What Happens With Sequestration?

     Sequestration, the odd term for automatic budget cuts, seems almost certain to take effect on March 1 unless there is a last minute "Come to Jesus" moment. Thank goodness the furloughs don't start instantly. From Government Executive:

Federal employees will not feel the immediate impact of sequestration, should automatic budget cuts set to go into effect March 1 take place, an Obama administration official said Thursday.

Office of Management and Budget Controller Danny Werfel told the Senate Appropriations Committee that union negotiations would start on March 1, if sequestration hasn’t been averted, and most federal employees would not receive furlough notices until mid-March.

“Will the furloughs take place on March 1st?” Werfel asked himself rhetorically. “No, because of legal requirements,” referring to the need to bargain with unions and provide 30 days notice to employees.

OMB clarified on Friday that Werfel was referring specifically to Defense Department civilians when setting April as the earliest possible start date for sequestration furloughs. The Obama administration is leaving open the possibility furlough notices could be sent out to non-Defense feds before March 1.

     Below is a letter that then Commissioner Michael Astrue sent to Senator Mikulski concerning the sequester. You can click twice on each page to view at full size. It appears to me that Astrue was understating the effects of sequestration on Social Security. I don't see how the agency avoids widespread furloughs. We won't have to wait long to find out. If furloughs are coming, Social Security will have to notify the employee unions and begin negotiating with them pretty much immediately after sequestration begins on March 1.

     Update: Let me respond to a persistent misunderstanding. Social Security benefits are exempt from sequestration. Social Security's administrative budget, the budget that pays employee salaries and that pays for rent and electricity and paper clips and all the other goods and services needed to keep the Social Security Administration operating, is very much subject to sequestration

ALJ Augustus Martin 1944-2013

     Social Security Administrative Law Judge Augustus Martin of the Charleston, SC hearing office has passed away after suffering a stroke.

Going All Qui Tam In Kentucky

     From the Lexington, KY Herald-Leader:

An Eastern Kentucky lawyer who has represented hundreds of people in Social Security disability cases schemed with a federal judge to commit wholesale fraud, two whistle blowers charge in a civil complaint.

Eric C. Conn received millions of dollars from the government for handling disability claims that the administrative law judge improperly approved, the complaint alleges.

Many people were approved for lifetime disability payments they didn't deserve, which could eventually cost the federal government tens of millions of dollars, said Benjamin J. Vernia, one of the attorneys who filed the claim. ...

The judge named in the complaint, David B. Daugherty, improperly manipulated a docketing system to get control of Conn's cases, the lawsuit alleges.

In 2010, Daugherty approved 99.7 percent of the claims before him, when the national average was 62 percent, the complaint said. ...

A court motion in the case indicates federal authorities are conducting a criminal investigation in the case.

Conn issued a statement Tuesday saying he had not seen the complaint and could not comment on it until he had.

"I can certainly say that I have always tried to represent my clients in the best and most appropriate way possible, within all the laws and rules," Conn said in the prepared statement. ...

The complaint against Conn was filed under the federal False Claims Act, under which whistle blowers can get a portion of the money recovered in cases in which the federal government is defrauded. ...

Vernia and Lexington attorneys Mark A. Wohlander, a former assistant federal prosecutor; Brian A. Ritchie; and William Nicholas Wallingford filed the lawsuit for two whistleblowers in October 2011.

The case was sealed until Tuesday, however. That was because the federal government had asked for several stays throughout 2012 as it considered whether to join the case.

The government ultimately said it could not decide whether to intervene by a deadline Thapar had set. Conn said in his statement that it is noteworthy the government decided not to take over the case.

The whistle blowers in the case are Jennifer Griffith and Sarah Carver. Both worked in the Huntington, W.Va., office of the Social Security Administration, which handled appeals in disability cases from Eastern Kentucky, according to the complaint.

     This type of lawsuit is known as a qui tam action. Qui tam actions have at times been spectacularly successful. In this case, I doubt that's going to happen. Daugherty was approving almost all disability claims that came before him. Conn wasn't representing all those claimants. Other lawyers were representing many of these claimants. Some claimants were unrepresented. Regardless, almost all of these claims were approved. Were all those other attorneys and all those unrepresented claimnats bribing Daugherty? That makes no sense. If it didn't take a bribe to get Daugherty to approve a disability claim, why would Conn bribe him? Would Conn bribe Daugherty to get him to manipulate the docketing system? That's way too visible. This whole case seems awfully improbable to me. Mere suspicions aren't enough to win a qui tam case. You have to have facts. Social Security didn't find enough merit in the case to get involved. Qui tam actions are much less likely to succeed if the government decides to not get involved.

Getting Freaked Out Over Removing F.I.C.A. Cap

     There are more and more signs that the right is getting freaked out at the prospect that Social Security's long term funding problems will be solved by lifting the cap on F.I.C.A. contributions. Today's New York Times has an op ed piece by Yuval Levin promoting the idea of means testing Social Security benefits. Levin works for a right wing think tank and edits a right wing journal.

     As Levin and others who promote this idea well understand, means testing undermines Social Security in the long run. If means testing is adopted, Levin and others will immediately start describing it as "welfare" and calling for it to be abolished. 

     Yuval Levin and others may try to label lifting the F.I.C.A. cap as some weird left wing idea that could never be adopted but there is wide support for lifting the F.I.C.A. cap even among Republicans. That's why Levin and others on the right are so freaked out. They're doing everything they can to derail the freight train headed their way. I know. The freight train isn't going to arrive while Republicans control the House of Representatives but that won't last forever.
     Maybe those who oppose lifting the F.I.C.A. cap ought to just shut up about Social Security's funding problems. The more they agitate on this subject, the closer we get to removing the F.I.C.A. cap

Astrue Was Busy On February 12

     The Ruling that Michael Astrue signed on February 12 wasn't the only one he signed that day. Tomorrow's Federal Register will have another Ruling he signed that day, although this one isn't that important. Social Security Ruling 13-3p says that:

In this SSR [Social Security Ruling], we are adopting as our nationwide policy the holding in Difford v. Secretary of Health and Human Services, 910 F.2d 1316 (6th Cir. 1990). We have applied the holding in that decision under Acquiescence Ruling (AR) 92-2(6) to cases involving beneficiaries residing in States within the Sixth Circuit ... Because this SSR addresses the issue decided by the Difford court, in this issue of the Federal Register, we are also publishing a notice rescinding AR 92-2(6) as obsolete ...

In Difford, the United States Court of Appeals for the Sixth Circuit interpreted the references to “now” and “current” in section 223(f) of the Act to require that when we review a medical disability cessation determination or decision, we must consider whether the beneficiary was disabled at any time through the date of the adjudicator(s)’s final determination or decision.

Another Problem On Colvin's Desk

     According to a new audit report from Social Security's Office of Inspector General, Social Security and the Office of Personnel Management (OPM) are having a serious disagreement. OPM has been billing Social Security for its work in administering Administrative Law Judge (ALJ) positions. OPM's work includes administering the ALJ exam, which isn't an exam in the traditional sense, but which takes plenty of staff time to administer.Social Security is refusing to pay OPM's bills. Social Security is not satisfied with the documentation that OPM is providing for the bills and is generally unsatisfied with the quality of OPM's work. It appears that budgetary problems at OPM and Social Security's desire to undertake hiring of ALJs without OPM's help are both playing a part in this dispute. There's no indication that this could delay future ALJ hiring -- assuming there's ever money to hire more ALJs -- but problems of some sort are inevitable if this dispute isn't resolved. To this point, the Office of Management and Budget (OMB), which is part of the White House, seems to be trying to stay out of the dispute but they may have trouble staying out if the two agencies can't come to an agreement.

A New Ruling On Drug Abuse And Alcoholism As A Parting Gift From Michael Astrue

     From Social Security Ruling 13-2p, scheduled to be published in the Federal Register tomorrow:

Although the DSM [Diagnostic and Statistical Manual of Mental Disorders] includes a category for nicotine-related disorders, including nicotine dependence, we will not make a determination regarding materiality based on these disorders. ...

When we apply the steps of the sequential evaluation a second time to determine whether the claimant would be disabled if he or she were not using drugs or alcohol, it is our longstanding policy that the claimant continues to have the burden of proving disability throughout the DAA [Drug Abuse and Alcoholism] materiality analysis. There does not have to be evidence from a period of abstinence for the claimant to meet his or her burden of proving disability. ...

[From a footnote] The finding about materiality is an opinion on an issue reserved to the Commissioner under 20 CFR 404.1527(e) and 416.927(e). Therefore, we will not ask a treating source, a CE [Consultative Examination] provider, a medical expert, or any other source for an opinion about whether DAA is material. ...

At the State agency levels of the administrative review process, a State agency medical or psychological consultant (MC/PC) may use his or her knowledge and expertise to project improvement of a physical impairment(s). At the hearing and appeals levels, Administrative Law Judges (ALJs) and the Appeals Council (when the Appeals Council makes a decision) must consider such MC/PC findings as medical opinion evidence and may base their findings about materiality on these opinions. ALJs and the Appeals Council may also base their findings on testimony from medical experts. As we provide in our regulations on considering nonexamining source opinion evidence, ALJs and the Appeals Council will give weight to these opinions to the extent that they are supported and consistent with other relevant evidence in the case record. Medical source knowledge and expertise are factors that may support the finding. ...

Adjudicators should generally not rely on a medical opinion to find that DAA is material if the case record contains credible evidence from an acceptable medical source from a relevant period of abstinence indicating that the impairment(s) would still be disabling in the absence of DAA. ...

Adjudicators must not presume that all claimants with DAA are inherently less credible than other claimants.

      The big thing going on here is not what this Ruling says but what it doesn't say. Social Security's previous instructions on DAA said that "“When it is not possible to separate the mental restrictions and limitations imposed by DAA and the various other mental disorders shown by the evidence, a finding of ‘not material’ would be appropriate.” This statement is not in the Ruling. In fact, the Ruling says the exact opposite.
     This was signed not by Acting Commissioner Colvin but by Michael Astrue on February 12. It was filed with the Office of Federal Register on February 19, after Astrue left office. Was Colvin aware of this? If this were a regulation, I would say it would be invalid without Colvin's signature but a Ruling? Colvin could disavow this at any time but would she? Of course, she could "correct" it by adding the omitted language.

Mr. True On Cavuto

     Michael Astrue appeared on Neil Cavuto's show on Fox Business News yesterday. Here are some things I gleaned from this appearance:

• If you thought that the Fox News attitude wouldn't carry over to Fox Business News, you'd be wrong. Cavuto had all the Fox News talking points on Social Security down pat. He could not refer to any Democratic idea without sneering.
• Cavuto seemed incapable of pronouncing Astrue's surname. A couple of times he seemed to refer to Astrue as Mr. True. Eventually, he just referred to him as Michael.
• Astrue wanted to talk about the serious problems affecting the Social Security disability trust fund.
• Astrue was promoting a Simpson-Bowles Commission to deal with Social Security. He wanted a requirement that there must be a vote on the floor of each House of Congress on this Commission's recommendations.
• Astrue thought it was a "trendy but facile" idea to remove the cap on earnings covered by the FICA tax because this would put a "crippling burden on the younger generation" and it would make it very difficult to operate a small business.
• Astrue believes that raising the retirement age "has to be on the table."
• Astrue made a dig at President Obama by noting that George W. Bush had nominated him four months before his predecessor's term had ended while, in Astrue's words, Obama was only in the "early stages" of selecting a new Commissioner.
• Astrue criticized an unnamed candidate or candidates for the job of Social Security Commissioner whom he characterized as being from the "very far left" because they denied that Social Security had any serious funding problem and because they believed that only minor tweaks would be required. He thought that the Social Security Commissioner should stay out of the debate and be an operational manager.

     I don't understand why Astrue would want to promote a Simpson-Bowles Commission to deal with Social Security. Simpson-Bowles was a disaster. That Commission never agreed to any recommendation. Their work didn't move Congress or the American people any closer to a resolution of our budget problems. There's no reason to believe such a commission to deal with Social Security would be any less of a failure. The reason is simple. People like Astrue insist that raising the retirement age has to be on the table but also insist that tax increases have to be off the table. How does that position get one to an agreement? How would lifting the FICA cap put a crippling burden on younger people? The vast majority of younger people would be unaffected by such a change. How would raising the FICA cap make it difficult to operate a small business? Few small businesses have any employees who have earnings above the FICA cap. If Astrue really wants to move the U.S in the direction of some grand bargain on Social Security, he has to say that increasing taxes must be on the table along with benefit cuts but if he says this he won't be appearing on Fox Business News again and he'll be ostracized by his fellow Republicans so he can't say that.

     I agree with Astrue that the next Social Security Commissioner should stay out of the Social Security funding debate and should be an operational manager. Nancy Altman is undoubtedly a fine person with great qualifications but those qualifications don't match up with the job description for the position of Social Security Commissioner. However, I don't think it's accurate or helpful to characterize Altman as being from the "very far left." To my mind, Altman is a political realist. Her position is that any attempt at this time to deal with Social Security's financing difficulties is doomed. Anything that Republicans would agree to would rely almost exclusively on benefit cuts. There's no point in agreeing to this sort of deal or even agreeing to talk about it. Medium and long term demographics strongly favor the Democrats. Wait a bit and this problem can be resolved on Democratic terms. Is that a "very far left" position or just political realism?