I Guess The Name Is OK But It’s All Really Weird

      From what I think is a press release:

Charlie, a neobank for the 62-plus demographic, is looking to solve pain points facing retirees and soon-to-be-retirees.

The fintech, which launched last week, allows account holders to withdraw their Social Security benefits up to four weeks early. The free service is available to account holders who link their Social Security direct deposit to their Charlie deposit account, said Kevin Nazemi, the fintech’s co-founder and CEO. …

     I don’t understand any of this. What’s a “neobank”? What’s a “fintech”? A financial institution named “Charlie”? How can they afford to give people money weeks prior to its actual arrival? What’s the catch?

Making It Official

     The Social Security Administration has posted a Notice of Proposed Rule-Making (NPRM) in the Federal Register to make official the availability of telephone and video hearings in Social Security cases.

Watch Out!

    Watch out. I've just received a scam phishing e-mail directed squarely at Social Security attorneys. It includes this: "You have a new document from Direct Fee Payment for Title 2 Claimant Representation" 

 

    Don't open the attached document!

What Effect Would A Federal Bond Default Have On The Social Security Trust Fund?

    If there's a default on the federal debt it would affect the market value of previously federal bonds. If the prevailing interest rate jumps, to let's say 8%, investors will pay a good deal less for previously issued bonds paying only 2.5%. Would that affect the value of the federal bonds held by the Social Security trust funds? I know that they can't sell the bonds on the open market but wouldn't a default affect the value of the bonds held in the trust fund? How do they value them on their books?

    Also, I  can imagine that if there is a delay in paying interest or principal on bonds that this could affect regular payment of benefits. The agency might not be able to get the money needed to pay benefits if they can't get money from their T-bills in time.

    On the other hand, a big increase in interest rates would help the trust funds gain more interest payments on newly issued bonds but, then, the major recession produced by a default on U.S. bonds certainly wouldn't help receipts and much higher inflation would definitely hurt the trust funds -- as well as beneficiaries.

    I hope and expect that all of this will remain theoretical. The consequences of a federal default are hard to even contemplate.

It's Complicated

     The question is often asked: "Why is Social Security even discussed in terms of the federal budget? Benefits are paid out of the trust funds, not general revenues." The answer to this question requires knowledge of some complicated history. Here it is from Social Security office agency history:

... From the beginning of the Social Security program its transactions were reported by the administration as a separate function in the budget. This is sometimes described in present usage by saying that the Social Security program was "off-budget." This was the budget representation of the Social Security program from its creation in 1935 until 1968. ...

In early 1968 President Lyndon Johnson made a change in the budget presentation by including Social Security and all other trust funds in a"unified budget." This is likewise sometimes described by saying that Social Security was placed "on-budget."

This 1968 change grew out of the recommendations of a presidential commission appointed by President Johnson in 1967, and known as the President's Commission on Budget Concepts. The concern of this Commission was not specifically with the Social Security Trust Funds, but rather it was an effort to rationalize what the Commission viewed as a confusing budget presentation. ...

In the 1983 Social Security Amendments a provision was included mandating that Social Security be taken "off-budget" starting in FY 1993. This was a recommendation from the National Commission on Social Security Reform (aka the Greenspan Commission). The Commission's report argued: "The National Commission believes that changes in the Social Security program should be made only for programmatic reasons, and not for purposes of balancing the budget. Those who support the removal of the operations of the trust funds from the budget believe that this policy of making changes only for programmatic reasons would be more likely to be carried out if the Social Security program were not in the unified budget." ...

[I]n the Omnibus Budget Reconciliation Act (OBRA) of 1990 the law was changed to stop the use of the Trust Funds for any function in the unified budget, including calculations of the deficit. ... The BEA budget treatment of Social Security basically remains the law to the present day. Specifically, present law mandates that the two Social Security Trust Funds, and the operations of the Postal Service, are formally considered to be "off-budget" and no longer part of the unified federal budget. ...

However, those involved in budget matters often produce two sets of numbers, one without Social Security included in the budget totals and one with Social Security included. Thus, Social Security is still frequently treated as though it were part of the unified federal budget even though, technically, it no longer is. ...

    One crucial way that Social Security is treated as part of the budget is in the way that Congress handles appropriations for Social Security's administrative budget. Technically, Social Security doesn't receive an appropriation. It's called a Limitation on Administrative Expenditures (LAE). Social Security's LAE is lumped in with the Labor-HHS appropriations bill, probably because Social Security used to be part of HHS. The Labor-HHS bill is the one that's always most controversial with Republican legislators. They work hardest at keeping the Labor-HHS bill as low as possible, which hurts Social Security. The agency could be moved out of the Labor-HHS bill. Probably, a statute could even be passed allowing administrative expenditures as needed without a specific annual LAE but that's not going to happen since it would reduce the powers of the appropriations committees in Congress, not that those powers have been exercised to any significant extent apart from keeping the agency on a starvation diet.

Phone And Video Hearings Not Going Away

     Not that there was any doubt, but Social Security has decided to make telephone and video hearings a permanent option.

    This is extremely convenient for "national" firms representing disability claimants.

And Another One Bites The Dust

     From David Weaver writing for The Hill:

The Social Security Administration (SSA) recently released the results of a major study on disability and work patterns. ...

The new study, called the Supported Employment Demonstration, sought to determine whether service interventions could promote success in the labor market for younger adults (that is, under the age of 50) who suffer from mental impairments.

Individuals in the treatment groups received employment support integrated with behavioral health services. These services and supports, known as the Individual Placement and Support (IPS) model, focuses on rapid job placement and eliminating barriers to work. The control group received no direct services or supports.

An important feature of the Supported Employment Demonstration is that it focused on individuals who were denied Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) disability benefits. Thus, the experiences of the control group illuminate the likely outcomes of proposals by Republican leaders and conservative economists that would shrink the reach of such programs. ...

In the third year of the study, the average monthly earnings of individuals in the control group were only $395 — not nearly enough to ward off extreme hardship. ...

Conservatives often emphasize the importance of financial disincentives of disability programs. But, gold-standard random-assignment demonstrations by SSA have not found any effect on earnings from financial incentives embedded in the benefit rules. Why? Because the fundamental problem facing disability applicants stems from the way in which severe health problems, directly and indirectly, interfere with every aspect of employment. ...

Average monthly earnings among those who received employment support and behavioral health services were 40-50 percent higher than for those who received no services — further evidence that individuals with severe health problems need services and support to have some success in the labor market. ...

To be sure, the monthly average earnings of those who received services in the Supported Employment Demonstration were still modest, ranging from $553 to $590. ...

In the idealized view, only full-time work at high levels of earnings is considered a successful outcome for disabled persons. A rethink of disability and work would allow for programs, policy and communications to support diverse work patterns among persons with disabilities, including part-time work, episodic work and less formal work, including volunteer. ...

    The problem with Mr. Weaver's position, which he acknowledges, is that policymakers are only interested in programs that knock people off benefits, not programs that help them earn a little more while staying on benefits. By this standard, this study was a near complete failure, just as every other study of work incentives and work assistance programs has been a near complete failure. Even those whose disability claims are denied are too sick to work on a regular basis. They really are sick. The standards to get benefits really are difficult to meet. You can't make rational decisions about Social Security disability benefits until you realize just how harsh these programs are. One of the signs that policymakers don't realize how harsh these programs are has been the endless adoption of new work incentives and the endless funding of demonstration programs designed to put disability claimants back to work. None of it can work. The claimants are just too damn sick to benefit from these efforts in any significant number.

Didn’t Know The Show Was That Popular

      From Fox News:

The two fastest-growing names for boys in the U.S. last year are inspired by the hit show "Yellowstone," according to the Social Security Administration (SSA).

SSA said the names "Dutton" and "Kayce" are ranked #1 and #2 on the list of top five fastest-growing boys' names in 2022.

Dutton is the surname of the fictional family who own the Yellowstone ranch in the hit Paramount Network show. Kevin Costner plays the patriarch, John Dutton. His son in the show is Kayce Dutton, played by Luke Grimes. …