The State Of The Fiscal Cliff Negotiations -- Social Security Benefits May Escape Cuts. Republicans Want To Escape Blame

     From Politico:

There is only one way to make the medicine of tax hikes go down easier for Republicans: specific cuts to entitlement spending. ...

A top Democratic official said talks have stalled on this question ...  Rob Nabors [the White House negotiator], has been saying: ‘This is what we want on revenues on the down payment. What’s you guys’ ask on the entitlement side?’ And they keep looking back at us and saying: ‘We want you to come up with that and pitch us.’ That’s not going to happen.” ...

It is possible Social Security gets tossed into the mix, but Senate Majority Leader Harry Reid (D-Nev.) plans to fight that, if he has to yield on other spending fronts. ...
 
[T]hat will most likely be the deal Republicans will be staring at: tax hikes now in exchange for Medicare changes way later.

     Note that Republicans are trying hard to avoid responsibility for Social Security or Medicare cuts. They want the President and Democrats to "own" those cuts even though it is the Republicans who are demanding them. Republicans want to continue to call, in the abstract, for cuts in "entitlements" while demanding that Democrats propose the actual cuts to Social Security and Medicare. The public doesn't oppose cuts to "entitlements" since the public has little idea what that term means. If anything, most of the public seems to think that "entitlements" are some form of "welfare" that doesn't go to people like them. The public does strongly oppose cuts in Social Security and Medicare, however, since the public, in general, is either receiving Social Security and Medicare or expects to.

Social Security, Angered By Spending Discipline, Takes Frustrations Out On Taxpayers According To Ohio Newspaper

     From the Tribune Chronicle of Warren, Ohio:

If you need to visit a Social Security office, plan to get there early. Starting next week, the public can visit Social Security offices only between 9 a.m. and 3 p.m. on weekdays. Beginning in January, the facilities will close at noon on Wednesdays.

Social Security officials complain Congress has not given them enough money to administer the program. In fact, the $10.7 billion Congress provided for administration is $287 million less than for the previous year.

So, like many businesses and households in the United States, the Social Security Administration is having to find ways to tighten its belt. Agency officials have chosen to take their anger out on the public, including the millions of older Americans who rely on Social Security.

Could the agency have not done what many businesses have - stagger employee hours to keep stores and offices open as much as possible for their customers?

Almost undoubtedly, the agency could have found ways to avoid reducing office hours. But, like so many government bureaus, the knee-jerk reaction to spending discipline seems to have been to take out frustrations on taxpayers. No wonder some of them are angry.

Former Lawmaker Indicted For Social Security Fraud

     From the Seattle Post Intelligencer:

A former Missouri lawmaker was indicted Tuesday on theft and Social Security fraud charges after receiving nearly $60,000 in federal disability payments while also getting paid for his work as a state House member.

The indictment alleges that former Democratic Rep. Ray Salva failed to notify the federal government of his employment as a legislator and thus received Social Security disability payments that he wasn't entitled to get. Salva served as a representative from the Kansas City suburb of Sugar Creek from January 2003 until January 2011, earning an annual salary of more than $30,000.

Plaquemine Field Office To Close

     The Social Security Administration is closing its field office in Plaquemine, LA on December 14 to save $4 million a year.

Waiting For A New Commissioner?

     All new federal regulations must be approved by the Office of Management and Budget (OMB), which is part of the White House.On August 15, Social Security sent three proposed final regulations to OMB. These were new Listings for "Respiratory System Disorders", "Genitourinary Disorders" and "Congenital Disorders That Affect Multiple Body Systems." OMB is supposed to act on proposed rules within 90 days. That time period can be extended by OMB for an extra 30 days or indefinitely by the agency that sent over the proposal. These proposals have now been pending over 90 days. That is unusual. OMB's website indicates that review has been "extended." It doesn't say whether OMB extended the review or whether Social Security extended it. I don't want to read too much into this. I don't recall any of these being controversial.

Doing Away With F.I.C.A. Isn't Liberal

      Froma Harrop isn't buying Russ Douthat's argument that we should do away with the F.I.C.A. tax and means test Social Security:

Conservatives never much liked Social Security. It's a wildly popular government program that's totally solvent until 2033. It will be easily fixable and by then may not need fixing at all. Doesn't quite fit with the government-can't-do-anything-right talking point. ...

They already tried Plan A during the George W. Bush years. Recall efforts to privatize the program -- that is, let workers put their Social Security payroll tax money into private investment plans. Recall how the boosters tried to sell stocks as a no-lose investment.

The beauty of Plan A was that Wall Street would get its cut, and eventually, the federal government would no longer be obligated to cut Social Security checks. But the public was so protective of traditional Social Security that Plan A crashed even before the stock market did.

Plan B starts with means-testing. It is a clever approach because it expropriates liberal rhetoric about the rich helping the poor. Means-testing would reduce the benefits of the well-to-do while keeping (or raising) them for others. This is an excellent way to destroy the loyalty to the program among our more powerful citizens. The deal could include making permanent the Social Security payroll tax holiday scheduled to expire on Jan. 1 -- in the interests of progressive taxation, of course.

Another counter-idea: The payroll tax holiday was always a bad concept from a true liberal perspective. (President Obama backed it as a stimulus measure.) It's bad because Social Security is an earned benefit. You can't easily take away something people know they've paid for.

So here's the work-around: It makes no sense, writes conservative Ross Douthat, "to finance our retirement system with a tax that ... imposes particular burdens on small business and the working class."

How liberal sounding. How sneaky. Start paying for Social Security out of general revenues and reduce benefits for the wealthy, and what do you have? You have welfare. You know what happens to welfare. ...

By the way, we already have a system for means-testing. It's called the progressive income tax. If conservatives think rich people should pay more, they can simply let marginal tax rates (and the capital gains tax rate) rise. Complicating Social Security with more means-testing and ending the tax dedicated to keeping it afloat would kill the program -- with a smile.

On to Plan C.

You Can Once Again Comment Without Registering

     I have changed the settings on this blog to once again allow comments without registering with Blogger. I am hoping that we are done, for now at least, with the problem of posts by ringers who pretended to be Social Security employees or who made multiple postings to give the appearance that some point of view enjoyed widespread support when it didn't. I hope that now that the election is over, this nuttiness is behind us.

     Of course, I never understood why people had a problem with registering with Blogger. It's not like it takes much time or requires divulging anything as personal as a real name, for instance. It inhibited commenting far more than I thought it would.

F.I.C.A. Is New Deal Machiavellianism?

     From Russ Douthat at the New York Times:

Payroll taxes are a relic of New Deal Machiavellianism: by taking a bite of every worker’s paycheck and promising postretirement returns, Franklin Roosevelt effectively disguised Social Security as a pay-as-you-go system, even though the program actually redistributes from rich to poor and young to old. That disguise has helped keep Social Security sacrosanct — hailed by Democrats because it protects the poor and backed by Republicans as a reward for steady work. 

But the costs of this disguise have grown too great to bear. Whatever its past political advantages, the payroll tax now imposes an unnecessary burden on a stagnating economy. In an era of mass unemployment, mediocre wage growth and weak mobility from the bottom of the income ladder, it makes no sense to finance our retirement system with a tax that falls directly on wages and hiring and imposes particular burdens on small business and the working class.

     First, Douthat is simply wrong to say that Social Security was disguised as a pay as you go system. He's got it backwards. Social Security is disguised but the disguise is that it appears to be a pre-funded retirement system when it is actually a pay as you go system. Douthat spent too much time coming up with the eye-catching phrase, "New Deal Machiavellianism", and too little time thinking about what he was saying.

     Second, Douthat goes on to say that he thinks that it would be a good idea to means-test Social Security. I doubt that idea will go over all that well even with those who generally want the federal government to do more income redistribution.