Winners And Losers

From the Washington Post:

The Congressional Budget Office estimate shows that compared with current spending rates the spending bill due for a House vote Thursday [and which just passed] would cut federal outlays from non-war accounts by just $352 million through Sept. 30. About $8 billion in immediate cuts to domestic programs and foreign aid are offset by nearly equal increases in defense spending.

Got that? Social Security got budget cuts that leave it barely functioning while defense spending went up.

House Social Security Subcommittee Hearing

Theresa Gruber, Social Security's Assistant Deputy Commissioner for Operations, testified today before the House Ways and Means Committee on Social Security number verification and identity theft. Her written testimony is now available.

President On Social Security

From a White House summary of President Obama's speech today:

The President does not believe that Social Security is a driver of our near-term deficit problems or is currently in crisis. But he supports bipartisan efforts to strengthen Social Security for the long haul, because its long-term challenges are better addressed sooner than later to ensure that it remains the rock-solid benefit for older Americans that it has been for past generations. The President in the State of the Union laid out his principles for Social Security reform which he believes should form the basis for bipartisan negotiations that could proceed in parallel to deficit negotiations:

• Strengthen retirement security for the low-income and vulnerable; maintain robust disability and survivors’ benefits.

• No privatization or weakening of the Social Security system; reform must strengthen Social Security and restore long-term solvency.

• No current beneficiary should see the basic benefit reduced; nor will we accept an approach that slashes benefits for future generations.

Lawsuit Alleges ALJ Bias In Queens, NY

From the New York Times:

The Queens office that hears appeals of Social Security disability cases is well known to lawyers, judges and many other New Yorkers as an inhospitable place to seek benefits. ...

Now, a class-action lawsuit filed on Tuesday in Federal District Court in Brooklyn says that five of the eight Queens judges are not just difficult, but also biased against the applicants — many of whom are poor or immigrants — and have systematically denied benefits to the disabled by making legal and factual errors. ...

The five judges named in the suit are David Z. Nisnewitz, Michael D. Cofresi, Seymour Fier, Marilyn P. Hoppenfeld and Hazel C. Strauss. ...

The Times’s analysis found that the rejection rate for the entire Queens office, 50.9 percent, was the highest in New York State, and far higher than in other New York City boroughs; in the current fiscal year, Manhattan has an average denial rate of 37 percent, the Bronx 33 percent, and Brooklyn 14.5 percent.

House Democrats Worried

A group of House Democrats apparently fear that the President will propose Social Security reductions on Wednesday, since they have sent the President a letter warning him not to cut Social Security or risk losing their support.

Bold Republican Plan

The Republican Study Committee, which includes most Republican in the House of Representatives, has issued a report calling for Supplemental Security Income (SSI) to end, with block grants to the states being substituted -- and the block grants would be at the 2007 spending level. The report also calls for a 25.6% reduction in discretionary spending, allowing Medicare beneficiaries to opt out, raising the Medicare age to 67, ending Medicaid and substituting block grants to the states, and raising full retirement age for Social Security to 70, with everyone who is currently under 60 being affected.

If this is the Republican platform for 2012, voters will definitely have a choice.

President To Propose Ending FICA Cap

From the Los Angeles Times:

President Obama will call for shrinking the nation's long-term deficits by raising taxes on wealthier Americans and requiring them to pay more into Social Security, drawing a barbed contrast with a Republican plan to save money by deeply slashing Medicare, Medicaid and other domestic spending. ...

Obama would end tax breaks for households earning more than $250,000 a year, trim Pentagon spending, lift a cap on the amount of income that is assessed for Social Security, and save on Medicare and Medicaid through alterations to healthcare delivery, administration officials said. He will speak about 1:30 p.m. Eastern time on the campus of George Washington University.

Final Appropriations Numbers For Social Security

The House Appropriations Committee has finally posted numbers on the cuts for various agencies under the final continuing resolution that will fund agencies through the rest of the fiscal year (FY). These numbers show no specific cut for the Social Security Administration other than a 0.2% cut being imposed across the board on all civilian agencies.

If I understand correctly, this means that Social Security's operating budget for the rest of the fiscal year will be the same as for the last fiscal year, less 0.2%, which would be about a $23 million reduction, at a time when Social Security's workloads are increasing dramatically. The Republican appropriations bill would have reduced Social Security's funding by $125 million from FY 2010, not counting recissions in funds already appropriated for construction of a new national computer center. The President's bill would have given Social Security almost a billion dollars more than FY 2010.

The bottom line is that under this level of funding, Social Security can probably avoid furloughing employees -- and I would guess that to have been the only goal shared by Democrats and Republicans -- but backlogs will grow and service will deteriorate. I am curious to know whether any overtime will be possible for the rest of FY 2011. Social Security has been getting a lot of its workload accomplished using overtime. No overtime would be very bad news for Social Security. Also, we need to know to what extent Social Security will have to freeze hiring for the rest of FY 2011.

Funding for Social Security's new national computer center is more precarious than anyone, including Republicans, would like. That money will have to be painfully squeezed out of the budget each year until it is finished.

Update: That 0.2% reduction in funding must not have been applied exactly evenly. According to the actual bill, Social Security's reduction was $26 million, not $23 million. More importantly, $75 million in funds previously appropriated to Social Security for information technology, telecommunications hardware and software infrastructure was rescinded. This is on top of the $200 million in rescissions for the national computer center. We already knew about that one.

This is going to be a mess to manage. Social Security is on a path towards administrative collapse.