I have written about the string of "grand plans", re-engineering, Hearing Process Improvement (HPI) and Disability Service Improvement (DSI), tried at Social Security over the past twelve years, in an effort to produce dramatic productivity gains at the agency. The net result of the first two of these schemes was a dramatic worsening of Social Security service. DSI is just now being introduced, but I am convinced that it is also doomed to failure. This raises the question of why these failed and why would I believe that DSI is also doomed to failure? I also noted that this twelve year period corresponded exactly with Republican control of Congress. This raises another question. What do these schemes have to do with Republican control of Congress.
To answer the first question of why "grand plans" to dramatically improve efficiency at Social Security are doomed to fail, let us take a look at some fairly simple numbers. The
Social Security trust funds currently total about $1,994 billion. The President's budget proposal for 2008 is $9.637 billion. Social Security annual administrative expenses come to 0.05% of the assets of the Social Security's trust funds. On it's face, does that not seem awfully low? By contrast, a
report from the Cato Institute, which was clearly trying to promote privatizing Social Security, calculated the annual administrative costs of a privatized old age benefit plan at 0.3% to 0.65% of assets. Note that the Cato estimate is about ten times as high as the actual administrative costs for the Social Security Administration and the plan that Cato is promoting, unlike Social Security, does
not include disability or survivors benefits which are much more expensive to administer. By comparison, the Social Security Administration looks incredibly efficient.
My point here is not that a plan to privatize Social Security would result in vastly greater administrative expenses. That is obvious enough, but privatization is not going to happen for many reasons and administrative efficiency is not even one of the more important reasons. My point is that the Social Security Administration is already incredibly efficient. The idea that Social Security could be managed into much greater efficiency is ridiculous on its face. Of course, not every Social Security employee is a dynamo and there are inefficiencies and some money wasted at Social Security. The agency is large and some problems are inevitable. However, the idea that major improvement in efficiency is possible at Social Security is ludicrous. The agency is already a model of efficiency. Any efficiency gains at Social Security are bound to be small -- or, perhaps, incremental to use a word that the new Commissioner of Social Security used during his confirmation hearing.
As to the second question of why we saw these silly schemes whose authors hoped to dramatically improve productivity at Social Security while Republican were in control of Congress, we have to look at ideology. It has long been an item of faith on the American political right that government agencies, particularly government benefit programs, are astoundingly wasteful and inefficient. A natural corollary is that Congress should put pressure upon agencies to become more efficient and that budgetary pressure is one good way of doing this. There was an incredible display of Republican ideology at the Astrue confirmation hearing. Republican Senator Jim Bunning, who was at one time in the House of Representatives and chairman of the House Ways and Means Committee Subcommittee on Social Security, became irate in telling Astrue, and I will paraphrase, that he did not want to hear that Social Security did not have an adequate budget, because he knew that the problem was inefficiency. Bunning's display was astonishing because Astrue had said nothing whatsoever to provoke Bunning. How did Bunning know with such certainty that Social Security was so very inefficient? The facts strongly suggest that Social Security is already incredibly efficient. I cannot imagine any basis for Bunning's outburst other than that it was a display of irrational political ideology. Unfortunately, Bunning and others in his party were able to impose that political ideology upon the Social Security Administration over the past twelve years. Things got so bad by 2006 that Republicans in Congress thought that a Republican Commissioner of Social Security was bluffing when she warned that her agency would have to close its door for two weeks because the budget that Congress was about to enact was so disastrously inadequate. Probably, only the results of the November election prevented this catastrophe.
