A "Bipartisan" Plan?

     From Semafor:

A bipartisan group led by Sens. Angus King, I-Maine, and Bill Cassidy, R-La. is considering gradually raising the retirement age to about 70 as part of their legislation to overhaul Social Security, Semafor has learned from two people briefed on their efforts.

Other options on the table include changing the existing formula that calculates monthly benefits from one based on a worker’s average earnings over 35 years to a different formula that’s based instead on the number of years spent working and paying into Social Security.

The plan also includes a proposed sovereign wealth fund (as previously reported by Semafor) that could be seeded with $1.5 trillion or more in borrowed money to jumpstart stock investments, the people said. If it fails to generate an 8% return, both the maximum taxable income and the payroll tax rate would be increased to ensure Social Security stays on track to be solvent another 75 years. ...

Sen. Mike Rounds, R-S.D., a member of the group, previously said that raising the payroll tax cap was under discussion. Only the first $160,000 of employees' earnings are currently subject to payroll taxes, which help fund Social Security. If Congress fails to step in, retirement benefits will be cut roughly 20% for seniors starting in 2032, per the Congressional Budget Office.

    Are there any real Democrats on this "bipartisan" group? I know that Angus King caucuses with Democrats but he's not a Democrat. 

    None of this has any hope of passage in this Congress.

 

Don't Panic!

     Paul Krugman has an excellent piece in the New York Times about why we should not panic about Social Security. You really should read the whole thing. Here are a few excerpts:

...  The thing about Social Security is that from the beginning it was designed to encourage misconceptions. It looks, on casual inspection, like a giant version of a private pension plan. ...

I’m pretty sure that it was set up to look like an ordinary pension fund because that made it politically easier to sell. But in reality, Social Security has never been run like a private pension plan. ...

For one thing, for the first half-century of the program’s existence it had almost no assets; in 1985, the trust fund was only large enough to pay around two months’ worth of benefits. So it has always operated mainly on a pay-as-you-go basis, with today’s payroll taxes paying for today’s retiree benefits, not tomorrow’s.

I often get mail from people claiming that this makes Social Security a Ponzi scheme. But it isn’t. It’s just a government program supported by a dedicated tax ...

I get a lot of mail from people saying that we should simply eliminate the upper limit on the payroll tax. That would certainly raise a lot of money. But bear in mind that there’s no fundamental reason Social Security has to be financed with payroll taxes — we only do it that way because back in 1935, F.D.R.’s advisers thought it would be a good idea to dress Social Security up to look like a private pension fund. ...

The other idea I hear a lot is that we should raise the retirement age — which has already been increased, from 65 to 67. After all, people are living longer, so they can work longer, right?

Well, some people are living longer. But one key point in thinking about Social Security is that the number of years you can expect to spend collecting benefits has become increasingly linked to the income you earned earlier in your life. ...

[C]alling for an increase in the retirement age is, in effect, saying that janitors can’t be allowed to retire because lawyers are living longer. Not a very nice position to take. ...

 

Full Retirement Age Went Up But Life Expectancy Went Down

     From People's Policy Project:

In 1983, Ronald Reagan signed into law a cut to Social Security benefits. Under the law, the Social Security full retirement age gradually increased from from 65 in 2000 to 67 at the end of 2022. ...

In the lead up to the passage of the legislation, a popular argument for raising the retirement age was that life expectancy had increased, so people should work for longer. The presumption was that the increase in life expectancy since Social Security’s implementation would continue as the retirement age rose. But, in reality, something peculiar happened.

Over the same period during which the 1983 law forced the retirement age up from 65 to 67, life expectancy in the US actually declined. In 2000, US life expectancy was 76.8 years. According to data released last December, life expectancy in 2021 was 76.4 years. This was the second consecutive year of significant life expectancy decline. ...

Covid And Social Security Disability

     From CNN:

... Pandemic issues and budget cuts at the Social Security Administration, which handles SSDI claims, have resulted in the lowest staffing levels in 25 years, according to the Center on Budget and Policy Priorities. That has kept long Covid cases backlogged. ...

People with long Covid “were less likely to be employed full time and more likely to be unemployed” due to the “presence of cognitive symptoms,” according to a recent study in the medical journal JAMA Network Open. 

A January study from the New York State Insurance Fund found that 18% of long Covid patients in that state have not been able to return to work for more than one year. ...

The Department of Health and Human Services estimates $50 billion in annual salaries in the US is lost annually due to long Covid. A Brookings analysis puts that total at an even higher number: a staggering $170 billion lost by workers. ...

[F]or many long Covid patients, [applying for Social Security disability benefitl] remains an ordeal on many levels, including the mental anguish of simply trying to cut through a notoriously bureaucratic federal disability application process.

“I feel like we’re being erased,” said Sarah Steinberg, 40, a Covid “long-hauler” and self-employed architectural designer. Disabled by long Covid since March 2020, she lives with her spouse and their 7-year-old son in Portland, Ore. 

Unlike workers whose jobs offer benefits packages, some freelancers like Steinberg say they find themselves locked out of benefits like health, dental, life, and short- and long-term disability insurance. ...

[N]early three years into the pandemic, long Covid still isn’t included on SSA’s listing of qualifying disabilities. ...

“Trying to apply for SSDI makes doing your taxes look like a kindergarten watercolor painting,” [a disability expert] said. “It’s well known that you usually have to apply multiple times. It can take years.”  ...

If FICA Covered All Wages Over $250,000

 

From the National Committee to Preserve Social Security and Medicare

Does Political Messaging Matter?

    From the Washington Post:

 In that Jan. 25 meeting [with the President], [Senator Bernie] Sanders pushed the president to fully fund Social Security for more than seven decades by expanding payroll taxes on affluent Americans, rather than just on workers’ first $160,000 in earnings, as is the case under current law. Sanders also asked the president to back his proposal — highly unlikely to pass Congress — to not only defend existing benefits but also increase them. He wants to provide another $2,400 per year for every Social Security beneficiary.

This previously unreported discussion between Biden and his onetime presidential primary rival reflects a broader behind-the-scenes effort inside the White House to decide how, or if, the party’s message on entitlements should go beyond criticizing the GOP. ...

Biden aides have in recent weeks discussed proposing raising payroll taxes on the rich to fund Social Security, but it is unclear if the president will ultimately endorse that measure when he releases his budget in March, according to three people familiar with international deliberations. ...

“There’s a faction inside the White House that feels some need to offer a plan, though I personally feel that’s misplaced,” one senior Democratic pollster said, speaking on the condition of anonymity to discuss private conversations with senior administration officials. “Stick to our basic message: Hands off our seniors. That’s working.” ...

    Note that these are discussions about political messaging. No tax increases are happening with Republicans in control of the House of Representatives. The Republican message that "We'll never agree to tax increases so Democrats, not Republicans, must propose benefit cuts" won't ever lead to a solution.

    It's apparent to me how Social Security's long-term financing issues will be resolved. Eventually, Democrats will have a great election cycle and have enough strength in Congress to pass a bill. Until then, it's just posturing but today's political messaging can become tomorrow's enacted fix for Social Security so the posturing matters. If Democrats don't have such an election cycle in time, it's going to be a train wreck, mainly for the GOP which will be caught between its ideology and the great majority of the country which loves Social Security and doesn't want to see it cut.

Good Decision Out Of CA4

    The Fourth Circuit Court of Appeals issued an important decision yesterday in Shelley C. v. Commissioner of Social Security.

    The Court found that summary statements assigning "little weight" to the opinion of the treating physician on the grounds that it "is on an issue reserved for the Commissioner and . . . is inconsistent with the medical evidence of record. [His] treatment notes do not indicate any significant symptoms that would render [Shelley C.] unable to perform basic work activities” does not comply with the agency's own regulations. An ALJ decision must identify the alleged inconsistencies between the treating physician's opinion and the medical evidence. The Court also held that the ALJ decision must explicitly show consideration of each of the six factors in 20 C.F.R.§404.1527(c). I think that in practical terms the Court held that merely using canned language won't cut it. If an ALJ gives "little weight" to a treating physician's opinion, the ALJ is going to have to explain why.

    By the way, the Court didn't even deign to discuss the "opinion reserved to the Commissioner" language in the ALJ decision, which is about how much attention one should pay to makeweight language implying that Social Security has some right to summarily make decisions without regard to the evidence and without being held to account by anyone. Taken at face value, that arrogance would render judicial review meaningless.

    The Court also held that the ALJ "could not dismiss Shelley C.’s subjective complaints based entirely upon the belief that they were not corroborated by the record’s medical evidence."

    The Court did not remand the case. It reversed it and ordered payment of benefits. That is uncommon at the District Court level and quite rare at the Court of Appeals level. This was a bad day for Social Security's Office of General Counsel and for canned boilerplate in ALJ decisions. Show your work, ALJs.

They Call This The Waterfall Chart

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