent talk of "outliers" at Social Security, Administrative Law Judges (ALJs) who approve or deny too many or too few claims or who just dispose of too many or too few cases, but in one way perhaps the most prominent outlier of all of Social Security's ALJs is Richard Harper, the Hearing Office Chief Administrative Law Judge (HOCALJ) in Charlotte. He is holding down this position even though he is 90 years of age.
He was  Administrative Law Judge In Charge (ALJIC), the old title for what is now HOCALJ, in 1978 when I interviewed for a job as a staff attorney. I took a job in Raleigh, where I was living, instead. He's still there.

I Don't Think You Can Enforce It That Way

There are early signs suggesting that Social Security's computer system is making it impossible for a new Social Security disability claim for months after a decision is issued by an Administrative Law Judge.

Roundup Of Debt Ceiling News

Here is this morning's news concerning the debt ceiling crisis that threatens Social Security payments among other things:

• House Speaker John Boehner was forced to postpone a vote on his party's plan for extending the debt ceiling because he did not have enough votes to pass it. It is unclear whether he can get the votes solely from among Republicans. Republicans in the House has no recent experience in negotiating for Democratic votes.The Republican dilemma changes the equation as the Associated Press notes: "Republicans will try again Friday. If they continue to fail, then President Barack Obama and Senate Democrats will have extensive leverage to shape a bill to their liking and practically dare the House to reject it and send the nation into default." On the other hand, Ezra Klein warns that "Anyone who says they know exactly what happens next is lying." By the way, one problem for Republicans is that their bill includes $17 billion for Pell grants, which got some Republican votes but which some other Republicans regard as pork.

• The Dow Jones Industrial Average was down 62 points yesterday. It is down 440 points on the week heading into today's trading. Interest rates on U.S. Treasury notes have moved sharply higher. Investors have pulled billions of dollars out of money market funds in recent days. Moody's is threatening to lower the credit ratings of 177 municipal bond issuers -- and yes, that is related to the debt ceiling impasse. If this sounds like developments that don't threaten you, trust me each and every person reading this is threatened by these developments.
• Update: The Dow is down by over 100 points in early trading.  Harry Reid, the Senate Majority Leader, has just told the Senate that "The last train is leaving the station" as he starts to move forward with his bill to raise the debt ceiling.
• Further update: The President is speaking to the country urging quick action. This is a tweet from an Agence France Presse (AFP) reporter: "Looks like US Senate votes at 1 am Sun, 7:30 am Mon, final #debt vote Tues, per a Dem aide. " This would then go to the House of Representatives which would decide whether we have a default. 
• Further update: It looks like House Republicans may bring a bill to the floor under which "The debt ceiling would be raised immediately but not by enough to get the government through next year. To get the second debt ceiling increase, House Republicans want a balanced budget constitutional amendment to pass both chambers first and be referred to the states." The Senate would never agree to that. 
• Further update: From Michael Shear writing on his New York Times blog:

Senate Democrats said Friday that they were prepared for an all-night battle on the Senate floor that could go into the wee hours of Sunday morning unless Republicans began negotiating on a bipartisan plan to raise the debt ceiling....

If Republicans filibuster that vote, Democrats say they are prepared to repeatedly require Republicans to object to the bill’s passage, keeping them in their seats for hours and creating a middle-of-the-night legislative spectacle for the cameras.

And from Ezra Klein:

John Boehner has a problem. He likes being Speaker of the House of Representatives. He would like to continue to be Speaker of the House of Representatives. But being Speaker of the House of Representatives means both leading the House Republicans and compromising to get things done. And in this Republican Party, at this moment, if you want to lead the House Republicans, you can’t compromise to get things done.

We’ve now seen the same farce play out four times. Republican leaders get close to a deal and then, just before they can close it, their members revolt and they have to pull back....

In order to have any chance of surviving as Speaker of the House, Boehner needs to produce legislation that is completely unacceptable to the White House and the Senate. Their opposition is a feature, not a bug. Consider how he sold his plan to Laura Ingraham: “President Obama hates it. Harry Reid hates it. Nancy Pelosi hates it. Why would Republicans want to be on the side of President Obama, Harry Reid, and Nancy Pelosi [is] beyond me.”

Why anyone would think that a plan loathed by the Majority Leader of the Senate and the President of the United States would be signed into law is beyond me. And since then, Boehner has moved the plan considerably to the right. But that’s because he’s not legislating. He’s just trying to survive.

It’s not just that Boehner’s party doesn’t like any of the viable compromises on the table. It’s that they don’t like compromise, full stop.