Give 'Em Hell, Les!

     In an op ed in the Los Angeles Times Les Gapay (who has an interesting backstory) writes:

In 1935, President Franklin D. Roosevelt signed into law the great Social Security program. It was designed to give workers an income after retirement.Today, it’s not so great. The tiny Social Security increase that will be bestowed on retirees and the elderly in January is a cruel fraud perpetrated by the government. That's because increases in Medicare Part B and Part D insurance premiums will negate all of the Social Security 2% cost of living increase for many recipients. Instead of staying even, we’ll fall behind.

I just got my annual benefits letter from Social Security. It says I will get $24 a month more next year. However, after the Medicare premium increases, my new Social Security check will be $3.40 a month less than the one I currently get. (The government deducts Medicare premiums from Social Security checks.)

In my case, the Medicare Part B insurance premium, for doctor visits, will go from $109 a month to $133 a month, eating the entire $24 cost of living increase. And my Part D prescription drug Medicare premium will increase to $20.40 a month from $17. For retirees on a fixed, low income, every dollar counts. We can't afford to have less money — even $3.40 a month — coming in from a government program we paid into for 45 years or so. ...

I paid into the system for decades from my wages, and I don’t want these programs cut.

My dwindling Social Security income is only half the problem, of course. My rent will go up on Jan. 1 by $27 a month. Food prices are rising....

Beyond Medicare premiums, the costs in other parts of that safety net keep rising as well. The Medicare Part B annual deductible — what I have to pay before Medicare ponies up — isn’t going up in 2018, but it rose last January to $183, from $166 in 2016, and $147 in 2015. And pray to God I don’t get hospitalized. That’s Medicare Part A, and the deductible will be $1,340 next year, up from $1,316. Most regular folks can't afford either amount. ...

No one in Congress from either party seems to give a damn. ...

Merry Christmas

A Small Sign Of A Vastly Larger Problem

     I thought I'd point out that Donald Trump was inaugurated President eleven months ago today but his official photo is still not hanging in federal offices, like Social Security. This isn't because of some dastardly plot to disrespect our esteemed leader. It's because the Trump White House is so disorganized that it hasn't selected an official portrait photo to distribute to federal offices!

Some Non-Abstract Questions

     Why is the Social Security Administration allowing Administrative Law Judges (ALJs) to hold hearings? It is the official position of the Executive Branch, of which Social Security is a part, that the ALJs lack authority to hold hearings and issue decisions.

     What is Social Security's plan for dealing with a Supreme Court decision holding that ALJs, as presently hired, are unconstitutional? By the way, Social Security, good luck on getting any usable advice on this from the White House or Department of Justice.

     Should attorneys request Appeals Council review and District Court review every time a client is denied by an ALJ, given that it is the position of the Executive Branch that the ALJs lack authority to make decisions, a position that the Supreme Court may possibly uphold? Even if I consider that Executive Branch position nuts, my obligation is to advance my client's interests even if those interests conflict with what I consider to be the best interests of the country.

     The only immediate solution for the problem is to have the President officially appoint each of Social Security's ALJs as has been done for the Securities and Exchange Commission ALJs. That should have already been done for the Social Security ALJs. If this isn't done, there will be a vast cascade of remands should the Supreme Court hold ALJs as presently appointed unconstitutional. Doing it after a Supreme Court decision isn't enough.

Merry Christmas

Initial And Recon Allowance Rates

     The National Organization of Social Security Claimants Representatives (NOSSCR) has obtained from Social Security the following report on allowance rates on disability claims at the initial and reconsideration levels. NOSSCR published this in its newsletter, which is only available to members. Click on each page to view full size.

What Effects Will Tax Bill Have On Social Security Trust Funds?

     The FICA tax that supports the Social Security trust funds is not insignificant. It's 15.3% if you're self-employed. Many self-employed people have gotten around this by incorporating their businesses as what have been called "S corporations." This is now being referred to as a "pass-through corporation", a more descriptive term for people unfamiliar with the Internal Revenue Code, which, of course, is most people. Pass-through corporations pass along all their net income to their owner or owners. There's no corporate taxes paid. Payments from a pass-through corporation are not considered wages and are not subject to the FICA tax.

     The Republican tax bill that is likely to pass this week adds a huge incentive for switching to a pass-through corporation. Subject to some limits, 20% of income from a pass-through corporation isn't taxed. This huge tax advantage is on top of the exclusion from the FICA tax. Almost everybody with a business will now switch to a pass-through corporation. Many people who aren't now thought of as self-employed will try to find some way of receiving payment for their work through a pass-through corporation.

     What effect will this have on the Social Security trust funds? I haven't seen any estimate but it's bound to have a significant negative effect on the trust funds. Of course, in the long run, it's going to leave many people without the quarters of coverage they need to receive Social Security benefits but it will take longer for that effect to become obvious.

     By the way, I can't seem to find out whether professional practices such as law firms are excluded from pass-through corporation treatment. The last I heard was that this was an issue still to be resolved. I can't see a reason why a trucker or construction worker is eligible for this but not a lawyer or architect. Really, I don't see why anyone should be eligible for this. It's a massive, intentionally created loophole at the expense of ordinary working men and women.
     By the way, even if professional practices are excluded, that doesn't mean that lawyers and other professionals can't benefit. Let's say a law firm forms a corporation that's not a law firm but a "staffing agency." The lawyers wouldn't be employees of the staffing agency but the firm's non-attorney staff would be. The law firm makes a generous enough payment to the "staffing agency" corporation so that it makes a substantial profit which it then pays out to the lawyer owners. Since the staffing agency corporation isn't a professional practice, 20% of the distributions aren't taxed. I can figure this one out and I'm not a tax lawyer or accountant. We'll see what the experts can come up with.
     Update: I can now say that law firms are excluded. (page 39). However,  I have seen nothing that would prevent a staffing corporation from qualifying and that could achieve much the same result.

Merry Christmas