Is Social Security Sending Out $75,000 Checks To Random Claimants?

     From CNN Money:

Americans dealing with injuries, mental illnesses and other impairments are being notified out of the blue that they’ve been overpaid by the Social Security Administration and now owe thousands of dollars.

One 33-year-old veteran began receiving Social Security disability payments after his left foot was amputated following an explosion in Iraq in 2007. After going through rehab for his prosthetic leg, he began working full-time for a defense contractor in 2009. As soon as he started collecting a paycheck, the veteran, who asked to remain anonymous, reported his roughly $100,000 annual salary to the Social Security Administration.

When recipients of disability benefits reenter the workforce, they have a nine-month trial period in which they continue to receive benefits. Once the trial period ends and their earnings exceed a certain level — currently $1,040 a month — the payments are supposed to stop. And that’s exactly what happened in his case.

But then, last July, he noticed a $75,000 deposit in his checking account. Three days later, a letter arrived from the Social Security Administration saying it had reinstated his benefits because he had not been “gainfully employed” during the past three years. ...

It turns out Social Security overpayments like these are surprisingly common.

A recent audit conducted by the Government Accountability Office found that Social Security made $1.3 billion in potential overpayments to disability recipients in just two years. While some of that amount can be attributed to fraudsters who game the system, many innocent people are also receiving overpayments and then being asked to pay the agency back. Some continue being paid even after they notify the administration that they are no longer eligible for benefits, while others have no idea they are being overpaid.

     I can't say what happened in the vet's case. I can say that the work incentives that Congress has provided for recipients of Social Security disability benefits are so complicated that mistakes are inevitable but not a $75,000 mistake of this sort. That's unusual.
     The Government Accountability Office (GAO) report referenced by this article is seriously misleading. It assumed that any work performed by a person who had applied for Social Security disability benefits made that person permanently ineligible for Social Security disability benefits. That's just wrong. That's not the way the law is written. For instance, many people who have applied for Social Security disability benefits attempt to return to work but are only able to last a short time on a job. This is what Social Security calls an Unsuccessful Work Attempt (UWA) and has no effect upon the person's entitlement to benefits. If anything, a UWA makes a Social Security disability claimant look more credible. GAO would have a person who has engaged in a UWA ineligible for Social Security disability benefits for the rest of their life! You probably didn't notice it but there was no Congressional hearing on the GAO report. Even Republicans figured out that the GAO report was a crock.
     If you're of a mind to believe that all government benefits programs do nothing but waste money you may want to believe that Social Security wastes billions of dollars just sending large checks to people at random but that's not the way the program works. Mistakes happen. Usually the mistakes take away money rather than bestowing it. Usually, the mistakes don't involve much money. Most of the mistakes are just the inevitable result of overworked human beings making mistakes running a complicated program. There's only so much you can expect Social Security to do about that especially when you the size of the agency's workforce is declining while its workforce is increasing.
    

A Manageable Problem

Alabama Sheriff Acquitted On Social Security Fraud Charge

     I had reported in August that Washington County, Alabama Sheriff Richard Stringer had pleaded not guilty to Social Security fraud. It was alleged that Stringer had conspired with others to get Social Security benefits for a friend.

     The case went to trial. Mr. Stringer was acquitted.

Democrats And Republicans Support Positions At Odds With Their Bases

     From Ronald Brownstein writing for the National Journal:

One reason a serious budget negotiation seems unlikely this fall is that any meaningful assault on the federal deficit would require each party to confront the contradictions between its fiscal agenda and its electoral coalition. ...

The GOP presidential nominee has carried most white seniors in four consecutive presidential elections, and by greater margins each time....

These older whites deeply resist any changes in Social Security and Medicare, which most consider insurance they have paid for, not a government benefit ...

But the demands from GOP leaders to squeeze middle-class entitlements such as Medicare in any budget deal still collide with the preferences of both older and blue-collar whites ...

Democrats face the opposite dilemma. For decades, they have watched expanding entitlements tilt federal spending toward the elderly. In 1960, children and seniors each consumed around one-fifth of federal domestic spending, the Urban Institute calculates. Today, children receive less than one-third as much as seniors, a trend reinforced by the sequester ...

Entering negotiations, many Democrats have made opposition to entitlement cuts a litmus test. But with the senior population projected to double through 2040, rejecting all entitlement reductions ensures both more pressure on discretionary investments like education that help young people and unsustainable tax burdens on future workers. That leaves Democrats confronting their own contradiction: They are now favoring programs that benefit predominantly white seniors who lopsidedly vote against them over policies that benefit the heavily diverse young people who strongly support them. Even a near-term trade of trimming entitlements to restore sequester-starved domestic investment could make sense for Democrats.

Quite A Comedown

     The House Ways and Means Committee has traditionally been of key importance to Social Security and to the nation. However, at the moment, according to Stacy Kaper at the National Journal, Ways and Means is barely functioning.

Charlie Binder Responds To Sixty Minutes

     Charlie Binder has posted something of a response to the Sixty Minutes piece on Social Security disability.

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