ALJ Daugherty Resigns

From the American Bar Association Journal:

An administrative law judge who awarded Social Security disability benefits in every case he decided over a six-month period has resigned amid investigations into his conduct.

Judge David Daugherty of Huntington, W.Va., approved disability awards in all 729 cases he heard in the first half of fiscal 2011, the Wall Street Journal (sub. req.) reports. In 2010, he heard nearly 1,300 cases, and approved benefits in all but four of them.

Gang Of Six Back From Near Death Experience -- With Undisclosed Social Security Plan

 From TPM Media:

President Obama likes it. A wide array of Senators, including influential conservative Tom Coburn (R-OK), have given it their blessings. Out of nowhere, the Gang of Six's bipartisan plan for addressing the country's fiscal imbalance has returned from legislative hinterlands -- and has become the only viable, publicly available framework by which Congress can make good on its supposed desire for a grand bargain on deficit reduction.
But according to an aide briefed on the Gang of Six's negotiations, the fledgling framework is still too new and incomplete to be included in a package to raise the debt limit before August 2nd -- and it's more likely to become the basis for a bigger-deal in the weeks and months ahead.

"It will play into getting us through August 2nd in absolutely no way," the aide said. ...

The plan would also address Social Security's long-term shortfalls, through undisclosed reforms, on a separate table, so that any cuts or revenues would be funneled back into the Social Security Trust Fund to keep it solvent.

More On IT Shakeup At Social Security

From Information Week Government:

After a shakeup in the Social Security Administration's IT organization, the agency's CIO [Chief Information Officer], Frank Baitman, has abruptly resigned. His departure follows a decision by commissioner Michael Astrue to shift most of the agency CIO's responsibilities to deputy commissioner for systems, Kelly Croft....

Baitman's departure brings to a close a nine-year experiment with the agency's CIO's office that, according to some observers and former officials, never resolved the fractured line of authority between IT spending and operations that separated the CIO and the office of systems.

According to Feig, who left the agency in June, one of the primary reasons for the break-up of Social Security's IT [Information Technology] department was Astrue's perception that Baitman failed to advance the agency's strategic plan. In an interview with InformationWeek, Feig said there was a split on IT vision at the agency, with Baitman's office pushing an aggressive agenda to transform its IT systems while saving money over the long-term, and Croft sticking with the agency's old but proven mainframe systems, most of which still run the decades-old Cobol programming language.

Feig's downfall came after the Office of Management and Budget sought input on the strategic direction of Social Security's IT systems, and Feig, who joined the agency last year from the private sector, responded with a version of the strategy he was brought in to develop. Feig's strategy is described in a document titled, "SSA-2020: Vision and Strategy." However, the commissioner didn't endorse the vision's sweeping nature, and Feig said he was asked to leave for engaging the White House without authority to do so. ...

And Social Security's inspector general is working on an audit of the agency's software environment. The audit will address the agency's plans to evolve away from Cobol, its continued use of Cobol in an era of Web-based apps, its ability to hire and retain staff trained in Cobol, and the work involved in re-engineering the agency's Cobol code in modern programming languages. 

What Would You Do?

Bloomberg Government has a nice interactive piece on the choices facing the Department of the Treasury and the President should Congress fail to increase the debt ceiling. What would you do? 

Be aware that the problem is much more complicated than this indicates since it will be a day by day situation. Having enough money in hand to pay Social Security at some point in the month is not the same as having money in hand to pay Social Security when it is due. Also, and probably more important, there is the serious problem of rolling over existing debt. That debt will have to be paid off before more debt is issued. Paying off the existing debt that comes due in August will take a lot of money in hand. You would hope that thereafter new Treasury bills and bonds could be issued in the same amount as was just retired but it is not clear that people would buy newly issued Treasury bonds if the debt ceiling is not raised.

Down To The Wire

From the Washington Post:

The current timeline, according to aides in both parties, would call for the Senate to unveil its bipartisan plan [to raise the debt ceiling] later this week and begin to consider it Saturday. With a week of parliamentary hurdles to clear, the Senate could pass its bill by July 29, leaving the House just four days to consider whether to approve the plan before Aug. 2, when the country would no longer be able to pay its bills. ...

Obama met Sunday with House Speaker John A. Boehner (R-Ohio) and Republican Leader Eric Cantor (Va.) to discuss the way forward. While aides provided no details about the meeting, Treasury Secretary Timothy F. Geithner said in an interview Monday that he is “absolutely” confident a deal will be reached.“Despite what you hear, and this is a complicated place, Washington, people are moving closer together,” he told CNBC.

And if that House of Representatives vote on July 29 fails, there are tough days ahead forSocial Security recipients and everyone else in this country.

Why Is It That The Social Security Payments Due To Be Made On August 3 May Not Be Made On Time Or In Full?

Let me try to explain again why there is a threat to the payment of Social Security benefits in August. I'll do it in a Q and A manner. The problem is that the people who want and need to know this sort of thing are unlikely to read through this.

Question: How can there possibly be a threat to the payment of Social Security benefits -- Social Security is taking in enough money each month to pay benefits? 

Answer: Actually, Social Security is no longer taking in quite enough money to cover each month's benefits. Due to the aging of the baby boomer population, the trust funds are actually going down very slightly, although this may vary from month to month depending upon tax receipts. But that is not the real problem. The real problem is that the tax receipts don't arrive at the U.S. Treasury in one big lump sum at the beginning of each month. They come in drips and drabs throughout the month. A big chunk of Social Security payments are due to be made on the 3d of each month and there won't be enough money in the U.S. Treasury to make that payment on the 3rd of August.

Question: What's the Treasury got to do with it?
Answer: By law, the Secretary of the Treasury is the managing trustee of the Social Security trust funds. By law, all Social Security payments are made from the U.S. Treasury.

Question: Why doesn't Social Security just sell to the public some of those U.S. government bonds it is invested in?

Answer: It can't. The law says those bonds can't be sold to the public. They're non-marketable.

Question: If they can't be sold to the public, who can they be sold to?

Answer: They can be sold to the U.S. Treasury but if the debt ceiling isn't raised, the Treasury won't have money to buy back any of the bonds.

Question: Why not just sell some Treasury bonds to the public and use that money to redeem some of Social Security's non-marketable bonds?
Answer: To avoid going over the debt cap, the Treasury would have to redeem Social Security's bonds first and then sell Treasury bonds to the public. There wouldn't be money in the Treasury to redeem Social Security's non-marketable bonds.

Question: Does this mean that no Social Security benefits will be paid if the debt ceiling isn't raised?

Answer: No, it just means that the checks due to be paid on August 3 can't be paid in full, on-time. They can be paid, at least in part, later in the month. However, a failure to raise the debt ceiling would create chaos at the U.S. Treasury.. It is unclear exactly when payments would go out.

Question: You say that Social Security might not be paid in full but why?

Answer: Social Security's cash receipts do not quite cover the payments it needs to make but more importantly, failure to raise the debt ceiling would leave the government without the money to meet many crucial obligations. No one wants Social Security recipients to be left without part of their checks but no one wants to close federal prisons and release all of those prisoners. No one wants to stop Medicare and Medicaid. No one wants to stop paying soldiers in the field. No one wants to send all the air traffic controllers home. No one wants to stop paying those who work in the Border Patrol. Total up all these and many other crucial functions and you've got more money that needs to be paid than the government's cash flow. Something's gotta give. It is possible that Social Security payments would be reduced to help out in this impossible situation.
There's also a possibility that money that should be paid to Social Security beneficiaries would have to go to service the U.S. debt. Some U.S. bonds sold in the past will be coming due in August. Normally, this debt would be rolled over by issuing new bonds. The problem is that because of the debt ceiling, the Treasury won't be able to issue new bonds before paying off the old bonds. Where does the money come from to do that? This would be temporary but a big problem. Of course, the problem would become immense if the U.S. could not sell new bonds because of the chaos at the Treasury, which is a real possibility.

Question: Why are we so worried about the bondholders?
Answer: The U.S. Constitution says that the validity of U.S. bonds may not be "questioned." In any case, trying to stiff the bondholders would make it impossible for the U.S. to borrow money would certainly cause a collapse in world financial markets.

Question: This proves that the Social Security trust funds are a myth, doesn't it?

Answer: The nature of the Social Security trust funds has never been a secret. Most people have misconceptions about the nature of the trust funds. They think, literally, that there is some pot of dollar bills somewhere with their name on it or they think that there is some huge pot of dollar bills somewhere labeled "Social Security trust fund." The fact that there are common misconceptions about the trust funds does not make the trust funds a myth.. The U.S. government bonds in the trust funds are real. The existence of the trust funds is the crucial reason that Americans believe that they "own" their Social Security benefits. We should all agree that this sense of ownership is no myth. It is of crucial political importance. It is why there is almost no chance that those who want to destroy or dramatically alter Social Security will succeed. No other sort of trust fund has ever been a realistic possibility.

Social Security Wants Computer Fix For SSI Resources Issue

From a notice posted by Social Security on FedBizOpps.gov:

This is a SOURCES SOUGHT NOTICE.  It is NOT a solicitation for proposals, proposal abstracts, or quotations and in no way obligates the Government to award a contract.  The purpose of this notice is to obtain information, for planning purposes, regarding: (1) the availability and capability of potential sources that are capable of accessing detailed electronic data on property ownership for all 50 states, the District of Columbia and Northern Mariana Islands.  (Access to property information in U.S. territories and foreign countries is desirable but not mandatory);  (2) the ability to provide data elements related to a specific property which should include:  Social Security Numbers (SSNs) of owner(s); Names(s) of owner(s); full address of property including description and parcel number; tax assessed value; encumbrances if any i.e. mortgages, liens, etc.); dates of ownership; sale information (date and price); and use of property (i.e. commercial, residential, farm, etc.); (3) the ability to deliver data current, timely data in an electronic format protecting the personal information of Supplemental Security Income (SSI)  receipts; (4) provide access/search capability using SSN; and have ability to transfer multiple data records via an automated process; and develop routine management information reports and ad hoc request.

Nutty Death Master File Theories

A match made in hell: 9/11 conspiracy theorists meet the Social Security death master file.