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Stress Rises on Social Security
Social Security, which pays retirement and disability benefits to 56 million Americans, will exhaust its reserves by 2033, three years sooner than previously estimated, a new government report said Monday.
The forecast raises pressure on the White House and Congress to tackle the entitlement program, which many politicians fear changing because of potential voter backlash.
The trustees who oversee Social Security's two trust funds?one for disability benefits, the other for retirees?said reserves for the fund that pays disability benefits would be exhausted by 2016, two years earlier than projected last year. And if the disability fund were combined with the larger fund that pays retiree benefits, all reserves would be exhausted by 2033, three years sooner than projected last year.
Benefits would automatically be cut roughly 25% if the trust funds were exhausted. Monthly Social Security benefits averaged $1,125 per recipient in March, according to government data.
Social Security and Medicare, the government-run health plan for senior citizens, are together the largest U.S. public benefit programs and account for one-third of the federal budget. The programs' costs are projected to grow rapidly because of the aging U.S. population and, in Medicare's case, the rising cost of health care.
Democrats and Republicans, in a battle over public spending, are making the role of government a central issue in the November election. Social Security is yet to emerge in the debate because, according to one argument, the program's financial problems remain decades away. Also, many older Americans who receive the government benefits vote in large numbers and have resisted cuts, striking fear in politicians.
"It is time for Congress to take on the task of retooling Social Security for the long haul," said Social Security Administration Commissioner Michael Astrue.
Many past proposals haven't gone far. The Republican-controlled House this year and last approved a budget that would change Medicare.
The proposal hasn't passed the Senate, which is controlled by Democrats. In 2005, then-President George W. Bush proposed to partially privatize Social Security but couldn't get Congress, at the time controlled by his own party, to approve the plan.
The Social Security trust-fund balances are essentially the difference between the taxes that have been paid into the programs and the total number of benefits that have been paid out over the years.
The government has borrowed from the Social Security trust fund to pay for other operations and pays interest to the program. By law, benefits are paid in full as long as the fund balances represent a surplus.
Treasury Secretary Timothy Geithner said the Obama administration would seek to work with Congress to come up with a long-term solution to repair the solvency of the disability trust fund but didn't offer specifics. "The best thing to do is a long-term solution," he said.
Social Security and Medicare are primarily funded through taxes paid by workers and employers. An effort to bolster the programs' finances would require increasing revenue, cutting costs, or some combination.
The Social Security disability program and the Medicare program that covers hospital care are already paying more in benefits than they collect through tax revenue. They make up the difference by drawing down trust funds built over many years when they collected more than they spent. The Social Security retirement system still collects more than it spends.
Social Security's worsening outlook comes from a combination of higher cost-of-living adjustments pushing benefits up and lagging wage growth holding down tax revenue.
In recent years, the Social Security disability rolls have soared, as many Americans with mental and physical health problems sought to enter the program and others with less severe issues applied because of a scarcity of work.
In 2011, Social Security paid $596.2 billion in retirement benefits to 44.8 million Americans and $128.9 billion in disability benefits to 10.6 million recipients.
Charles Blahous, a Republican trustee for Social Security and Medicare, said, "By any objective measure, the problems in Social Security are growing somewhat more serious." He called for a congressional deal, which he said needed to be "responsible, decisive, and prompt."
Mr. Astrue, a Republican, urged Congress to address the funding shortfalls but said in the interim lawmakers could consider redirecting some of the money meant for the retiree program to the disability fund.
The trustees also provided an update on Medicare's finances. They projected the Medicare fund that pays for hospital benefits would be exhausted in 2024, unchanged from their projection last year.
But, foreshadowing the financial pressures on Medicare in coming years, the trustees said the number of people covered by Medicare rose to 48.7 million in 2011. That meant, on average, 100,000 Americans joined Medicare each month.
The Obama administration has said it would support changes to Social Security to improve the program's solvency but hasn't proposed any. White House officials and congressional Republicans met privately last year to discuss possible changes to Social Security. Those talks fell apart when negotiators couldn't reach a broader deal to reduce the federal budget deficit. One change discussed by both sides would have slowed how benefits are increased to take account for inflation.
Mitt Romney, the likely Republican presidential nominee, has proposed gradually raising the retirement age and slowing the rate of benefit inflation for wealthier Americans. Currently, Americans can claim full Social Security retiree benefits at age 66, or seek smaller benefits when they turn 62.
President Barack Obama's re-election campaign used the new data to attack Mr. Romney, with spokesman Ben LaBolt saying the former Massachusetts governor would make "devastating cuts to Medicare and Social Security" which "would end America's social compact with our seniors."
Lanhee Chen, Mr. Romney's policy director, said in a statement that Mr. Obama's "inaction on Social Security reforms means that seniors will be left to face across-the-board benefit cuts. His failure on this issue stands in stark contrast to the meaningful reforms that Mitt Romney has proposed?reforms that will ensure Social Security remains solvent and strong for at least the next 75 years."
On Medicare, White House officials say the 2010 health care law has added eight years to the program's solvency and last year they proposed even more changes. Republicans dispute many of the figures. Last year, Mr. Obama privately explored with Republicans the idea of raising the eligibility age for Medicare, but those talks collapsed.
Mr. Romney has proposed changing Medicare to allow seniors to sign up with the government program or shop for private insurance, with the government providing some assistance for premium payments. He would also change the program to give more support to low-income seniors and less support to wealthier Americans. He has proposed curbing the growth of Medicare spending, in part, by raising the eligibility age from 65 by one month per year beginning in 2022.
With the Bush-era tax cuts set to expire at the end of the year, and $1.2 trillion in defense and other spending reductions set to begin in January, lawmakers in both parties have said they hope a broad, bipartisan deficit-reduction plan could come together by the end of the year.
Republicans have said that big changes to Medicare and potentially Social Security should be included in any talks that might raise new taxes, but so far both sides appear far apart on any deal.
Re: Stress Rises on Social Security
Ugh, this scares me. In part, because I selfishly don't want to be out of a job in under 4 years. I can really only speak to the Disability portion but I think that massive program changes need to be made. I think Congress would be wise to provide room in the budget to ramp up SS investigators so countless people can be taken off the rolls. It just seemed counterintuitive that each time budget is cut they eliminate or severely reduce the investigators so you have folks stuck on the rolls for life when SSA disability is not meant to be that way for many many people.
I also think they should provide better training at the lower levels because IMO there are a large number of people getting paid that shouldn't be. To be clear, I am not saying that these people are perpetuating a fraud on the US government, I really do think they believe they are disabled. I just think that many of SSA's own employees are overworked and under trained when it comes to establishing disability and it is easier to just mark paid then do any real investigation.
Hopefully something will come out of the current SSI investigations.
Above Us Only Sky
Not too long ago, the WSJ had an interesting series of articles on SS fraud. The biggest problem appeared to be the SS judges, who in many cases grant applications with almost zero inspection of the underlying claim, partly due to caseload and partly due to laziness. In at least one case, a senior claims judge was assigning cases from a specific attorney to his own court so that he could rule favorably. IIRC, he was forced to resign as a result of the articles and a subsequent investigation.
The Boston Globe did an expose last year about normal but poor kids being put on drugs so their parents could collect SSI for them. The system is screwed up but part of the reason SS is screwed up is because of welfare reform in the 90s, I'm not sure of the answer but there will always be some who are unwilling to work and cutting off their welfare cash benefits just means they learned to work the SSI/SSDI system.
Above Us Only Sky
Yeah, my old boss was actually a manager in that office. Yeah, it is really frustrating. I actually find that the ALJs do a much better job than the decision makers before them (but then again I only see cases that aren't approved). I mean I will agree it is tough. I know these ALJs have a goal of something like 500+ decisions a year or something like that. They don't have much of a staff and sometimes the medical evidence for these cases has thousands of pages. Congress is always on our butts for not processing cases fast enough so there is a lot of pressure to just churn stuff out. So, I guess when you stress quantity over quality you get a lot of room for improper behavior and overall bad decisions.
Team Death Panels right here.
In all seriousness, here is what needs to happen -
1) Raise the SS full benefits age to 70, with smaller benefits at 66.
2) Are the requirements to get SS disability benefits less strict than they used to be, and it is easy to remain on the rolls forever? If so, that needs to be closely looked at.
What will they actually do? They will raise our (young people) SS contributions, and I will have to grab my pitchfork and revolt because I will NOT contribute another penny to something I will never see for myself when I'm old.
Also, they should put me in charge of deciding who gets SS. The nice old man who always walks in the park and gives me a thumbs up and words of encouragement during my runs? He can get SS. The old lady who cut me in line at the deli the other day? No SS for her.
<a href="http://www.thenest.com/?utm_source=ticker&utm_medium=HTML&utm_campaign=tickers" title="Home DI don't remember the specifics but I do remember reading those articles. Regardless of the reform, I'm not inclined to feel much sympathy for people willing to drug their kids absent actual medical need for the sake of collecting. I understand their plight but I still find the act repugnant.
Moreover, I don't think we should abandon reform efforts simply because some learn to work around the system. You will always have those who will figure out how to play the system regardless of the safety valves, and the bureaucracy required to deal with this is untenable, which to my mind is simply part of the problem with any large-scale government program. While I agree that stressing quantity over quality is a massive part of the problem, I'm particularly disgusted by judges who behave inappropriately.
There is definitely fraud and bias both in favor of the claimants and against them. Part of the problem with the judges though goes to Kari's point about cutting the staff - SSA is the largest administrative law body in the country, IIRC. The worklolad of some of these judges is enormous and the pressure to just churn out cases is huge. This is problematic when it results in stupid errors that force remands from the appeals level, and it is problematic when the appeals council is so overwhelmed that they can't get ahead on the case load. And of course the whole issue of favoring certain attorneys or claimants over others is another whole issue.
So in all this talk of cutting federal spending, you don't want to cut the spending at agencies such as SSA, because the workload is only increasing, and then you are having more work that is getting done by fewer people, which creates more errors, more lag time, etc. So in order to actually protect the trust, the government needs to hire more people. It sounds counterintuitive but as long as the applications remain steady or continue to rise, it's going to be the only way really.
I also completely agree with Kari's point about better training the initial level examiners and I was just thinking about this the other day. I can't even imagine how many cases are paid that probably shouldn't be. And like Kari said, I think most people who apply think they are "disabled," so I don't think they are trying to defraud the government.
signed,
a guardian of the trust (that may be what we call ourselves when we are feeling silly
)
Above Us Only Sky
People who know me on this board will probably faint dead away at reading this, but I tend to agree with this. I think that but for a few very clear cases, the decision-making is such that people can legitimately believe they are entitled to benefits regardless of whether they actually are. I think the folks described in the Boston Globe articles are outliers and that most apply in earnest. The problem is that the gatekeepers are failing, and while I do understand the point about needing to beef up spending to deal with the caseload, this brings me back to the problem with administering such a massive program. I think y'all know where I stand on such things.
We should make ourselves capes
You mean something like a continuing disability review, that might result in a cessation of benefits? yes, we have that. For many people, when you are found disabled there is a date set in the future depending on the impairment - maybe two years, mayeb 5 - when you will be re-evaluated. You have the option though of continuing to receive benefits while your case is being evaluated when you reach that point, which can take years (I'm doing a case now - benefits were "terminated" in 2009. I'm just evaluating the appeal now in 2012. That's almost 3 extra years of benefits.) Yes the agency can go after them for repayment of those benefits bc they technically weren't entitled to them. But a) that takes more manpower, and b) so we're the big bad agency that is ceasing your payments AND making you repay the past 3 years of payments? That plays out well in the press, so a lot of times I think we just don't even bother. A lot more fish to fry here.
And whee! finally a post where I can use my knowledge. Haha.
I think IIOY has a good point though in that a lot of these problems are just inherent in such a massive program. Yes outright fraud, favoring your buddies, and all that is a huge problem, but a lot of people just slip through the cracks and get paid when they shouldn't. And when you are handling thousands and thousands of applications a year, that's going to happen. So you either expand the program (ie hire more employees etc) or you have to massively reform it - the way it is run, the way claims are processed, etc - and you dont do that just by cutting the budget.
Actually, yes. I went to look for jobs in Houston on their website.
Wait. You mean it's not Welfare?