How Is The National Computer Center Project Coming Along?

     Social Security is building a new national computer center. It's been quite some time since I've heard anything about this big project. How is it going? Are budget problems slowing it down? What is the expected completion date?

Why Are Central Offices Opening Late Today?

     Social Security's offices in the Baltimore area, where the agency's headquarters are located, are opening two hours late today. Uh, why? I didn't think it had been snowing in the area.

Does The President Still Support Chained CPI?

     A White House aid is refusing to say whether the President still supports chained CPI.

Supreme Court Requires Social Security To Recognize All Same Sex Marriages

     The Mexican Supreme Court has ruled that the country's Social Security system must recognize all same sex marriages.

Early-Outs Offered

     The Social Security Administration is once again offering "early-outs" to its employees. Employees who are 50 and older and have 20 years of federal or military service or employees of any age with 30 years of federal or military service may retire and receive pensions. The point of the early-outs is to induce employees with higher salaries to retire. Unfortunately, those are the most experienced employees, the ones who can solve knotty problems. They're often the most productive employees.

Another NY Field Office To Close

     Social Security plans to close its office in Ulster County, NY even though 39% of the county's population receives either Social Security or Supplemental Security Income (SSI) benefits. Local politicians are unhappy. These office closures are an inevitable consequence of the limited funding being given to the agency.

Service Contract Inventory

     As required by law, the Social Security Administration has published its annual inventory of service contracts. Notable on the list is Lockheed Martin, which received over $100 million in contracts over the last year. Northrup Grumman received over $60 million in contracts. In glancing through the list I was a little surprised by the number and amount of contracts with Brookfield Relocation, apparently for employee relocation services. It's a small matter in the overall picture but I didn't think there would be that many Social Security employees being relocated at agency expense or that the costs, often over $100,000, would be that high.

Disability Trust Fund Doing Better Than Projected

     The final 2013 numbers are in for Social Security's Disability Insurance Trust Fund. Here's a summary (in billions) for both the actual results and the projections that had been made for the year:

Receipts
Actual: $111.5
Intermediate Projection: $111.4
Low-Cost (optimistic) Projection: $112.5

Expenditures
Actual: $143.5
Intermediate Projection: $144.8
Low-Cost (optimistic) Projection: $142.8

Amount of Decline in Trust Fund Balance:
Actual: $32.3
Intermediate Projection: $33.5
Low-Cost (optimistic) Projection: $30.3

Trust Fund Balance at end of year
Actual: $90.4
Intermediate Projection: $89.2
Low-Cost (optimistic) Projection: $92.

     The key question is when, if ever, the Disability Insurance Trust Fund runs out of money. You might think it obvious that the Disability Insurance Trust Fund will run out of money in 2016 but you'd be wrong. While the most recent Intermediate projection was that the Disability Insurance Trust Fund will run out of funds in 2016, it is projected to be only a narrow shortfall in 2016 -- $3.4 billion. Note that the actual results in 2013 were $1.2 billion better than anticipated by the Intermediate Projection. It's impossible to say for sure but the slightly better than expected results in 2013 suggests that the projections for 2014-2016 should be more optimistic as well. The methodology will certainly be more sophisticated but if you multiply $1.2 billion times four years you find that instead of running out of money in late 2016, the Disability Insurance Trust Fund squeaks into 2017. My expectation is that the Intermediate Projection in the next Trustee's report coming out this Spring will show an exhaustion date of 2017. Of course, unfavorable economic news or even a small uptick in benefit payments could change this. 

     The difference between 2016 and 2017 may be politically crucial. It's three years off but 2017 looks like a better year for Democrats than 2016.

     Note that I indicated above that it is uncertain whether the Disability Insurance Trust Fund runs out of money at all. How can that be? Both the Intermediate and Low-Cost projections show that the declines in trust fund balance will be decreasing in coming years. They differ on how quickly the receipts and expenditures move towards each other.  The most recent Low-Cost projection was that the decline in Trust Fund balance will be rapid enough to keep the Disability Insurance Trust Fund in the black as far as the eye can see and that the Trust Fund balance actually starts rising in 2020.The Low-Cost projection was a bit less accurate for 2013 than the Intermediate projection. There's no telling what the next Low-Cost projection will look like. In any case, projections become less reliable the further you extend them into the future. It's more likely than not that the Disability Insurance Trust Fund runs out of money at some point but it's not a certainty. If it does happen, it'll probably be after 2016.

     By the way, Social Security's actuaries also made a High-Cost or pessimistic projection that the Disability Insurance Trust Fund would run out of money in 2015. I've omitted that from the summary above since it was so far off from what actually happened in 2013.