Can Anyone Explain This To Me?

     From Jay Newton-Small writing at The Swampland blog at Time, writing about the debt ceiling agreement :

... [J]ust to ensure we don’t have another bruising government shutdown fight over cuts in September, the deal deems and passes the 2012 budget. Yes, that’s right, the old Gephardt Rule or Slaughter Solution, is back. What’s deem and pass? It’s a legislative trick that essentially means that Congress will consider the budget passed without ever actually having to vote on it.

     Neither the House nor the Senate Appropriations Committee has even started formally considering the Labor-HHS appropriations bill that includes Social Security, so how can we now rule out a government shutdown after September 30, 2011?

Debt Ceiling Deal Causes No Cuts For Social Security Until At Least 2013

     Nate Silver at the New York Times makes it clear. The debt ceiling deal will cause no cuts in the operating budget of Social Security or any other domestic agency until at least fiscal year 2013. The expiration of the  Bush tax cuts at the end of 2012 may prevent any cut in Social Security's operating budget.

     There is less to this debt ceiling agreement than meets the eye. There is little chance that the "super committee" that has been set up will recommend anything. Even if it does, there is even less chance the recommendation will be adopted. The failure to adopt something will have little immediate effect. Even down the road, the effect should be limited if President Obama is re-elected. If he is not re-elected, there will be problems but there would be problems for Social Security anyway.

     By the way, I really like the idea of using the super committee as a means of forcing Republicans in Congress to vote for enormous cuts in Social Security and Medicare.

So What Just Happened?

     You have heard about the debt ceiling agreement reached yesterday. Here's what you may not have heard:

• It is far from clear that this can pass the House of Representatives. Many Republicans members oppose increasing the debt ceiling. It will take Democratic votes but most Democrats in the House oppose the agreement. However, Wall Street appears to believe that this will pass since the market is up this morning. 
• If the bill does not pass, we are in default. Probably, the August 3 Social Security payments will go out on time -- probably -- but anything beyond that will be delayed.
• The bill would cap domestic spending for the next 10 years. This means that it will be difficult for Social Security to get a larger budget or even to hold onto the operating budget it already has.
• The bill, if passed, sets up a process whereby a special 12 member joint committee of members of both the House and the Senate will recommend measures in November to dramatically cut the budget. Congress will then vote on the recommendations on December 23. If the committee cannot agree or if Congress does not enact the recommendations, automatic budget reductions kick in. The reductions exclude Social Security and apparently exclude Supplemental Security Income (SSI) and other poverty programs. Medicare is excluded except for provider payments.

     Unless Republicans on the joint committee are willing to include significant tax increases, I have a hard time imagining what the joint committee could come up with that Democrats would perceive as better than what happens if nothing is done and the automatic budget reductions kick in. After all, if the alternative is dramatic cuts in Social Security, Medicare, Medicaid, SSI, Food Stamps and Unemployment Insurance Benefits, what is so terrible about percentage cuts?

     I have this vision of how this joint committee will work. Democrats will come up with one plan, Republicans will come up with another plan and the two sides will be unable to come to any agreement. The joint committee has a vote on the rival plans. They deadlock 6-6 on the Democratic plan. When the Republican plan comes up, one of the Democrats votes "present." This means that the vote is 6-5 in favor of the Republican plan and it goes forward. Republicans in Congress are then forced to vote to dramatically reduce Social Security and Medicare. The plan fails, the country is left with the automatic cuts, and Republicans have to explain their votes to dramatically cut Social Security and Medicare when the election comes up.

     The question I wonder about is what would be the percentage reduction in appropriations for agencies such as Social Security if nothing is passed by December 23? I cannot seem to find the answer. Whatever the reduction is, furloughs at Social Security would be inevitable.
     Update: I am doing some very rough calculations and come up with a reduction in Social Security's operating budget of about 4% if no further agreement is reached. I am basing this upon the fact that the current agreement would call for $1.2 trillion in cuts over ten years. Divided by ten that would be $120 billion in cuts in this year's budget but that would be further divided in two between defense and non-defense spending and the Bloomberg business calculator figures on domestic expenditures-- although that is based solely on August 2011 expected expenditures, so I multiplied that by twelve. This is rough at best and there's certainly a chance that I have erred in some way. I hope someone can give us a more accurate number soon. A 4% cut in Social Security's operating budget would definitely cause furloughs and significantly reduced service but it would not cause the collapse of the Social Security Administration, at least in the short run.
    I do not know what effect the planned National Computer Center would have on this. Suspending that project would certainly save money. Isn't there a vacant data center building in the D.C. area that Social Security could take over so it doesn't have to build from scratch? That would be quicker and cheaper. If that project goes forward despite what has happened, I think some explanations are in order.
     Further update: I am reading that the cuts in domestic spending will be delayed until 2013 -- after the Bush tax cuts are due to expire. If I understand correctly, that would save Social Security from any immediate cuts in its administrative budget. The end of the Bush tax cuts, which is certain to happen, at least in part, will help avoid cuts after 2013. If I am understanding this agreement correctly, there will be huge pressure on Republicans to agree to tax increases and little pressure on Democrats to agree to anything.

New POMS On "Expedited Vocational Assessment"

Social Security has published some changes to its Program Operations Manual Series (POMS) that may explain the proposed regulatory changes it recently sent over to the Office of Management and Budget (OMB) for approval. The POMS change has the title, "Expedited Vocational Assessment at Steps 4 and 5 of Sequential Evaluation." The proposed change sent over to OMB has the title, "Expedited Vocational Assessment Under the Sequential Evaluation Process" so it sounds like these are the same thing. Why is Social Security already implementing a rule when it just asked OMB to approve a proposed rule?

Emergency Message On New Claims While Appeal Pending Does Not Help

Social Security has issued a new Emergency Message (EM) on the new Ruling which seeks to prevent a claimant from filing a new claim while an old claim is pending on appeal. The EM does not expand upon the Ruling in any meaningful way. It does not even address the question of what to do about cases where a new claim and an appeal are both already pending.

Debt Ceiling Settlement? Will SSA Be Affected?

Brian Beutler at TPM reports that there may be a settlement of the debt ceiling crisis. The settlement would involve a special committee that would recommend further budget reduction measures. That  committee would report back in November. Congress would then have until December 23 to enact something to reduce the deficit by December 23. If nothing happened, automatic cuts would go into effect, including Defense and Medicare. There is nothing in the report suggesting that Social Security benefits would be cut. The Medicare cuts would be directed at providers rather than beneficiaries. We will have to wait on further details but Social Security's administrative budget might be cut which would give us the prospect of furloughs just in time for Christmas. There is also a strong probability that if Congress is able to do something about the deficit by December 23 that Social Security will be affected with the chained CPI being the starting point but not necessarily the ending point.

A Solution At Last!

Just when you think there's no hope for the debt ceiling crisis, there it is. All it takes to solve it is two coins.

From The Past

Courtesy of the Way Back Machine, take a look at Social Security's homepage as of June 13, 1997.