Government Shutdown Looms

From the Wall Street Journal:

The White House and Democratic lawmakers, with less than two weeks left to avoid a government shutdown, are assembling a proposal for roughly $20 billion in additional spending cuts that could soon be offered to Republicans, according to people close to the budget talks.

That would come on top of $10 billion in cuts that Congress has already enacted and would represent a deeper reduction than the Obama administration and Senate Democrats had offered previously in negotiations. But it isn't clear that would be enough to satisfy Republicans, who initially sought $61 billion in spending cuts and face pressure from tea-party activists not to compromise....

The Treasury Department this week is likely to issue an updated report on when it expects the ceiling on the federal debt will have to be increased; its most recent estimate was that the borrowing limit would be reached between April 15 and the end of May. ...

Anticipating tough tea-party opposition to raising the debt limit, Senate Republicans are planning soon to mount a new push for a constitutional amendment to require a balanced federal budget, which may be unveiled soon after Congress reconvenes this week.

What Social Security Crisis?

From Paul Krugman, writing about the argument that the Social Security trust funds are a myth:

The bigger problem for those who want to see a crisis in Social Security’s future is this: if Social Security is just part of the federal budget, with no budget or trust fund of its own, then, well, it’s just part of the federal budget: there can’t be a Social Security crisis. All you can have is a general budget crisis. Rising Social Security benefit payments might be one reason for that crisis, but it’s hard to make the case that it will be central.

Government Shutdown Looking More Likely

From the Washington Post:

A breakdown this week in closed-door negotiations between congressional leaders and the White House on funding the federal government spilled into the open late Friday, with aides from both parties now saying it’s possible Congress may not agree on a long-term funding resolution or another temporary measure by an April 8 deadline. ...

Democratic aides said talks had been underway for nearly two weeks between Boehner’s staff and the White House budget office, with steady progress leading to an agreement that the two sides would meet halfway between the $61 billion in cuts approved by the House and Democrats’ preference for maintaining current spending levels.

Since $10 billion in cuts had already been approved in two temporary funding resolutions, that position would require Democrats to come up with only an additional $20 billion to $25 billion — some of which Democrats hoped to take from mandatory programs such as health care and agriculture subsidies.

But on Tuesday, according to Democrats, House Republicans changed the terms, insisting that negotiations start with the House-passed bill and that Democrats identify the cuts they couldn’t accept.

Such a move would force Democrats to go on record defending programs that Republicans had identified as wasteful. In the meeting Tuesday, White House budget director Jacob J. Lew balked at the terms and walked out of the meeting, Democratic aides said.

Republican aides blamed Lew for the impasse, saying it was the White House that had demanded unreasonable terms.

Medicare Premium Increase To Gobble Up COLA?

From the Associated Press:

Millions of retired and disabled people in the United States had better brace for another year with no increase in Social Security payments.

The government is projecting a slight cost-of-living adjustment for Social Security benefits next year, the first increase since 2009. But for most beneficiaries, rising Medicare premiums threaten to wipe out any increase in payments, leaving them without a raise for a third straight year.

Can We All Agree That The AARP Isn't A Grassroots Organization?

From The Hill:

Newly empowered House Republicans are getting ready to renew their attacks against AARP [American Association of Retired Persons] over its support for the healthcare reform law, The Hill has learned.

The Ways and Means health and oversight subcommittees are hauling in the seniors lobby's executives before the panel for an April 1 hearing on how the group stands to benefit from the law, among other topics. ...

The hearing will cover not only Medigap but "AARP’s organizational structure, management, and financial growth over the last decade." ...

According to its 2008 tax filing, AARP made $249 million from membership dues but $653 million in payments for lending its name to policies sold to its members by private insurers. Those royalties made up more than 57 percent of its total $1.14 billion in revenues that year. ...

This isn't the first time the AARP's dual role as a consumer advocate and an insurance sponsor has come under scrutiny.

Democrats were furious when the association supported Republicans' Medicare prescription drug bill in 2003 ...

And the AARP's support for "temporarily" reducing the FICA tax is inconsistent with its supposed staunch support for Social Security.

Dangerous

The chances for avoiding a government shutdown when the current continuing resolution expires on April 8 are not looking so good at the moment.

Democrats Sharply Divided On Social Security?

From the Washington Post:

With momentum building to rein in record budget deficits, Democrats are sharply divided over whether to tackle popular but increasingly expensive safety-net programs for the elderly, particularly Social Security.

A growing number of Democratic lawmakers say they are willing to consider controversial measures such as raising the retirement age and reducing benefits for wealthier seniors as part of a compromise with Republicans to cut spending on the programs and stabilize them for future generations.

But senior lawmakers such as Senate Majority Leader Harry M. Reid (Nev.) and Sen. Charles E. Schumer (N.Y.) are lining up against them, arguing that tampering with Social Security would harm the elderly — as well as the political fortunes of Democrats hoping to maintain control of the White House and the Senate in 2012....

Meanwhile, Third Way, the centrist Democratic think tank, plans to release a memo Friday arguing that the deficit has emerged as an uncommonly powerful political issue and that 2012 voters will reward the party that takes bold action to restrain government spending — including overhauling Social Security, Medicare and Medicaid.

“In our view, Republicans are winning this fight,” the memo says, according to an advance copy provided to The Washington Post. “ ...

Josh Marshall at TPM commenting upon the Post article:

Beware articles that conflate Social Security with Medicare. Beware articles that hang on statements from pressure groups with virtually no constituency within the Democratic party.

OIG Report On State Agency Furloughs

Social Security's Office of Inspector General (OIG) has issued a report on the Social Security Administration's response to furloughs of state employees who make initial and reconsideration determinations on disability claims for the agency. A number of states in financial difficulty have furloughed these employees even though their salaries and all other expenses are paid by the federal government. The reason always given for this is that the states want "to be fair to other state employees." I have extracted a chart from the report showing the numbers of cases involved per state and what Social Security has done in response. Click on the chart to see it full size.

Here is an interesting paragraph from the report (footnotes omitted):

SSA [Social Security Administration] explored other options to address the effect of State furloughs, such as contracting with private companies and federalizing the State DDSs [Disability Determination Services]. However, these options would likely involve legislative changes, as the Social Security Act, in effect, requires that most disability determinations be processed by State DDSs. Additionally, SSA estimated that federalizing the State DDSs would be more costly than the current framework—costing approximately $4 billion over the first 4 years.