Getting A New Government Program Off The Ground Is Tough

     The start-up problems that the Health Care Exchanges are experiencing are not without precedent. As Arthur Delaney writing for the Huffington Report notes there were serious start-up problems with Social Security. Early on, a management expert told the nascent Social Security Board that it should notify Congress that it couldn't run the program! The management expert was told to get back to work. I think you can guess the rest of the story.

Big Return From Social Security

     From a study by Gary Koenig of the AARP Public Policy Institute and Al Myles of Mississippi State University:

Social Security’s economic impact starts when its recipients spend their benefits on goods and services.The businesses that receive these dollars use them to pay their owners and employees, purchase additional items to sell, and pay rent, taxes, and the other normal costs of doing business. Their suppliers in turn use the revenue they receive to pay their employees, suppliers, and so forth....

 Every dollar of Social Security benefits generates about $2 of economic output. ...

Social Security benefit payments in 2012 supported:

• About $1.4 trillion in economic output (goods and services)
• Just over 9.2 million jobs
• About $774 billion in value added (gross domestic product)
• More than $370 billion in salaries, wages, and other compensation
• Tax revenues for local, state, and federal governments exceeding $222 billion, including $78.9 billion in local and state taxes and $143.3 billion in federal taxes

OIG To Focus On Widespread Fraud Investigations; ALJ Lillios Detailed To Help

     From Social Security's Office of Inspector General (OIG):

Our new pilot ... will focus on allegations involving third-party facilitators [of disability fraud], particularly those that may indicate widespread fraud schemes or conspiracies.  The pilot will focus on allegations involving:

• SSA senior executives, administrative law judges, administrative appeals judges, and other employees;
• attorneys and non-attorney claimant representatives; and
• medical evidence providers, consultative examiners, vocational and medical experts, and other disability contractors.

The Inspector General has asked SSA [Social Security Administration] Associate Chief Administrative Law Judge Paul Lillios to manage this new pilot program.  Judge Lillios has been detailed from SSA to the OIG as a Senior Advisor, reporting to our Assistant Inspector General for Investigations, Rich Rohde.

Why Social Security Is Essential

     Alicia Munnell of the Center for Retirement Research explains in simple terms why Social Security is absolutely essential and why replacing it with a defined contribution plan would be a horrible idea: People are so financially illiterate that they cannot be counted upon to make rational retirement decisions and more financial education won't solve the problem.

     And, by the way, to prove her point do you, gentle reader, even know what a defined contribution plan is?

Representative Ryan Asking About Raising Retirement Age

     No big surprise here, but Representative Paul Ryan, the Chairman of the House Budget Committee, seems to be interested in the effects of raising Social Security's normal retirement age. He recently asked Social Security's Chief Actuary to give him information about the effects of the last increase in the normal retirement age.

SSA Has No Idea Whether The Billions It's Spent On IT Have Done Any Good

     From a report by Social Security's Office of Inspector General (OIG) (footnotes omitted):

Our objective was to determine whether the Social Security Administration (SSA) had achieved the planned cost savingsfor its information technology (IT) initiatives....

In Fiscal Year (FY) 2012, SSA spent approximately$1.5 billion on IT investments. SSA has stated its IT investments have been critical to increasing its average annual employee productivity. For example, the Agency indicated that IT investments in online services and the disability process have allowed it to keep pace with recent workload increases. ...

In an April 2009 report, we noted that SSA’s 7-year projected savings for new and continued IT projects in FYs 2007 through 2009 were $10 to $20 billion. ...

In a 2007 review, we determined that although SSA had established a PIR [Post-Implementation Review] policy, it had not established a process to determine whether its IT projects actually achieved their planned cost savings....

We could not determine whether SSA had realized the planned cost savings for its IT initiatives because SSA had not calculated actual savings after project implementation. Additionally, SSA did not have a process to assess the overall effectiveness of its IT capital planning and investment control process. As a result, SSA did not know whether the IT investments achieved the planned FTE savings or any productivity improvements.

     For years, I have been asking the question: If the enormous IT investment required to implement electronic files at Social Security was cost effective, why didn't Social Security release a report crowing about its success? Now we have the answer. Social Security couldn't release a report crowing about its success because it had no idea whether its electronic files project was a success. It wasn't even trying to find out. I wonder if they weren't trying to find out because they were afraid to find out what the answer would be.
     I'm going to get some responses saying that electronic files are wonderful and asking why I would want to go back to paper files. I don't want to go back to paper files. Doing so would cost even more money. We may as well use the poorly designed system we have. However, I'm pretty sure that if former Commissioner Barnhart had put all that money that went into the switch to electronic files into more personnel to review paper files that the agency's backlogs would be far lower now. I don't care in the least whether some Social Security employee finds electronic files more to their liking. It doesn't matter a bit what Social Security employees like or don't like. It doesn't matter what I like or don't like. The important thing is delivering service to the public. I'm confident that throwing more people at the backlog problem would have worked. It's obvious that throwing IT money at contractors didn't work. We still have enormous backlogs. Everyone is now accustomed to these backlogs, except for the claimants. Huge contractors get rich while claimants die waiting for an answer.

WSJ Fantasizes About Cuts To Social Security

     The Wall Street Journal is fantasizing about cuts to Social Security. It will happen -- just as soon as the Wall Street Journal supports higher taxes on those with high incomes. Anyone want to predict when that will happen?

Attack On Social Security From Children's Advocate

     From WNYC:

The president of the Harlem Children Zone said he's on the college campus circuit to gin up student activism around entitlement spending. As it is, Geoffrey Canada said, seniors are erasing any chance for the next generation to have the safety net they will need and deserve.

"There are a lot of folk who have a lot of money who simply don't need social security. And we can't even begin to have a conversation around means testing for that group," he said. "It's unfair to the next generation."