More Furloughs In California

The Associated Press reports that California governor Arnold Schwarzenegger has ordered a new round of furloughs for state workers until the legislature passes a budget. Apparently, this includes employees of the state Disability Determination Service (DDS) that makes initial and reconsideration determinations on Social Security disability claims.

State workers had already been furloughed a total of 46 days over the last year under a previous furlough order. That order had just ended in June.

Board Of Trustees Report Issued

A press release from Social Security:

The Social Security Board of Trustees today released its annual report on the financial health of the Social Security Trust Funds and the long-range outlook remains unchanged. The combined assets of the Old-Age and Survivors Insurance, and Disability Insurance (OASDI) Trust Funds will be exhausted in 2037, the same as projected last year. The Trustees also project that program costs will exceed tax revenues in 2010 and 2011, be less than tax revenues in 2012 through 2014, and then permanently exceed tax revenues beginning 2015, one year earlier than estimated in last year’s report. The worsening of the short-range outlook for the Social Security Trust Funds is due in large part to the recent economic downturn.

In the 2010 Annual Report to Congress, the Trustees announced:

• The projected point at which the combined Trust Funds will be exhausted comes in 2037 – the same as the estimate in last year’s report. At that time, there will be sufficient tax revenue coming in to pay about 78 percent of benefits.

• The projected point at which tax revenues will fall below program costs comes in 2010. Tax revenues will again exceed program costs in 2012 through 2014 before permanently falling below program costs in 2015 -- one year sooner than the estimate in last year’s report.

• The projected actuarial deficit over the 75-year long-range period is 1.92 percent of taxable payroll -- 0.08 percentage point smaller than in last year’s report.

• Over the 75-year period, the Trust Funds would require additional revenue equivalent to $5.4 trillion in present value dollars to pay all scheduled benefits.

“The impact of the current economic downturn continues to be felt by the Social Security Trust Funds,” said Michael J. Astrue, Commissioner of Social Security. “The fact that the costs for the program will likely exceed tax revenue this year is not a cause for panic but it does send a strong message that it’s time for us to make the tough choices that we know we need to make. I applaud President Obama for his creation of the Deficit Commission so we can start the national discussion needed to ensure that Social Security remains a foundation of economic security for our children and grandchildren.”

Other highlights of the Trustees Report include:

• Income including interest to the combined OASDI Trust Funds amounted to $807 billion ($667 billion in net contributions, $22 billion from taxation of benefits and $118 billion in interest) in 2009.

• Total expenditures from the combined OASDI Trust Funds amounted to $686 billion in 2009.

• The assets of the combined OASDI Trust Funds increased by about $122 billion in 2009 to a total of $2.5 trillion.

• During 2009, an estimated 156 million people had earnings covered by Social Security and paid payroll taxes.

• Social Security paid benefits of $675 billion in calendar year 2009. There were about 53 million beneficiaries at the end of the calendar year.

• The cost of $6.2 billion to administer the program in 2009 was a very low 0.9 percent of total expenditures.

• The combined Trust Fund assets earned interest at an effective annual rate of 4.9 percent in 2009.

The Board of Trustees is comprised of six members. Four serve by virtue of their positions with the federal government: Timothy F. Geithner, Secretary of the Treasury and Managing Trustee; Michael J. Astrue, Commissioner of Social Security; Kathleen Sebelius, Secretary of Health and Human Services; and Hilda L. Solis, Secretary of Labor. The two public trustee positions are currently vacant. President Obama nominated two individuals to serve as public trustees, and the Senate Finance Committee held hearings on July 29 for both trustee nominees. Their confirmations are pending.

The 2010 Trustees Report will be posted at www.socialsecurity.gov/OACT/TR/2010/ by Thursday afternoon. [It is there now.]

The Right Wing Take On Social Security

Jagadeesh Gokhale works at the Cato Institute, a right wing think tank. He is on the Social Security Advisory Board (SSAB). He has a blog post up arguing with the Top 5 Social Security Myths posted by MoveOn.org. His basic point seems to be that the Social Security trust funds are a meaningless abstraction but that because this meaningless abstraction is going to run out of money in 2037 we need to cut benefit payments now. This seems contradictory to me.

Gokhale argues against solving Social Security's long term funding problem by lifting the cap on income covered by the F.I.C.A. tax since that would only increase government spending and because it would be unfair to high wage earners. Of course, this takes for granted that increased government spending during a recession would be a bad thing, that an increase in the F.I.C.A. cap would lead to increased government spending and that progressive taxation of income is a bad thing. Those beliefs can all be assumed among his colleagues at the Cato Institute but the rest of us may need some convincing.

More On Yesterday's Hearing

Joe Davidson's Federal Diary column in today's Washington Post discusses yesterday's hearing before the Permanent Subcommittee on Investigations of the Senate Committee on Homeland Security and Governmental Affairs. Davidson reveals the crucial fact that "The investigations subcommittee is a bit unusual in that, unlike on most congressional panels, members of the minority party, Republicans at the moment, can initiate hearings." This hearing was initiated by Senator Tom Coburn (R-Okla.). Coburn and two other Republican Senators had requested the report from the Government Accountability Office (GAO).

Astrue called the GAO report "fatally and hopelessly flawed" in his prepared remarks for the Subcommittee. He complained the the GAO report !inflammatorily characterized the situation it found." Gregory Kurtz, the GAO employee who prepared the report said that Social Security "expressed its displeasure even more vividly in private."

Unfortunately, Davidson accepts the basic premise of the GAO report that anyone who is working and drawing Social Security disability benefits at the same time is a fraud. As a matter of Social Security law, this is flatly wrong. It is quite legal to work and draw Social Security disability benefits at the same time within certain limits. Ask yourself a couple of simple questions. Do we want people who draw Social Security disability benefits to return to work? Is it a good idea to reflexively accuse someone who does this of a criminal offense?

Two Maryland Sites Under Review For National Data Center

From the Frederick News Post:

The Social Security Administration is looking for a new site for its National Data Center -- and Frederick County [Maryland] made the short list.

The end of Bennett Creek Boulevard in Urbana is one of two sites under consideration and both are in the state, according to a news release from U.S. Sen. Barbara Mikulski, D-Md.

The other site is on Johnnycake Road in Woodlawn, in Baltimore County, according to the news release.

Improper Use Of Paid Administrative Leave

From the Federal Times:

The Social Security Administration paid nearly $1.5 million in wages to 16 employees who were not working while facing misconduct or criminal charges, according to the agency's inspector general [IG].

In a report released July 29, the IG said that paid administrative leave is meant to be used on a limited basis, so agencies can give potentially dangerous or criminal employees a month's advance notice that they will be indefinitely suspended. But the IG's report said 16 SSA employees were paid for months of work they didn't do between October 2005 and January 2009.

The Washington Times has also picked up on this story.

I guess they will have to fire everybody who made this mistake. That is what they did when an Administrative Law Judge made a similar mistake.

Senate Hearing Today

The Permanent Subcommittee on Investigations of the Senate Committee on Homeland Security and Governmental Affairs has scheduled a hearing for 2:30 this afternoon on Social Security Disability Fraud: Case Studies in Federal Employees and Commercial Drivers Licenses. The Chairman of the Subcommittee is Carl Levin of Michigan. Gregory Kutz of the Government Accountability Office (GAO) and Social Security Commissioner Michael Astrue are supposed to testify.

From a Washington Post article today that may give some explanation for the hearing:

Almost 1,500 federal workers might have received improper or fraudulent Social Security payments in the past several years, according to a government audit disputed by the Social Security Administration.

Government Accountability Office investigators matched civilian federal payroll records with benefit data from the Social Security Disability Insurance program and the Supplemental Security Income program to yield their estimates. ...

About 7,000 federal workers received Social Security Administration (SSA) disability benefits while on the government payroll during fiscal year 2008. Almost 1,500 other federal employees may have received fraudulent or improper payments between October 2006 and December 2008, according to the Government Accountability Office (GAO).

The potentially improper or fraudulent payments totaled about $1.7 million each month, according to GAO estimates. The exact number and nature of the payments cannot be determined without detailed case investigations, the GAO said....

The SSA currently does not match its records against federal payroll records to check whether federal workers are improperly receiving payments because their salaries exceed the programs' requirements, but officials acknowledged to the GAO that such a check could be helpful.

Social Security Commissioner Michael J. Astrue called the audit "fatally and hopelessly flawed," and said auditors improperly compared payroll data with SSA data.

"It relies on anecdotes and it inflammatorily characterized the situations it found," Astrue said in an interview. The audit provides little proof of whether the payments were improper or fraudulent and are small examples of fraud, he said. The Justice Department has declined to prosecute at least five of the 20 cases the GAO reviewed, because the payments in question fall below the threshold for prosecution, the SSA commissioner said.

Where do commercial drivers licenses fit in here? Why is Homeland Security and Government Affairs doing this hearing instead of the Senate Finance Committee?

I strongly suspect that this Committee is out of its depth here. The rules concerning Social Security disability recipients who return to work are incredibly complex. I strongly doubt that anyone at GAO or this Committee understands them. What they are casually talking about as fraud is probably nothing of the sort in most cases. I wonder if the Subcommittee staff realizes that until fairly recently Social Security had no system for keeping records on disability benefits recipients who reported return to work. That means that until recently, Social Security had no idea who had or had not reported return to work. Reports of return to work were simply ignored. That makes it a bit difficult to prosecute someone for fraud.

I am unable to see how returning to federal employment is any different than returning to other employment. All of this income is reported to Social Security and Social Security does data matches. The problem is that Social Security is many years behind in doing these data matches. Social Security is already well aware of this problem. Social Security has been prevented from getting up to date with this because of lack of personnel. If Social Security were given an extra billion or two billion dollars a year to hire more people, I guess the problem could be resolved in the foreseeable future. Social Security is not ignoring this problem because its officials are stupid or do not care. It is just that they have to also worry -- and I am being literal here -- about answering their telephone calls in less than seven or eight minutes and keeping the lines at their offices from routinely extending out their doors. The problem of delayed earnings records matches is only one of many problems leading to overpayments at Social Security. They are not going to be resolved without spending a lot of money.

What Do You Mean "We", Kemo Sabe?

From KTKA News:

On Tuesday, the head of the Social Security Administration Commissioner Michael Astrue arrived in Topeka to mark the opening of the state’s newest hearing office. The Topeka office is expected to cut down on the amount of time people must wait for a judge to hear their disability case. Next week, the office will start hearing cases.

“In the short term, this office allows times in Nebraska, Missouri and Kansas to start dropping very dramatically. Also, in the bigger picture, it is a great sign for the future of the agency we started 75 years ago, SSA Commissioner Michael Astrue said.

Yes, I realize that the "we" may be a reference to we as a nation but it still sounds odd coming from a Republican. The reporter may not have gotten the quote exactly right since she thought that Social Security was only given $500,000 in the Recovery Act to use in working down backlogs!