Asrue Confirmation Hearing

Some notes from watching the Astrue confirmation hearing:

1. It is obvious that Astrue will be confirmed and soon.
   
2. Senator Baucus, the Chairman of the Committee, makes it clear that Astrue has firmly promised to stay out of anything political and especially to stay out of privatization. Senator Hatch later tries to get Astrue to say that he might "help" bring about Social Security reform. Astrue gives no such commitment to Hatch.
3. Senator Baucus talks of removing Social Security from the budget -- which would dramatically improve the prospects for Social Security getting an adequate administrative budget. The Chairman of the House Social Security Subcommittee strongly supports this idea also. However, the Social Security trust funds are taking in far more money than they are paying out at the moment. Taking Social Security out of the budget would make the deficit appear vastly larger. In general, Baucus talks a lot about Social Security's budget problems.
   
4. Senator Kerry, who is from Astrue's home state of Massachusetts, gives a warm introduction for Astrue. Senator Kennedy also wanted to be there to introduce Astrue, but he had to be elsewhere.
5. Senator Grassley, the ranking Republican on the Finance Committee, also talks about Social Security's budget problem.
6. Astrue reveals that his father had a brain tumor and stroke some years ago and he helped his father file for Social Security disability benefits.
7. Astrue takes credit for ending non-acquiescence when he was at Social Security earlier.
8. In talking about Commissioner Barnhart's Disability Service Improvement project, Astrue says he wants to review it. He would like to roll out more rapidly those parts of the plan that are least controversial and least costly. I have no idea what he could be referring to.
9. Astrue says that he is an incrementalist on reorganization. He says that no sweeping reorganization is likely with him as Commissioner.
10. Several Senators question Astrue on Social Security's role in regard to undocumented immigrants.
11. Senator Baucus asks Astrue about benchmarks for agency performance, particularly in regards to backlogs. Baucus says the backlogs are an "outrage" and it would be "irresponsible" not to do something.
12. Astrue says that Barnhart's plans are on the periphery of the problem of backlogs and that "brute force", apparently referring to the need for more manpower, is needed.
    
13. Astrue says that 60 days after a budget is finalized for this year, which should be February 15, he can talk with the Committee regarding plans for reducing Social Security's backlogs. Senator Baucus makes it clear that he is very interested in this.
14. Senator Baucus asks Astrue to be more cooperative with employee unions. The question arises because Barnhart listened to everyone, except the employee unions, with which she had a surprisingly frosty relationship. Astrue promises to meet with the unions.
15. The hearing lasted about one and a half hours. There were no witnesses other than Astrue.
    

View Astrue Confirmation Hearing Online

Michael Astrue has been nominated by President Bush for a six year term as Commissioner of Social Security. The Senate Finance Committee has scheduled a hearing on the nomination to begin at this hour. The hearing may be viewed live online. Astrue's written statement has not yet been posted.

Bush Mentions Social Security In State Of Union

President Bush included a call for Social Security reform in his State of the Union Address Tuesday night. Early response from Democrats indicated little interest in pursuing the idea, according to Reuters.

Cambodian Refugees Investigated In California

From InsideBayArea.com:

More than two dozen Cambodian refugees in Oakland and elsewhere in the East Bay are fighting allegations that they fraudulently applied for benefits from the Social Security Administration and say they were unfairly targeted. ...

Many of the Cambodians are patients of Mona Afary, a licensed marriage and family therapist who specializes in working with Afghans and Cambodian refugees. She now works with the refugees at the Center for Empowerment of Refugees and Immigrants in Oakland.

Afary has diagnosed many of her patients with post-traumatic stress disorder, sometimes several people in the same family, Weiss and Lunsford said. That — combined with what Social Security may see as Afary's lack of proper clinical training to make such diagnoses — could have triggered the investigations, Afary, her patients' attorneys and spokespeople for Social Security said.

The attorneys accused investigators of lacking the clinical training to assess whether someone was truly faking mental illness, as well as cultural insensitivity toward people who were traumatized by the harsh privations suffered under the Khmer Rouge. Many of the refugees came here in the 1980s. ...

This is not the first time Cambodians and their health care providers have been the target of Social Security fraud investigations. Similar investigations have taken place in Southern California, Boston and Washington state over the last decade. In those cases, some parties involved with the Cambodians were accused of fraud and others cleared ...

Barnhart Gone -- Who's In Charge?

Social Security has not posted the name of the person designated as the Acting Commissioner of Social Security now that Jo Anne Barnhart's term as Commissioner has ended. An anonymous post on the CONNECT board reports that Linda McMahon, Social Security's Deputy Commissioner for Operations has the job, although this conflicts with the previously established hierarchy which would have given Larry W. Dye, the Commissioner's Chief of Staff, the job. It is certainly possible that the White House made this decision, but has not sent out a press release on what they would consider to be a very mundane matter.

Interestingly, although Social Security's website shows the Commissioner's job as vacant, it shows Martin Gerry still as Deputy Commissioner for Disability and Income Security Programs, even though Gerry was brought in by Barnhart and seemed to be her right hand man. It is a bit hard to imagine Gerry working with another Commissioner.

Commissioner Nominee "Often At The Center Of Controversy"

A 2005 article in the Boston Globe described Michael Astrue, President Bush's nominee for Commissioner of Social Security, as being "often at the center of controversy." This is an intriguing statement which deserves scrutiny, although the scrutiny I can do is limited, since I have never met Mr. Astrue, nor have I even talked with someone who knows him.

The first controversial time in Michael Astrue's life, as best I can tell from looking at records available on the internet, was in 2001 when the newly elected President George W. Bush suggested Astrue as a possible Commissioner of the Food and Drug Administration (FDA). Astrue was never formally nominated for the position. Eventually, he was forced to withdraw his name from consideration due to the opposition of Senator Edward Kennedy. At the time the Senate was controlled by Democrats. Senator Kennedy, from Astrue's home state of Massachusetts, was chairman of the committee that would have considered Astrue's nomination. His opposition made Astrue's confirmation impossible. Kennedy's stated reason for opposing Astrue was that Astrue was employed in the pharmaceutical industry. This seems slightly surprising since Astrue was from Massachusetts and at the time had not worked long in the pharmaceutical industry. It would seem that almost anyone nominated to become FDA Commissioner would have some experience in working with the pharmaceutical industry.

One thing that might easily be missed is that even in 2001 the possible approval by the FDA of RU-486, the "abortion drug", was an issue. For Bush to have put Astrue's name forward, it is clear that Astrue must have given a promise to Bush to oppose RU-486, since this issue was of considerable importance to Bush. Although the RU-486 issue was not raised publicly at the time, there is no doubt that had Astrue become FDA Commissioner, RU-486 would have made him controversial.

The next "controversial" time period in Michael Astrue's life was in 2003. At the time Michael Astrue was Chief Counsel and Vice President at Transkaryotic (TKT), a biotech pharmaceutical company. Astrue resigned his job but was then rehired a month later as the company's CEO. Astrue said publicly that he resigned as Chief Counsel to work at the Hudson Institute, a conservative think tank, and to teach law at Boston University, but there is good reason to believe that he was trying to get away from a firestorm that was about to engulf TKT. The company's CEO, Dr. Richard Selden, was accused of making false and misleading statements to the public about the company's prospects for getting FDA approval for a new drug, while simultaneously selling some of his own stock in the company. What was alleged amounted to a "pump and dump", a technique usually associated with fly by night penny stocks.

Although the TKT board hired Astrue as the company's CEO in the wake of this scandal, it is far from clear that Astrue was blameless in the events that led to Selden's downfall. Selden later blamed company lawyers for misadvising him. Astrue was the company's top lawyer. Was Astrue unaware of Selden's misleading public statements about the company? Would not the rules of a publicly traded company have required Selden to notify Astrue before selling stock in the company? It was Astrue's job to keep anything like this from happening at TKT, but it happened.

In 2004 there was a small controversy. Michael Astrue had been Chairman of the Massachusetts Biotechnology Council, an important trade organization, but the Boston Globe reported that he withdrew his company's membership in the Council after the Council's executive director, Janice Bourque, was forced out. Astrue refused to comment publicly, but his apparent concern was that Bourque was forced out by larger biotech companies. There is no sign that any other company withdrew from the Council over the issue.

Transkaryotic (TKT) settled down after Astrue took over as CEO and Astrue was given much of the credit. However, in 2005, with the company's fortunes looking up, Shire Pharmaceuticals Group, a British company, made an offer to buy TKT. Two TKT board members were prominent in support of accepting the offer. Astrue and one other director opposed the sale. The two who supported the sale were partners at Warburg Pincus, a private equity firm, which had a 14% stake in TKT, worth about $200 million. In the end, the board of directors voted to accept Shire's offer. Astrue resigned and led a fight to persuade the company's shareholders to vote down the sale. Astrue lost again and the company was sold. During this process Astrue apparently argued that Warburg Pincus was selling out the company's shareholders, even though Warburg Pincus was a huge shareholder itself and Astrue never publicly identified any ulterior motive that Warburg Pincus might have had.

You have to wonder about the situation. Warburg Pincus had a $200 million stake in the company and no ulterior motive as far as we know. Warburg Pincus is in the business of knowing when to buy and when to sell stock. They must be quite good at it to have the kind of money at their disposal that allows them to take a $200 million stake in a company. Their opinion would be extremely influential with most people. In truth, this was nothing more than a question of valuation and Warburg Pincus had vastly more experience with valuing stock than Astrue. Why would Astrue embark upon such a quixotic adventure as opposing this sale? Was he simply upset that he would no longer be a CEO?

Astrue described the time period of 2001 through 2005 as "a pretty rock-and-roll five years." The question is how much of this was due to intrinsic characteristics of Michael Astrue and how much was due to the politics of 2001 combined with Astrue being employed in an extraordinarily dynamic industry.

A Boston Globe article from 2003 may give some insight on Astrue's character and give some idea of why he does seem to be at the center of controversy with some frequency: '' 'Mike is an incredibly moral guy,' said Dr. Burt Adelman, executive vice president of research and development for Biogen Inc., where Astrue served as general counsel. 'I suspect they got him back [at TKT] because he wasn't going to leave something he was committed to when they were having a problem. He doesn't walk away from a fight.' " The problem is that the flip side of "incredibly moral" is "self-righteous"and the flip side of "doesn't walk away from a fight" is "spoiling for a fight."

Does Astrue have the backbone to do what is needed at Social Security or is he an arrogant, inflexible man who will relentlessly drive forward some personal or political agenda? That is the question for the Senate. I think one can say that Astrue does not sound like the sort of man who, if confirmed, would meekly implement Jo Anne Barnhart's Disability Service Improvement (DSI) vision for Social Security.

The Social Security Game

The American Academy of Actuaries has posted a "Social Security Game" which allows anyone to test how their ideas would affect Social Security's future finances. In this game, merely eliminating the cap on earnings subject to the FICA tax eliminates 93% of the problem of paying future retirees. Creating private savings accounts as part of Social Security does nothing to solve the problem.

Fraud In Honesdale

The TimesTribune.com reports that Rosemary Garton of Honesdale, PA has pleaded guilty to Social Security fraud for cashing her late mother's Social Security checks for 20 years after the mother died. She first told authorities at first that her mother was living with relatives in Philadelphia.