Managers Worried About Administrative Budget

The National Council of Social Security Management Associations (NCSSMA), an organization of Social Security management personnel, has issued its June 2011 newsletter. NCSSMA is heavily focused upon Social Security's perilous administrative budget. One short quote from the newsletter describing the current budget situation: "We are 'walking on eggshells' now. It feels like we are being held together by tape and glue."

One Sentence

The Social Security Administration's "Update" contains this sentence: "The number of employees we have determines the amount of work we can complete."

Does that sound innocuous? Self-obvious? The last Commissioner of Social Security, Jo Anne Barnhart, would never have allowed such a sentence in a Social Security document. She promised that the magic fairy dust of her "plan" would make everything all better at Social Security regardless of the number of employees her agency had. She promised wonders from her "plan" but delayed and delayed announcing what her plan was. The delay was almost certainly because she had no more than vague ideas about a "plan." She probably also had an increasing realization that no "plan" would work without additional employees. She finally announced her "plan" shortly before she was to leave office, leaving it to her successor to make her "plan" work. Of course, her "plan" was unworkable and quickly abandoned. The whole thing  deceived the naive, of which there are many.

This week is an opportunity to fully bury the Barnhart approach. We have a Congressional hearing coming up that will focus on the question of why Social Security keeps overpaying people. Undoubtedly, Social Security will be criticized. Social Security can respond by saying, in effect, "Thank you, Congress, for pointing out our errors. We will do better." Or Social Security can respond by saying, in effect, "Yes, we've known about these issues for years. We'd love to address them but we don't have enough personnel. We've been telling you this for years. We got a bigger budget in 2009 and 2010 but never enough to get these problems resolved. Now, our budget has gotten tighter. Get us a bigger budget and we'll take care of these problems. Otherwise, nothing's going to happen and it's not because we don't care." Which would be a more honest answer to the criticism? Which will Social Security give? I understand the need for diplomacy  in  dealing with Republican Congressmen who remain all too eager to believe that the amount of work which may be accomplished by a federal agency is independent of the number of employees that agency has but honesty is needed as well.

Updated Fee Payment Numbers

Social Security has issued updated numbers on payments of fees to attorneys and others for representation of Social Security claimants:

Fee Payments
Month/Year	Volume	Amount
Jan-11	34,467	$113,459,847.04
Feb-11	33,305	$107,796,771.38
Mar-11	34,885	$112,463,768.46
Apr-11	48,033	$153,893,755.37
May-11	36,479	$115,159012.77

This shows a 2% reduction from the same period last year, a reduction this is certainly due not to fewer claims being approved but to more claims being paid much slower. It is taking claimants longer to get paid after a favorable decision on a disability claim.

SSI Overpayments Due To Real Estate Ownership

From a recent report by Social Security's Office of Inspector General (footnotes omitted):

SSI [Supplemental Security Income] is a needs-based program, and SSA [Social Security Administration] considers the applicant’s resources, including real property ownership, when determining program eligibility. Real property consists of land and buildings or immovable objects attached permanently to the land. ...

SSA staff can access the LexisNexis Risk Management Solutions database (LexisNexis) as an optional tool to obtain information about SSI applicants’ or recipients’ real property ownership, transfer of real property for less than fair market value, or recent sale of real property. ...

In a July 2009 report, Supplemental Security Income Recipients with Unreported Vehicles, we found that the Agency would have prevented about $551 million in improper payments had its staff used LexisNexis to identify unreported vehicle ownership. ...

While conducting the 2009 audit, we also found that many individuals who did not disclose their vehicle ownership also did not disclose their real property ownership. ...

[W]e used LexisNexis to determine whether there was any indication these individuals owned real property beyond their primary residences. We also reviewed LexisNexis for evidence of other ineligibility issues. In total, we referred 52 cases to SSA for further development since LexisNexis indicated the recipients owned real property that was not accounted for in SSA’s records. ...

SSA’s determinations of SSI recipients’ resources related to real property agreed with public property records in LexisNexis for 298 (85 percent) of the 350 records we reviewed. For the remaining 52 cases, the information in SSA’s records on real property ownership disagreed with information in LexisNexis. LexisNexis data indicated that the recipients owned one or more properties that were not recorded in SSA’s records. SSA reviewed these 52 cases. For 27 of the 52 cases, SSA determined that the information in LexisNexis was accurate; the recipients owned one or more real properties that they had not previously reported to the Agency....

Projecting our findings to the entire population, we estimate that about 541,580 recipients misreported real property ownership, and SSA improperly paid 320,940 of these recipients over $2.2 billion because of their unreported real property.

I would be a bit cautious about this projections. I have dealt with many SSI real property ownership situations where things turned out to be far more complicated than Social Security originally thought. The most common reason is something called "heir property," property in which an SSI recipient has an undivided interest in common with other heirs. Often, there is no practical way for the SSI recipient to demand that the property be divided or sold because land ownership is badly fractionated and there is no way to finance the  transactional expenses involved in dividing the property or forcing a sale. This sort of property usually ends up being sold for unpaid taxes. There are also many, many tracts of property not worth what county tax records show. This is especially the case when we are talking about undeveloped rural real estate which is often almost unmarketable. This is the type of real estate that SSI recipients are most likely to own in my part of the country. The real estate owned by SSI recipients is a can of worms, probably one that Social Security needs to open, but it is still a can of worms. In any case, Social Security can barely open this can of worms with its current staffing level. OIG can issue reports and the House of Representatives can hold hearings but without more personnel it just isn't going to happen.

Zombie-Nihilists

From the Crooks and Liars blog:

Good grief, this nonsense is just exhausting. Nothing is ever settled with these people, they have been coming after Social Security for 75 years, and they just don't quit, no matter how many times they get chased down with walkers and eaten alive by gray panthers. It's like they are programmed or genetically manipulated, like one of those creepy super-soldiers from science fiction that can't stop fighting after the war is over, even though they recognize the reality. 

Nah, I give them too much credit in that scenario. They are just zombie-nihilists and Social Security is the brain they are driven to eat.

STD And LTD Coverage Plummets

From a press release:

According to new research¹ from The Hartford, 49 percent of U.S. workers have short-term disability insurance [STD] and 44 percent have long-term disability insurance [LTD]. This represents a drop of 6 percent and 3 percent, respectively, over last year’s survey in the number of Americans with the coverage that provides an income if one cannot work due to an illness or non-work related injury.

Does Rehabilitating Disability Benefits Recipients Cost More Money Than It Saves?

Social Security has some very preliminary results from the Benefits Offset Pilot Demonstration (BOPD) (emphasis added):

We designed the four-State BOPD project to provide information about the implementation and the effect of a benefit offset for SSDI beneficiaries.  We used the information collected in BOPD to help design the BOND [Benefits Offset National Demonstration] project....

The pilot includes a targeted group of SSDI [Social Security Disability Insurance] beneficiaries who chose to volunteer for the project.  We gave them the opportunity to receive a $1 reduction in benefits for every $2 earned above the SGA [Substantial Gainful Activity] threshold amount during the extended period of eligibility (EPE), instead of losing their entire benefit, as they would have under our usual rules....

The State [by state] reports show that the benefit offset had a positive effect on the percentage of beneficiaries who have earnings above the SGA amount ($980 per month for the non-blind in 2009).  We conducted our own analysis using Internal Revenue Service earnings data and our benefit payment administrative records.  We found similar effects on earnings.  However, our analysis also showed an increase in benefit payments because we made partial benefit payments under the benefit offset to beneficiaries who would have had their benefits suspended due to SGA under the current program rules....

 No wonder Social Security wants to stretch out BOND over ten years.

Let's Just Abolish FICA And Be Done With It

From Bloomberg News:

President Barack Obama’s advisers have discussed seeking a temporary cut in the payroll taxes businesses pay on wages as they debate ways to spur hiring amid signs that the recovery is slowing, according to people familiar with the matter. 

The idea, which is in preliminary stages of discussion, is among several being talked about at the White House...

A hiring stimulus based on a tax break for employers may appeal to Republican lawmakers, many of whom have called for measures to help businesses....

A temporary break on employer payroll taxes would echo a centerpiece of the deal Obama and congressional Republicans reached in December 2010 to extend tax cuts enacted during the presidency of George W. Bush. That package included a two- percentage-point reduction in employee contributions to the payroll tax during 2011.

Update: Daniel Marans at FDL lays out the case against this sort of "temporary stimulus."