Staffing Shortages Cost Money

Social Security's Office of Inspector General (OIG) issued a report in September 2005 calling upon the agency to do better follow-up of the offsets that reduce Social Security disability benefits due to workers compensation benefits. At the time, Social Security had a large backlog of cases to work through. OIG decided to take a look at what Social Security has done in response to that report. The report is discouraging. Social Security had done little or nothing, with the result being:

...the volume of cases with WC [Workers Compensation] claims pending for 2 or more years increased from 227,615 in January 2005 to 268,825 in November 2009, an 18-percent increase over the past 4 years. In addition, we estimated SSA had overpaid Title II beneficiaries between $44 and $58 million because of unreported WC payments since our [earlier report].

The reason that Social Security has not taken action on this problem:

An official from the Office of the Deputy Commissioner for Operations told us the Agency plans to pursue processing its pending WC workload to the extent possible. However, according to this official, SSA resources are limited, and the Agency must take a holistic approach in applying those resources, considering many other priority workloads.

Inadequate budgets and the staffing shortages that result from inadequate budgets cost money.

House Markup Of Social Security Appropriations Bill

The House Appropriations Committee is meeting today to markup the Fiscal Year (FY) 2011 appropriations bill that covers Social Security. FY 2011 begins on October 1, 2010. It is most unlikely that a bill can be passed and signed by the President before the beginning of FY 2011. It may be well into calendar year 2011 before this happens.

The "Chairman's Mark" is the starting point for the markup process. Chairman David Obey's "mark" is $12,485 million, the same as the Administration's appropriation request for Social Security. That represents an 8% increase over Social Security's regular FY 2010 appropriation. However, this is misleading since Social Security got to spend a lot of money in FY 2009 and FY 2010 that was part of the economic stimulus package rather than Social Security's base budget. In terms of money that could be used for operational expenses, that money is about gone. Things are not going to be getting any better at Social Security even if the appropriation passes as proposed. Should Republicans gain control of either house of Congress after the November election, Social Security may be plunged back into a new budget abyss.

I wonder whether Michael Astrue would be happy or sad to see Republicans take control of the House of Representatives.

Effects Of Social Security Cuts

The President's federal budget deficit commission (being called the "catfood commission" in some circles) is studying ways to reduce the federal deficit. Social Security seems to be a prime candidate for cuts. The Center for Economic and Policy Research, a liberal think tank, has produced a report on the impart of some cuts under consideration. Their analysis "suggests that the cuts most commonly being considered will have a substantial negative impact on low- and middle-income families." The cut that appears to be under the most consideration, raising the normal retirement age to 70 "...is essentially a cut in benefits since the vast majority of workers start collecting reduced benefits not long after they reach the early retirement age (ERA) of 62."

The report does not go into the question of why the vast majority of workers retire as early as possible but I will. A high number of these early retirement claims should really be disability claims. Medicine may be helping people live longer but the length of a person's lifespan has little to do with how long a person can go on working before the inevitable effects of the aging process make it too difficult to go on. Of course, there are many people who can go on working into their 80s but that is not most people. Not everyone works in offices. Not everyone is fortunate enough to enjoy good health as they age. Those who are able to work past 67 should enjoy their good fortune and respect the fact that their good fortune could change in a heartbeat.

First Report On Today's Hearings

The Wall Street Journal's Washington Wire blog contains the first media report on today's hearings before the House Social Security Subcommittee and Senate Finance Committee. Apparently, nothing was said about the reported dispute between Commissioner Astrue and Social Security Chief Actuary Stephen Goss. Social Security's finances were discussed but not any grand plan for cutting benefits or raising taxes. Social Security Subcommittee Chairman Earl Pomeroy predicted only "modest adjustments" to Social Security.

Inspector General Gets Involved In Utah Immigrant List

Someone recently sent a list of 1,100 purported illegal immigrants present in the state of Utah to Utah state agencies and news outlets. The list included Social Security numbers. This was done ananymously. TPM Media reports that Social Security's Inspector General has a copy of the list and is looking into whether federal laws were violated.

Senate Finance Committee Hearing

The Senate Finance Committee is holding a hearing today on Social Security. Here is some of the opening statement of Senator Max Baucus, the Chairman of the Committee:

George Burns, who worked until he was 100, said of retirement: “Retirement at 65 is ridiculous. When I was 65, I still had pimples.”

Today, we’ll talk about people who want to work beyond retirement age. And we’ll talk about how those folks’ decisions affect Social Security.

When it comes to Social Security, folks often say that there are only two ways to improve solvency: cutting benefits or raising taxes.

Neither is easy. And each has drawbacks.

Fortunately, there are other ways. And these ways don’t involve cutting benefits or raising taxes.

For example, there’s the tax gap. The tax gap is the difference between what taxpayers owe and what they actually pay. Currently, there’s a gap of about $58 billion each year between Social Security and Medicare payroll taxes that are owed and the taxes that are paid. We have to do more to collect the tax gap.
And today, we are going to look at another idea for improving Social Security and Medicare solvency, without raising taxes or cutting benefits.

We are going to look at facilitating work by people who want to resume work after they retire from their full-time jobs, or who want to phase down their work before retiring.

The written statements of the witnesses concern ways to encourage retired people to go back to work. Stephen Goss, Social Security's Chief Actuary, is one of the witnesses. There may have been questions about the reported conflict between him and the Commissioner of Social Security but there was nothing in his written statement about this.

First 75th Birthday Event

I have received notice of the first official commemoration of Social Security's 75th anniversary on August 14. This is not the major, official event but I am sure that one is coming. This one involves:

[A] special presentation and historical exhibit at the U.S. Capitol Visitor Center, 1st Street NE, Washington, D.C., in Senate Meeting Room SVC203/202, on Friday, July 23, 2010. Commissioner Michael J. Astrue will open the exhibit at 10 a.m. and introduce our keynote speaker Dr. Edward Berkowitz, professor at the George Washington University, Social Security historian and author. The exhibit will remain open until 3 p.m. Larry DeWitt, our Social Security Historian, will be on hand to answer questions.

House Social Security Subcommittee Hearing

The House Social Security Subcommittee is holding a hearing at the moment. The witnesses' written statements have been posted. Here is a snippet from the written testimony of Kelly Ross, the Deputy Policy Director of the AFL-CIO:

The income replacement rate of today’s Social Security benefit is about one third lower than the OECD [Organization for Economic Coo-peration and Development, whose members are the major industrialized nations] average. The United States ranks 25th of 30 OECD countries in the share of the average worker’s earnings that is replaced upon retirement. For a medium earner retiring at age 65, Social Security benefits replace only 40 percent of their prior earnings, and this replacement rate will fall to 36 percent by 2030 because of the scheduled increase in the full retirement age.