Progress On Fiscal Cliff Negotiations And Social Security May Be Greatly Affected

     There is progress in the fiscal cliff negotiations. If the reports are accurate, Social Security will be greatly affected. Ezra Klein (who is about as well plugged into the Obama Administration as it is possible for an outsider to be) reports that the deal would include:

• A shift to the chained CPI method of computing Social Security's Cost of Living Adjustment (COLA). The chained CPI method is a sneaky way of cutting Social Security benefits. Few people understand it but it reduces the COLA. Its effects on a Social Security recipient compound as the years pass. 
• An end for the sequester, which would dramatically cut operating budgets for Social Security and all other agencies on January 1 if it takes effect but there would be another sequester-like device to take effect at some later date.
• There might be "some amount of infrastructure spending" in the deal. Klein does not say how this spending might be directed. The Social Security Administration would be a great place for this spending. The money could be spent quickly and to great effect, both in terms of backlogs at Social Security and program integrity.
• The 2% reduction in the F.I.C.A. tax would end.

     A Washington Post article says that the infrastructure spending could be $50 billion! I would be extremely disappointed if Social Security were not included in infrastructure spending that high. 

     The article relates that"[S]enior Democratic aides said they could probably muster the votes for the [chained CPI] change if it was not applied to disability payments, known as SSI, and if very old seniors were protected through a bump-up in benefits at age 85." I hope this is just confused, that the chained CPI would not be applied to Title II Social Security disability benefits as well as SSI disability benefits. This would make sense because applying the chained CPI to someone who would draw disability benefits and then retirement benefits for 50 years or more would be devastating because of the compounding effect.

Sequestration Would Be A Disaster For Social Security

     While there are reports of some progress in the fiscal cliff negotiations, the parties remain far apart and agreement is uncertain. One of the consequences of failure to reach agreement and the one that is of the most importance for the Social Security Administration is sequestration, a sudden, dramatic cut in the agency's operating budget effective January 1. Sequestration would be far worse for Social Security than a government shutdown. In a government shutdown, most of Social Security continues to operate. A Senate Finance Subcommittee report gives some idea of what sequestration would mean for Social Security:

In fiscal year 2012 SSA’s [Social Security Administration unnecessarily stated in the possessive form] had an administrative budget of $11.45 billion. This represents less than 1.5% of the over $800 billion it will pay in benefits. The sequester would cut SSA’s administrative budget by $890 million in fiscal year 2013. As a result, in fiscal year 2013 SSA would lose 5,000 staff through attrition and the loss of temporary hires. In addition, SSA’s approximately 65,000 employees and 15,000 State Disability Determinations Services employees would face approximately 6 weeks of furloughs.

Degradation of Basic Services

... The processing time for the 3.2 million Americans who will file disability claims would increase from 111 days in fiscal year 2012 to an estimated 180 days in fiscal year 2013. The number of pending disability claims would increase from 861,000 in fiscal year 2012 to almost 1.5 million by the end of fiscal year 2013. As field offices and telephone-service centers close their doors for 30 days throughout the year, the waiting time for the 45 million field office visitors and 63 million 1-800 number callers would increase dramatically.

Combating Waste, Fraud, and Abuse
This year the SSA will conduct 435,000 continuing disability reviews, to ensure individuals receiving disability benefits are still disabled, and 2.4 million SSI redeterminations, to ensure individuals receiving SSI still meet income and resources limitations. Combined, these two program integrity activities are expected to save $5.9 billion over 10 years, approximately $8 for each $1 spent. Under the sequester, SSA would be able to conduct 35,000 fewer continuing disability reviews and 500,000 fewer SSI redeterminations. This would cost the Federal government $500 million over 10 years from otherwise preventable waste, fraud, and abuse.

Updated Numbers On Numbers Of Social Security Employees

The Office of Personnel Management (OPM) has posted updated figures for the number of employees at Social Security. I would caution that these numbers are a bit misleading. Social Security has long relied heavily upon employee overtime to get much of its workload done. Reductions in overtime are not reflected in the OPM numbers. Overtime declined at Social Security during the 2012 fiscal year and has almost completely disappeared since the beginning of the 2013 fiscal year on October 1, 2012. I cannot see the big picture but all of the parts of Social Security that I deal with, apart from the Office of Disability Adjudication and Review (ODAR), where the Administrative Law Judges (ALJs) work, seem to me to be falling apart, with the most dramatic changes happening at the payment centers, which put claimants on benefits after they approved, and the N.C. Disability Determination Service (DDS) which makes initial and reconsideration determinations on disability claims, being the most dramatically affected. Service at the field offices I am dealing with is also noticeably deteriorating. I could say that the current situation is one that cannot continue for the long term but that would understate the problem The current situation that I see is one that cannot survive for even a few more months without dramatic consequences which would be obvious to the public. I cannot even imagine the consequences if sequestration comes to pass for even a week or two.

• September 2012 65,113
• June 2012 65,282
• March 2012 65,257
• December 2011 65,911
• September 2011 67,136
• June 2011 67,773
• March 2011 68,700
• December 2010 70,270
• June 2010 69,600
• March 2010 66,863
• December 2009 67,486
• September 2009 67,632
• December 2008 63,733
• September 2008 63,990
• September 2007 62,407
• September 2006 63,647
• September 2005 66,147
• September 2004 65,258
• September 2003 64,903
• September 2002 64,648
• September 2001 65,377
• September 2000 64,521

Satellite Office Closes In Hawaii

     Social Security has announced the closing of its satellite office in Kona, Hawaii. The office had only been open four hours a month. Local residents now face a two hour drive each way to conduct business in person at a Social Security office. The satellite office in Kona had been well used. Locals had complained about long lines and limited places to sit. The local mayor said that closing the satellite office was "obviously a decision made by someone not from Hawaii Island.” The decision to close the satellite office affects not just those who are receiving or want to receive Social Security benefits. It affects those who need a replacement Social Security card so they can get a drivers license.

Dreams Die Hard

     From Paul Krugman writing for the New York Times:

... Since the 1970s, the Republican Party has fallen increasingly under the influence of radical ideologues, whose goal is nothing less than the elimination of the welfare state — that is, the whole legacy of the New Deal and the Great Society. From the beginning, however, these ideologues have had a big problem: The programs they want to kill are very popular. Americans may nod their heads when you attack big government in the abstract, but they strongly support Social Security, Medicare, and even Medicaid. So what’s a radical to do? 

The answer, for a long time, has involved two strategies. One is “starve the beast,” the idea of using tax cuts to reduce government revenue, then using the resulting lack of funds to force cuts in popular social programs. Whenever you see some Republican politician piously denouncing federal red ink, always remember that, for decades, the G.O.P. has seen budget deficits as a feature, not a bug.

Arguably more important in conservative thinking, however, was the notion that the G.O.P. could exploit other sources of strength — white resentment, working-class dislike of social change, tough talk on national security — to build overwhelming political dominance, at which point the dismantling of the welfare state could proceed freely....

O.K., you see the problem: Democrats didn’t go along with the program, and refused to give up. Worse, from the Republican point of view, all of their party’s sources of strength have turned into weaknesses. Democratic dominance among Hispanics has overshadowed Republican dominance among southern whites; women’s rights have trumped the politics of abortion and antigay sentiment; and guess who finally did get Osama bin Laden. 

And look at where we are now in terms of the welfare state: far from killing it, Republicans now have to watch as Mr. Obama implements the biggest expansion of social insurance since the creation of Medicare.

So Republicans have suffered more than an election defeat, they’ve seen the collapse of a decades-long project. And with their grandiose goals now out of reach, they literally have no idea what they want — hence their inability to make specific demands [in the fiscal cliff negotiations].

It’s a dangerous situation. The G.O.P. is lost and rudderless, bitter and angry, but it still controls the House and, therefore, retains the ability to do a lot of harm, as it lashes out in the death throes of the conservative dream. 

AFGE Statement On Arizona Bombing

     From a press release issued by the President of the American Federation of Government Employees (AFGE), the union that represents most Social Security employees:

A recent explosion outside the Social Security Administration office in Casa Grande, Ariz., should be a wakeup call for every agency head that the security and safety of our federal employees should be a top priority.

In this frightening event, a homemade bomb was detonated at the employee entrance to the Social Security office on the morning of Nov. 30. Luckily, no one was injured in the blast, although some employees have developed a cough and one is being examined for possible hearing loss as a result of the explosion.

Employees are understandably shaken and frightened and worried that they are putting their lives in danger simply by showing up for work. This incident is a stark reminder of the difficult and often dangerous environment in which federal employees work.

The office reopened Thursday for the first time following the incident, and employees have been gratified by the outpouring of support and encouragement from visitors.

I want to thank AFGE Local 3694 President Tony Thomas and Council 147 President Katrina Lopez for attending to the needs of the affected employees. I also extend my gratitude to SSA Administrator Michael Astrue and Region 9 Commissioner Bill Zielinski for personally visiting the office and pledging to review security enhancements at all Social Security offices.

We Should Double Social Security Benefits!

     Steven Hill writing in The Atlantic urges that we double Social Security benefits. I know and Hill knows that isn't going to happen but he makes a strong argument that Social Security benefits shouldn't be cut and, if anything, should be increased.
     Only about a third of seniors now have pension income. Defined benefit pensions -- the kind that pay a guaranteed benefit -- have been rapidly disappearing over the last thirty years. Only about 10% of workers are now covered by this type of pension. Sixty-five percent of workers are now covered by defined contribution pensions -- 401(k) type plans --  which have exploded in popularity with employers over the last thirty years. The problem is that:

401(k)s and other defined-contribution plans have turned out to be an unreliable pillar of retirement security, not only because they don't provide as secure a net but because many Americans are pretty lousy at managing their investments. A study by the National Bureau of Economic Research found that more than one-quarter of baby boomer households thought "hardly at all" about retirement and that financial literacy among boomers was "alarmingly low." Half could not do a simple math calculation (divide $2 million by five) and fewer than 20 percent could calculate compound interest.

     Seventy-five percent of Americans nearing retirement have less than $30,000 in their retirement accounts.

     Traditionally, home ownership has provided seniors with a cushion they can rely upon in retirement but during the Great Recession homeowners have lost $8 trillion in home equity. Twenty-eight percent of homeowners are underwater on their mortgages.

     The result is that about half of Americans are at risk of not having sufficient retirement income. 

     Still think the idea of increasing Social Security benefits is no outlandish? Are you really ready for retirement?

Merry Christmas