Witness List For Social Security Subcommittee Hearing

     Here's the witness list for the 11:00 hearing today before the Social Security Subcommittee of the House Ways and Means Committee on "What Workers Need to Know About Social Security as They Plan for Their Retirement":

Charles P. Blahous III, Ph.D.
Public Trustee, Social Security and Medicare Boards of Trustees

Sylvester J. Schieber, Ph.D.
Independent Consultant

C. Eugene Steuerle, Ph.D.
Institute Fellow and Richard B. Fischer Chair, Urban Institute

Joan Entmacher
Vice President for Family Economic Security, National Women’s Law Center

Andrew G. Biggs, Ph.D.
Resident Scholar, American Enterprise Institute

Laurence J. Kotlikoff, Ph.D.
William Fairfield Warren Professor, Boston University, Boston, Massachusetts

How Does Trustees Report Say That Disability Trust Fund Will Be Exhausted In 2016, Not 2017?

     There's a simple answer why the Trustees report says that the Disability Trust Fund will be exhausted in 2016 rather than 2017 as I have suggested. It assumes that the modest improvement in the operation of the Disability Trust Fund seen over the last two years will disappear and be replaced by a modestly increased decline. That may happen.

     There is a significant difference between the Trustees report and what has been happening so far this year. The rate at which the Disability Trust Fund declined was down by 12% in the first six months of this year when compared to the first six months of last year but the Trustees report assumes that by the time the year is over that the Disability Trust Fund will have declined by the same amount as last year.

     This year's Trustees report projects that the Disability Trust Fund will be only $3.6 billion short of making it into 2017. If the improvement in the Disability Trust Fund continues in the last half of this year at the same rate as in the first half, we'll have made up that ground by the end of this year.

Trustees Report Released -- Retirement And Disability Fund Exhaustion Dates Unchanged

     A Social Security press release:

The Social Security Board of Trustees today released its annual report on the long-term financial status of the Social Security Trust Funds. The combined asset reserves of the Old-Age and Survivors Insurance, and Disability Insurance (OASDI) Trust Funds are projected to become depleted in 2033, unchanged from last year, with 77 percent of benefits still payable at that time. The DI Trust Fund will become depleted in 2016, also unchanged from last year's estimate, with 81 percent of benefits still payable.
In the 2014 Annual Report to Congress, the Trustees announced:

• The combined trust fund reserves are still growing and will continue to do so through 2019. Beginning with 2020, the cost of the program is projected to exceed income.

• The projected point at which the combined trust fund reserves will become depleted, if Congress does not act before then, comes in 2033 – the same as projected last year. At that time, there will be sufficient income coming in to pay 77 percent of scheduled benefits.

• The projected actuarial deficit over the 75-year long-range period is 2.88 percent of taxable payroll -- 0.16 percentage point larger than in last year's report.

"The projected depletion dates of the Social Security Trust Funds have not changed, and three-fourths of benefits would still be payable after depletion.  But the fact remains that Congress can ensure the long-term solvency of this vital program by taking action," said Carolyn W. Colvin, Acting Commissioner of Social Security.  "The Disability Insurance Trust Fund's projected depletion year remains 2016, and legislative action is needed as soon as possible to address this financial imbalance."
Other highlights of the Trustees Report include:

• Income including interest to the combined OASDI Trust Funds amounted to $855 billion in 2013. ($726 billion in net contributions, $21 billion from taxation of benefits, $103 billion in interest, and $5 billion in reimbursements from the General Fund of the Treasury—almost exclusively resulting from the 2012 payroll tax legislation)

• Total expenditures from the combined OASDI Trust Funds amounted to $823 billion in 2013. 

• Non-interest income fell below program costs in 2010 for the first time since 1983. Program costs are projected to exceed non-interest income throughout the remainder of the 75-year period.

• The asset reserves of the combined OASDI Trust Funds increased by $32 billion in 2013 to a total of $2.76 trillion.

• During 2013, an estimated 163 million people had earnings covered by Social Security and paid payroll taxes.

• Social Security paid benefits of $812 billion in calendar year 2013. There were about 58 million beneficiaries at the end of the calendar year. 

• The cost of $6.2 billion to administer the program in 2013 was a very low 0.7 percent of total expenditures.

• The combined Trust Fund asset reserves earned interest at an effective annual rate of 3.8 percent in 2013.

The Board of Trustees is comprised of six members. Four serve by virtue of their positions with the federal government: Jacob J. Lew, Secretary of the Treasury and Managing Trustee; Carolyn W. Colvin, Acting Commissioner of Social Security; Sylvia M. Burwell, Secretary of Health and Human Services; and Thomas E. Perez, Secretary of Labor. The two public trustees are Charles P. Blahous III and Robert D. Reischauer.
The 2014 Trustees Report will be posted at www.socialsecurity.gov/OACT/TR/2014/ on Monday.

Something To Keep In Mind When You Review The Social Security Trustees Report

Well, There's Your Problem

From the Federal Times

Appropriations Bill Starts To Make Progress In Senate

     The Subcommittee of the Senate Appropriations Committee that covers the Social Security Administration has issued a draft appropriations bill. Here's some language from the draft report on the bill:

Disability Early Intervention Initiative.—The Committee recommendation includes $35,000,000 for a new disability early intervention initiative at SSA. This demonstration project will test models to improve outcomes for individuals with disabilities who are not yet receiving Social Security disability benefits, but who are likely to in the future, focusing on helping them remain in the workforce....

Preventing Improper Social Security Payments.—The Committee recommendation includes $1,396,000,000 for SSA to conduct continuing disability reviews and SSI redeterminations of non-medical eligibility, a $199,000,000 increase over the fiscal year 2014 level. ...

The Committee recommendation includes $11,921,040,000, a $224,000,000 increase, for SSA’s administrative expenses....

The Committee recommendation includes $83,000,000 in mandatory funds for research and demonstration projects conducted under sections 1110, 1115, and 1144 of the Social Security Act.  These funds support a variety of research and demonstration projects designed to improve the disability process, promote selfsufficiency and assist individuals in returning to work, encourage savings and retirement planning through financial literacy, and generally provide analytical and data resources for use in preparing and reviewing policy proposals.  ... 

The Committee remains concerned about the impact of persistently tight budget constraints on SSA’s ability to provide convenient, quality, and timely services to the public. After years of inadequate funding in the mid-2000s basic services began to suffer. For example, by 2008 it took an average of 532 days to process a disability hearing, and a substantial number of cases were pending for over 900 and even 1,000 days. Significant funding increases in fiscal years 2009 and 2010 allowed SSA to work down this backlog and reduce waiting times while keeping pace with increasing workloads.

The Committee is deeply concerned that significantly reduced discretionary spending caps—non-defense discretionary spending subject to caps is $28 billion less in fiscal year 2015 than projected in August 2011—and the resulting budget constraints for SSA have reversed these positive trends and are impacting basic services to the American public. Individuals are waiting longer to receive initial disability decisions and to hear back on their appeals, waiting longer at field offices, and increasingly reaching busy signals or waiting longer when they call SSA’s 1–800 number. In recent years SSA has closed many offices, reduced hours offices are open to the public, and reduced services available at field offices. ...

At the same time, program integrity activities, including but not limited to CDRs and SSI redeterminations, have significantly increased.

The Committee supports such activities but remains particularly concerned about the balance in funding for program integrity activities and the core basic services at field offices, SSA’s 1–800 number, disability determination services, and hearing offices that millions of Americans rely on every day. Therefore, the Committee recommendation includes a $224,000,000 increase over the fiscal year 2014 level for LAE to keep pace with rising costs and improve services to the public, while also increasing program integrity efforts. ...

Access and Availability of Benefit Verification Letters and SSN Printouts.—The Committee remains concerned about plans to eliminate the Social Security Number printout, and to limit the availability of Benefit Verification letters at field offices. The Committee agrees that SSN printouts should be phased out but remains concerned about the planned timeline. Similarly, the Committee remains unconvinced that the availability of Benefit Verification letters at field offices should be limited. The Committee appreciates that SSA has revised its guidance related to Benefit Verification letters and the ability of individuals to continue to receive this document at field offices but remains concerned about the effect of the overall policy change. It is often third parties, such local government agencies, banks, or employers that require individuals to provide these documents. While the Committee strongly supports SSA encouraging third parties to use existing online tools to verify the same information, and eliminate the need for individuals to provide these documents altogether, that ultimately relies on third parties to do so. Similarly, the Committee supports individuals being able to access this information through multiple service channels, including over the phone or online. However, many individuals will prefer or need to request this information in-person at a field office. The Committee strongly encourages SSA to continue to make these documents readily available at field offices until there is more evidence or better assurances that individuals will not be adversely impacted by any changes.

      This is nuts. The draft would increase funding for program integrity by 14% but increase appropriations for agency operations otherwise by only 2%, probably not enough to cover inflation. The authors of the draft say they are "deeply concerned" that basic services at Social Security are being affected by sequestration yet demand that the agency provide services that it can't afford. Social Security is given no guidance on what services it should cut. Meanwhile, a ridiculous amount of money is wasted on "research" and "demonstration projects." I defy anyone to show me an example of a Social Security research or demonstration project that ever helped the American people. It all gets wasted on beltway bandits.
     And the Senate is much more concerned about service at Social Security than the House of Representatives.

Johnson Demands End To DCPS

     From a House Ways and Means Committee press release:

Ways and Means Subcommittee on Social Security Chairman Sam Johnson (R-TX) sent a letter to Social Security Administration (SSA) Inspector General Patrick O’Carroll requesting a full and immediate investigation into the SSA’s mismanagement and failed implementation of the $300 million Disability Case Processing System (DCPS).  Johnson also sent a letter to Acting Commissioner of Social Security, Carolyn Colvin, calling for her to stop further spending on the implementation of the DCPS.

     And what, exactly, does SSA use to replace the DCPS, which is already partially implemented?

Once You Assume That Social Security's Workforce Will Be Cut In Half, This Is How You Pretend The Work Will Get Done

     From Government Executive:

... The National Academy of Public Administration -- a congressionally chartered organization -- worked with SSA to make 29 recommendations on how the agency should modernize and reform itself by 2025. Chief among the suggestions was to more aggressively embrace new technology to deliver services to Social Security recipients, and to move away from in-person customer support in favor of “virtual channels” such as phone, online and videoconferencing options. ...

“With a shrinking workforce, the agency cannot afford to continue to operate in this [old] way,” the panelists wrote. “Furthermore, as more work is automated, it becomes less necessary to maintain the current structure.”

While NAPA did not make any specific estimates of potential job cuts -- Project Director Roger Kodat said it was “too early to make that judgment” -- the union representing SSA employees said the results would be drastic. The American Federation of Government Employees estimated if fully implemented, the recommendations made in the report would result in 30,000 job cuts and the elimination of all 1,250 SSA field offices. ...