Restore Solvency

From Dow Jones Newswires:

White House Budget Director Peter Orszag, who is reportedly stepping down from his post in July, called for action Tuesday "sooner rather than later" to help restore solvency for the U.S. Social Security program.

"Despite the fact it is not the most substantial contributor to our long-term fiscal gap, we also need to restore solvency to Social Security," he said at an event on the topic at the National Press Club.

"Not only will putting Social Security on sound footing help to some degree with our overall long-term budget picture, making adjustments sooner rather than later...will provide greater certainty to future Social Security beneficiaries and also allow us to make adjustments that are both gradual and fair."

Sticking Your Foot In It

Alan Simpson, the co-chair of the President's Deficit Reduction Commission, recently made some strong comments about Social Security to a representative of Social Security Works who made the recording public. How bad were Simpson's comments? So bad that The Fiscal Times, which was set up by uber-deficit hawk Peter Peterson, a long time advocate for Social Security cuts, called the comments "condescending and derisive" and "wildly wrong."

Good Stewardship?

From WMUR-TV of New Hampshire:

A grieving widow says the Social Security Administration added to her heartache after they took back her Social Security check without notice. ...

After [her husband's] death, Marchulitis noticed her late husband’s Social Security check for $1,008, which had been deposited on June 1, had been removed from their bank account. ...

She never got a notification, and suddenly the 69-year-old widow was bouncing checks and had no idea why.

She contacted the Social Security Administration and learned the bank did a reclamation of the money after learning her husband died.

She later found out the reclamation was an error, because her husband was alive for the entire month of May. The money was promptly returned to her account, and her bank forgave her overdraft fees.

Reached by News 9, the Social Security Administration said reclamation is common when a family member dies, and no written notice is required.

Orszag Leaving

Peter Orszag will be stepping down from his position as Director of the Office of Management and Budget (OMB) next month. OMB has enormous influence over the Social Security Administration because of OMB's role in the budget process and the process of adopting new regulations.

Zombie Lies

From Paul Krugman's blog:

It must have sounded like a good idea (although not to me): establish a bipartisan commission of Serious People to develop plans to bring the federal budget under control. ...

[T]he immediate problem is the statements of Alan Simpson, the commission’s co-chairman. And what got reporters’ attention was the combination of incredible insensitivity – the “lesser people”??? — and flat errors of fact.

But it’s actually much worse than that. On Social Security, Simpson is repeating a zombie lie — that is, one of those misstatements that keeps being debunked, but keeps coming back.

Specifically, Simpson has resurrected the old nonsense about how Social Security will be bankrupt as soon as payroll tax revenues fall short of benefit payments, never mind the quarter century of surpluses that came first. ...

So what does it mean that the co-chair of the commission is resurrecting this zombie lie? It means that at even the most basic level of discussion, either (a) he isn’t willing to deal in good faith or (b) the zombies have eaten his brain. And in either case, there’s no point going on with this farce.

Probation For Threats In Alaska

From the Anchorage Daily News:

An Anchorage man pleaded guilty to threatening Social Security Administration employees over unpaid medical benefits and was sentenced Friday in federal court to five years' probation. ...

Prosecutors say Stockheim sent a Social Security Administration employee threatening e-mails in April, saying he would kill Anchorage police officers if the SSA didn't pay his medical bills. The same month he threatened to bring weapons to his next SSA hearing. When Anchorage police and federal officers approached Stockheim at his home, he became violent, prosecutors say.

An Interesting Interview

The President's debt commission has been meeting in secret. Alex Lawson of Social Security Works has been standing outside the closed doors and trying to record interviews with Commission members as they enter and leave. Here is a small excerpt from an interview that Lawson did with former Senator Alan Simpson, co-chair of the Commission, that gets at a fundamental difference in the way that people look at the Social Security trust funds.

SIMPSON: There is no surplus in there [the Social Security trust funds]. It’s a bunch of IOUs.

LAWSON: That’s what I wanted to actually get at.

SIMPSON: Listen. Listen. It’s 2.5 trillion bucks in IOUs which have been used to build the interstate highway system and all of the things people have enjoyed since it has been setup.

LAWSON: Two wars, tax cuts for the wealthy.

SIMPSON: Whatever, whatever. You pick your crap and I’ll pick the real stuff. ...

Since more than 90% of the costs of the interstate highways comes from gasoline taxes, I think that one would have to say that Lawson was much closer to the truth.

By the way, the rest of the interview shows that both Lawson and Simpson suffer from important misconceptions. Lawson thinks that the Social Security trust funds are still growing. Due to the recession they are contracting slightly at this time. They might grow a little for a short time if we make a rapid recovery from the recession but they are destined to start contracting in a few years under even the most optimistic forecasts. For his part, Simpson is unaware that Social Security actuaries predicted fairly accurately the increases in life expectancy that have occurred over the nearly 75 years that have passed since the creation of Social Security in the U.S. Increases in life expectancy are not the reason for Social Security's long term funding problems. The blame goes mostly to benefit increases without corresponding tax increases.

I have always wondered what we ought to invest the Social Security trust funds in if not U.S. government bonds. If the trust funds were invested in stocks and bonds they would own a good part of the U.S. economy. I do not think that either conservatives or liberals would be comfortable with that idea. Those who claim that the Social Security trust funds are meaningless abstractions do not want the trust fund monies invested in something other than U.S. government bonds. They want the trust funds and all of Social Security to cease to exist. They are just afraid to say so.

AFGE Notes More Positive Attitude

Some contract negotiation news from the American Federation of Government Employees (AFGE), the union that represents most Social Security employees:

After a break of several weeks, negotiations between AFGE and the Social Security Administration resumed today and Union leaders believe there has been a positive change in the agency’s tone and attitude.

“We seem to be moving on a number of issues,” said Witold Skwierczynski, the Union’s Chief Negotiator.

Steve Kofahl, another member of the AFGE contract team, also said SSA officials are now showing a willingness to deal with the Union on matters which had previously stalled. One of those is a procedure for Union reps (including retired employees who still do Union work) to have access to SSA space and facilities.

This latest round of contract talks should continue until June 25th, with more bargaining set for mid-July.