A Report That's Not A Report

The "report" of The National Commission On Fiscal Responsibility and Reform (called the Catfood Commission in some quarters) is out, except that it is not really the report since it has not been voted on by the commission and besides the commission officially went out of business yesterday. I do not know what the "report" represents other than the fantasies of its leaders but here are the Social Security recommendations:

• MAKE RETIREMENT BENEFIT FORMULA MORE PROGRESSIVE. Modify the current three-bracket formula to a more progressive four-bracket formula, with changes phased in slowly.
• REDUCE POVERTY BY PROVIDING AN ENHANCED MINIMUM BENEFIT FOR LOW-WAGE WORKERS. Create a new special minimum benefit that provides full career workers with a benefit no less than 125 percent of the poverty line in 2017 and indexed to wages thereafter.
• ENHANCE BENEFITS FOR THE VERY OLD AND THE LONG-TIME DISABLED. Add a new “20-year benefit bump up” to protect those Social Security recipients who have potentially outlived their personal retirement resources.
• GRADUALLY INCREASE EARLY AND FULL RETIREMENT AGES, BASED ON INCREASES IN LIFE EXPECTANCY. After the Normal Retirement Age (NRA) reaches 67 in 2027 under current law, index both the NRA and Early Eligibility Age (EEA) to increases in life expectancy, effectively increasing the NRA to 68 by about 2050 and 69 by about 2075, and the EEA to 63 and 64 in lock step.
• GIVE RETIREES MORE FLEXIBILITY IN CLAIMING BENEFITS AND CREATE A HARDSHIP EXEMPTION FOR THOSE WHO CANNOT WORK BEYOND 62. Allow Social Security beneficiaries to collect half of their benefits as early as age 62, and the other half at a later age. Also, direct the Social Security Administration to design a hardship exemption for those who cannot work past 62 but who do not qualify for disability benefits.
• GRADUALLY INCREASE THE TAXABLE MAXIMUM TO COVER 90 PERCENT OF WAGES BY 2050.
• ADOPT IMPROVED MEASURE OF CPI. Use the chained CPI, a more accurate measure of inflation, to calculate the Cost of Living Adjustment for Social Security beneficiaries.
• COVER NEWLY HIRED STATE AND LOCAL WORKERS AFTER 2020. After 2020, mandate that all newly hired state and local workers be covered under Social Security, and require state and local pension plans to share data with Social Security.
• DIRECT SSA TO BETTER INFORM FUTURE BENEFICIARIES ON RETIREMENT OPTIONS. Direct the Social Security Administration to improve information on retirement choices, better inform future beneficiaries on the financial implications of early retirement, and promote greater retirement savings.
• BEGIN A BROAD DIALOGUE ON THE IMPORTANCE OF PERSONAL RETIREMENT SAVINGS.

Death Of Rep Payee Causes Huge Problems

From the Louisville Courier-Journal:

Nearly 100 disabled Louisville residents have had their Social Security benefits unexpectedly cut off after a local attorney responsible for managing their finances died last month.

Louis Cohen, 78, was the designated payee for 96 people whom the U.S. Social Security Administration had deemed in need of someone to receive and manage their monthly checks. Their accounts were frozen when he died Nov. 4 from cancer.

CBS Scare Tactics

From the Columbia Journalism Review:

If there were prizes given for the most one-sided, misleading story about Social Security this year, a segment aired on the CBS Evening News before Thanksgiving would make a great candidate.

In a breathless recitation of the horrors befalling the system, CBS painted a grim picture of Social Security, using scare words and phrases like “the system is headed for a crisis,” “the government is confronting a painful reality,” and “there’s no debating that we’re running out of time.” How’s that for opinion journalism on a news show?

Perhaps to substantiate the segment’s conclusions, CBS piled on quotes from those people in favor of cutting Social Security benefits and raising the retirement age. Here was Andrew Biggs, currently a resident scholar at the conservative American Enterprise Institute, saying: “Americans are living longer, but they’re retiring earlier and saving less. Something in that equation has to give.” Biggs was a deputy Social Security commissioner in the Bush II administration and a Social Security analyst at the Cato Institute, which has been a leader in the efforts to privatize the system. CBS did not mention those credentials.

The Third Way Looks A Lot Like The Second Way

From Bloomburg:

A Democratic-led policy group is defying party history by proposing changes to Social Security to pave the way for recommendations this week by President Barack Obama’s deficit-cutting commission.

Washington-based Third Way said its plan would raise the retirement age, trim or eliminate Social Security benefits for high-income retirees, limit cost-of-living increases and provide money to help young workers create private retirement accounts.

The proposal, to be released after the presidential panel is due to issue its report tomorrow, is timed to help create a buffer for congressional Democrats to support politically unpopular deficit-trimming measures, said Third Way spokesman Sean Gibbons. ...

The chairman of the group’s board of trustees is John L. Vogelstein, former president of private-equity firm Warburg Pincus LLC, and the vice-chairman is David Heller, global co- leader of Goldman Sachs Group Inc.’s securities division. ...

Social Security benefits would be reduced on a scale starting at individuals with $150,000 in outside income and couples with $250,000, and eliminated for individuals earning $200,000 and couples with $400,000 in income. ...

Even the AARP senior citizens’ group that’s long fought benefit cuts appears to be open to at least some cutbacks. John Rother, executive vice president for policy at the senior citizens’ group AARP, praised the Bipartisan Policy Center plan.

“It’s more politically realistic” than the Obama panel’s draft and “in general I would characterize this as a more centrist approach,” said Rother.

The basic premise of Social Security is that it is an insurance program. Republicans have never accepted that Social Security is an insurance program. They have always seen it as "welfare" program which must be phased out. Accepting any form of means testing in Title II of the Social Security Act would be to accept the Republican view of Social Security and would start a process that would destroy Social Security in the long run. This is a litmus test issue. If you believe that means testing of Social Security is appropriate, you believe that the fundamental premise of Social Security is a myth, which means that you just might be a Republican. Unless the Democratic Party has completely lost its mooring, this is going nowhere.

Where We Rank

The report of the Organization for Economic Cooperation and Development (OECD) report concerning disability programs around the world also includes a chart showing where the United States ranks in relationship to other countries around the world in the rate of disability benefits recipiency. See the chart below. Click on it to see it full size.

Note that we have a higher incidence of disability benefits recipients than many European countries. The fact that the full retirement age in the U.S. is higher than in most, if not all of Europe has to contribute to this. Otherwise, your explanation may depend upon your politics. I think that it has a lot to do with our poor health care system. A large part of our population is at enormous risk because they do not receive even basic medical care. Untreated diseases such as hypertension cause much disability in this country.

Hearing Office Chief ALJ Not Concerned By Threats

From the Akron Beacon Journal:

Judge Thomas A. Ciccolini is not a man easily shaken.

As chief administrative law judge in Akron's new Social Security disability claims office in the heart of downtown, he reacts with calm assurance to the news out of Washington that judges who hear these cases are facing an increasing number of threats from people who are denied benefits, or must wait a year (or more) for the case to be decided. ...

''I practiced law in Akron for 31 years. I did nothing but criminal work, so I know courtrooms can become volatile,'' Ciccolini said. ...

As the chief Social Security hearing officer in Cleveland, where he heard disability cases for seven years before assuming the lead position in Akron, he said he actually had a guard stationed in his hearing room on only a couple of occasions.

''I have conducted thousands of hearings in my seven years and cannot recall any violent incidents. Obviously, there is somewhere in the country that this has happened,'' Ciccolini said, ''but it just hasn't happened in this area.''

By the way, if you do not know what Social Security's hearing rooms look like, take a look at the picture above. Note that the room is not large or fancy and that it includes a large television screen with a small television camera attached to the bottom of the screen. The table in front of the judge has at least one computer monitor on it. The desk in front of the judge probably has another computer monitor on it just off camera.

A Little Help Please

For many years I have maintained that there is little or no proof that there is a significant link between rates of unemployment and the rates of disability claims. Common wisdom is to the contrary. The Organization for Economic Cooperation and Development (OECD) has released a report dealing with disability benefits around the world. Take a look at this chart (click on it to view it full size).

Could someone show me on this chart some evidence of a relationship between disability claims and unemployment?

Can Anyone Explain This?

From the Washington Post:

The government should create incentives for employers to retain disabled workers on their payrolls as a way of slowing unsustainable increases in the number of people receiving Social Security disability benefits, according to a new report.

Adding a "front end" of benefits to keep the disabled in their jobs could arrest the rapidly growing expense of the federal disability program, a problem that has largely escaped the scrutiny of policymakers, according to the report's authors at the Brookings Institution's Hamilton Project and the left-leaning Center for American Progress.

Their proposal would require workers and employers to share the cost of a modest private disability insurance package, which is between $150 and $250 a year, according to the report, which is to be officially unveiled at a Dec. 3 event in Washington.

Workers seeking to go onto the federal disability program would first have to be approved for benefits from the private policy. Those benefits would go toward rehabilitation services, partial income support and other related services, the researchers said....

David Autor, a Massachusetts Institute of Technology researcher who co-authored the study, acknowledged that the overall proposal would likely face huge hurdles in a political environment that is growing increasingly hostile to new government mandates.

$150 to $250 a year for private disability insurance? Turning over disability determination to private insurers who get to pocket anything they do not have to pay out? Rehab services to enable all those people with degenerative diseases to return to work?

What could possibly go wrong?