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Something Doesn't Add Up

From House Ways and Means Committee Democrats:

The 2011 budget plan presented this week by the House Republican Majority strips $1.7 billion away from the Social Security Administration (SSA) for the remainder of the year, a cut so drastic that SSA would need to impose the equivalent of a month of furloughs. ...

House Republicans have proposed a $1.7 billion reduction in SSA funding for the remainder of 2011. That includes:

* Cutting SSA’s operating budget by over a billion dollars (8.5%) below what’s needed for 2011. That level is $506 million below what SSA actually spent in 2010 to process claims and operate Social Security offices.

* Cutting an additional $500 million by draining SSA’s reserve account. Most of the money in reserve is already allocated for this year’s expenses and the rest is budgeted for next year’s planned information technology improvements.

* Rescinding an additional $118 million from funds already set aside to build a new National Computer Center, which could delay equipping this mission-critical project.

House Ways and Means Committee Republicans countered with this:

Democrats today made outrageous claims that the Social Security Administration’s (SSA) offices “would shut down” due to a proposed administrative budget reduction, a claim which is false and based on hypothetical scenarios. Despite the Democrats’ irresponsible scare tactics, the facts show that the Republicans' proposed one percent cut will not harm seniors’ benefits. Furthermore, any decisions to furlough workers – another highly misleading claim made by the Democrats – would result only if that decision were made by the Administration.

Here is a look at the facts.

Wrong Numbers:
The Democrats’ claim of $1.7 billion in cuts is based on the President’s budget request from last year.

One Percent:
The proposed 2011 budget plan from House Republicans would reduce the SSA’s administrative budget by only one percent ($125 million) compared to the current level.

In point of fact, the Republican statement is flatly wrong unless they have already altered their proposed budget for this fiscal year. The Republicans own budget summary shows them proposing a $625 million reduction for Social Security from FY 2010 and a $997.6 million reduction from the President's requested FY 2011 budget. That is a lot more than 1%, however you look at it. Republicans do not dispute that they would take away all money needed to construct a new National Computer Center for Social Security at the same time as they criticize the agency for not constructing the National Computer Center faster.

AARP Backs Giving More Time To Withdraw Claims

From Janet Novack's column in Forbes:

AARP [American Association of Retired Persons], the 40-million member seniors’ lobby, has asked the Social Security Administration to give a break to current retirees who want to pay back the benefits they’ve received to earn higher future benefit checks. ...

In mid-January, AARP representatives met with Social Security officials and said they did not know if they would take a position on the rule change. But on Feb. 7, the last day for comment, the AARP finally weighed in on the side of the seniors. It asked the government to give those who are already receiving Social Security a full 12 months—until Dec. 8, 2011—to withdraw their Social Security applications and pay back their benefits without interest. The letter, signed by David Certner, the AARP’s legislative counsel, said the organization generally agrees with the intent of the new rule but believes “that equity and fairness” require that those who took early benefits more than a year before the abrupt rule change be given an opportunity to withdraw their initial Social Security applications and repay the money.

Two Retired ALJs Pass

I regret to report the passing of two of Social Security's retired Administrative Law Judges (ALJs): Pat McCormick, who had been the Chief ALJ in San Jose, and John Volz, who had been in Tulsa.

What Happens At Social Security In Case Of A Government Shutdown?

Let me give you my speculation on what will happen at Social Security in case of a government shutdown. Remember, I have no inside information.

The last time there was a government shutdown caused by a budget impasse the vast majority of Social Security's employees were initially furloughed but most of them were soon called back to work even as the impasse continued. Does this mean that most Social Security's employees would escape a furlough if there is a general government shutdown this time? The Anti-Deficiency Act says that it is illegal to "involve either [the federal government or the District of Columbia] government in a contract or obligation for the payment of money before an appropriation is made unless authorized by law." A straightforward reading of that law makes one wonder how Social Security employees were called back in 1995.

There may be some ways around the Anti-Deficiency Act but the first question is whether the President wants to get around it. Republicans have taken an aggressive stance against government in general, a stance that borders on anarchism, the belief that government is so terrible that we would be better off without a government. Perhaps the best way to demonstrate the folly of anarchism is to remind everyone of all that the federal government does for us. Shut down air traffic control and you shut down civil aviation. Shut down the Federal Reserve and you may well shut down banks and stock exchanges. Shut down the Department of Agriculture and food production in the U.S. may shut down. Shut down the Department of the Treasury and Social Security checks stop going out. Shut down the Department of Veterans Affairs and VA hospitals start shutting down. Even Rand Paul might blanch at the prospect of all this happening.

Let us assume, however, that the President wants to ameliorate the effects of a government shutdown at Social Security. Here are some things he can do:

• The President has some poorly defined emergency powers that apparently include budgetary powers that may supersede the Anti-Deficiency Act to some extent. 50 U.S.C. §1641(c). This was almost certainly the justification used when most Social Security employees were called back to work in 1995.
• The economic stimulus bill enacted soon after President Obama was elected included a good deal of money for Social Security that has not yet been expended. The money that is left was intended for construction of a new national computer center for Social Security but was not so limited in the appropriation. Some of that money has been spent and Social Security has contractual obligations on some of the rest but I think that there is still a pot of money available in an emergency. The agency could spend the money with the assurance that the pot can be refilled once the money starts flowing again. This money may be enough to keep Social Security going for a time.
• Social Security also squirreled away $280 million from last year's appropriation in a "no year" account. That money may be available to be spent in an emergency, assuming it has not been committed to long term information technology projects.

Stay tuned. I would not expect any announcement of what the plans are until the very last minute. Let us hope that there is no need to ever announce those plans.

Let me make one warning: If any Social Security employees are furloughed, do not expect that their salaries will be made up as happened in 1995. I doubt that employees who were furloughed can be paid for their time off without at least tacit Congressional approval. In 1995 Republicans did not want to alienate government employees. This time around, Republicans are not only willing to hurt public employees, they seem eager to do so. If Republicans have an enemies list in 2011, public employees are at the top of it.

Social Security Administration On Budget -- Including An Alarming Chart

Social Security has issued a press release praising President Obama's proposed Fiscal Year 2012 budget for the agency. Also linked is a 28 page "Budget Overview." I have reproduced a rather startling chart from the report which shows that things have been going very badly over the last two years in one area. Here are some excerpts from the text, the first of which is from the Commissioner's preface:

A critical concern for FY 2011 is operating under a continuing resolution (CR). A full-year CR would erase the tremendous progress we have made in the last few years. We have improved our productivity by an average of 4 percent during my tenure, and we continue to look for ways to become more efficient. Nevertheless, our success is dependent on having enough skilled employees to handle our mounting workloads. A hiring freeze for the remainder of the year would result in a loss of about 2,500 Federal employees and 1,000 State employees in the DDS in FY 2011. This attrition will not occur uniformly, which will leave some offices seriously understaffed. Our backlogs would skyrocket, and people would wait considerably longer to receive decisions. As our backlogs grow, it will become more difficult, expensive, and take even longer to eliminate them. Waiting times in field offices and on our 800-number would increase dramatically. Improper payments would grow. We might even be forced to delay simple retirement claims. ...

Paying Medical Consultants Per Case: We are implementing initiatives focused on increasing the volume and quality of work processed by medical consultants. One of these initiatives focuses on converting the pay structure for medical consultants from pay-per-hour to pay-per-case. We believe this new pay structure could increase productivity, allow medical consultants to review a greater number of disability claims, and ultimately assist in reducing the number of cases awaiting medical consultant review. ...

Reducing Headquarters Staff: We are reducing staff in headquarters components through attrition. Although headquarters staff play an important support role, with our limited resources, it is more important for us to fund our front-line operations. ...

President's Budget

The President's recommended budget for Social Security for Fiscal Year (FY) 2012, which begins on October 1, 2011, is out. It recommends $12.496 billion for Social Security, a 2% increase from the President's recommended budget for FY 2011 although that is a somewhat theoretical number since it will never be enacted, and a 9% increase over the FY 2010 budget. Social Security is currently operating under a Continuing Resolution (CR) which allows the agency to spend money at the FY 2010 rate. This would amount to a nice jump for Social Security if it could be enacted.

The budget proposal says that the President "proposes a new Disability Insurance Work Incentives Simplification Pilot (WISP) to provide beneficiaries a simpler set of work rules that no longer terminates benefits based solely on earnings." I have no idea whether this is simply a new name for the Benefits Offset National Demonstration (BOND) experiment that has just started. If it is the same thing, why are they giving it a different name and acronym? If it is different, why do we need two similar experiments going on at the same time.

The budget proposal also talks of the creation of a a "Disability Research Center." I am deeply skeptical of this sort of research in general and especially skeptical of the Social Security Administration overseeing it. That is not the agency's mission.

Republicans in Congress will undoubtedly declare this budget "dead on arrival." The Social Security Administration may be lucky to continue spending in FY 2012 at the FY 2010 rate.

Update: The President's budget would increase employment at Social Security from 67,060 under the current CR to 69,306, a 3% increase.

The Commissioner's recommended budget, which, by law, must be conveyed to Congress, is $13.093 billion, 5% higher than the President's recommended budget.

The Last Time A Government Shutdown Happened

Let me stress that this describes historic events. This does not tell us what will happen in the future. I will have try to have more on this tomorrow. This is from Social Security's official history (emphasis added):

On November 14, 1995, SSA was advised to begin a shutdown of operations [due to a budget stalemate] beginning at 10 a.m. The Agency’s contingency plan was implemented. Employees were instructed to pay close attention to the media to determine when the impasse was resolved and when to return to work. SSA furloughed 61,415 employees and retained 4,780. The majority of the employees retained were in direct service positions to ensure the continuance of benefits. ... Other functions considered essential and permitted under applicable statutes (including the Anti-Deficiency Act) during a lapse in appropriations related to areas of health and safety, oversight and coordination of all human resources and financial functions related to the furlough.

SSA’s contingency plan was altered shortly after the shutdown began when the Commissioner approved the recall of an additional 130 Office of Hearings and Appeals employees to handle time-sensitive mail in the hearing offices. Without the assistance of these employees, this claims-related mail would have been returned to the sender, further delaying claims processing. ...

It was evident to Agency executives after a couple of days that the shutdown was not acceptable, and that it was affecting some of its most vulnerable people, namely its elderly, disabled, and low-income recipients. It became very clear that it was important that SSA reopen its offices to conduct business, even during the shutdown. There was tremendous concern internally, as well as within the White House that SSA not providing service would cause harm to too many Americans.

President Clinton held a press conference that afternoon and announced to the public that this shutdown was unacceptable, that Americans needed to be able to conduct business, and that SSA was recalling approximately 49,715 more employees in direct service positions back to work. This involved recalling sufficient staff to effectively administer its programs, including processing new claims for Social Security benefits. This put field offices, the toll-free 800 number service and State DDS facilities back in business. Although SSA would take and process new applications for benefits and resume processing appeals, it would not process applications for SSNs, perform personal earnings and benefits estimates or conduct annual wage reporting activities. A total of 54,495 staff would be retained. ...

There was a great deal of discussion and some dissention internally over which employees should return to work, and that if SSA was going to recall 54,000 employees, why not recall all 66,000. The concern was that by recalling all but 12,000 employees, what message were you sending to them? ...

The second shutdown was the longest in history and presented new challenges to Agency management. When the threat of a second shutdown surfaced, SSA determined that the trust funds and benefit programs could not tolerate another interruption of claims-taking activities. Based on the experience during the November lapse in appropriations and the loss of four full days of production time, any further interruption in service would have a devastating long-term impact on SSA’s ability to process Social Security, SSI and Black Lung claims. The Agency was still attempting to recover from the effects of the November furlough. Therefore, employees in direct service positions would remain operational, while staff support employees would be furloughed. When the partial shutdown began December 16, 1995, about 55,000 Agency employees, most of whom processed claims and/or provided direct public service, were told to report for work. A total of approximately 11,000 staff employees remained furloughed.