[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]
THE SOCIAL SECURITY ADMINISTRATION'S SERVICE DELIVERY BUDGET PLAN
=======================================================================
HEARING
before the
SUBCOMMITTEE ON SOCIAL SECURITY
of the
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
SECOND SESSION
__________
FEBRUARY 26, 2004
__________
Serial No. 108-46
__________
Printed for the use of the Committee on Ways and Means
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COMMITTEE ON WAYS AND MEANS
BILL THOMAS, California, Chairman
PHILIP M. CRANE, Illinois CHARLES B. RANGEL, New York
E. CLAY SHAW, JR., Florida FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut ROBERT T. MATSUI, California
AMO HOUGHTON, New York SANDER M. LEVIN, Michigan
WALLY HERGER, California BENJAMIN L. CARDIN, Maryland
JIM MCCRERY, Louisiana JIM MCDERMOTT, Washington
DAVE CAMP, Michigan GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota JOHN LEWIS, Georgia
JIM NUSSLE, Iowa RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas MICHAEL R. MCNULTY, New York
JENNIFER DUNN, Washington WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio XAVIER BECERRA, California
PHIL ENGLISH, Pennsylvania LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona EARL POMEROY, North Dakota
JERRY WELLER, Illinois MAX SANDLIN, Texas
KENNY C. HULSHOF, Missouri STEPHANIE TUBBS JONES, Ohio
SCOTT MCINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin
ERIC CANTOR, Virginia
Allison H. Giles, Chief of Staff
Janice Mays, Minority Chief Counsel
______
SUBCOMMITTEE ON SOCIAL SECURITY
E. CLAY SHAW, JR., Florida, Chairman
SAM JOHNSON, Texas ROBERT T. MATSUI, California
MAC COLLINS, Georgia BENJAMIN L. CARDIN, Maryland
J.D. HAYWORTH, Arizona EARL POMEROY, North Dakota
KENNY C. HULSHOF, Missouri XAVIER BECERRA, California
RON LEWIS, Kentucky STEPHANIE TUBBS JONES, Ohio
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Ways and Means are also published
in electronic form. The printed hearing record remains the official
version. Because electronic submissions are used to prepare both
printed and electronic versions of the hearing record, the process of
converting between various electronic formats may introduce
unintentional errors or omissions. Such occurrences are inherent in the
current publication process and should diminish as the process is
further refined.
C O N T E N T S
__________
Page
Advisory of February 19, 2004 announcing the hearing............. 2
WITNESS
Social Security Administration, Hon. Joanne B. Barnhart,
Commissioner................................................... 10
SUBMISSIONS FOR THE RECORD
AARP, statement.................................................. 44
Hernandez, Carlos, Frankfort, KY, statement...................... 46
National Education Association, statement........................ 47
Union of American Physicians and Dentists, Oakland, CA, statement 49
Walker, Peter J.H., Jr., Las Vegas, NV, statement................ 51
Williams, Harry L., Jr., The Woodlands, TX, statement............ 52
THE SOCIAL SECURITY ADMINISTRATION'S SERVICE DELIVERY BUDGET PLAN
----------
THURSDAY, FEBRUARY 26, 2004
U.S. House of Representatives,
Committee on Ways and Means,
Subcommittee on Social Security,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:01 a.m., in
Room B-318, Rayburn House Office Building, Hon. E. Clay Shaw,
Jr. (Chairman of the Subcommittee) presiding.
[The advisory announcing the hearing follows:]
ADVISORY
FROM THE
COMMITTEE
ON WAYS
AND
MEANS
SUBCOMMITTEE ON SOCIAL SECURITY
CONTACT: (202) 225-9263
FOR IMMEDIATE RELEASE
February 19, 2004
SS-7
Shaw Announces Hearing on
Social Security Service Delivery Plan
Congressman E. Clay Shaw, Jr. (R-FL), Chairman, Subcommittee on
Social Security of the Committee on Ways and Means, today announced
that the Subcommittee will hold a hearing on the Social Security
Administration's Service Delivery Budget Plan. The hearing will take
place on Thursday, February 26, 2004, in room B-318 of the Rayburn
House Office Building, beginning at 10:00 a.m.
Oral testimony at this hearing will be from an invited
Administration witness only. Any individual or organization may submit
a written statement for consideration by the Committee or for inclusion
in the printed record of the hearing.
BACKGROUND:
Each year, the Social Security Administration (SSA) updates a 5-
year Service Delivery Budget Plan first submitted to the Office of
Management and Budget with the agency's fiscal year 2004 request.
Integrated with the 5-year Strategic Plan, the plan provides a
comprehensive framework to address the challenges facing the agency and
improve public service. Updates of the Service Delivery Budget Plan are
based on current workload experience and available funding.
For fiscal year 2005, the President's budget requests $9 billion
for the administrative expenses of the SSA, an increase of 6.6 percent
from last year, and less than 2 percent of total outlays. In the
Service Delivery Budget Plan, the Commissioner had requested $9.4
billion for the administrative expenses in fiscal year 2005. These
funds will be used to deliver $557 billion in retirement, disability,
survivor, and Supplemental Security Income (SSI) benefits.
The Service Delivery Budget Plan calls for the SSA's 64,000
employees nationwide to continue to provide a high level of service to
Americans by paying benefits to more than 52 million people each month,
processing almost 6 million claims for benefits, issuing 18 million new
and replacement Social Security cards, posting 267 million earnings
items to workers' earnings records, handling 52 million phone calls,
and issuing 136 million Social Security Statements that advise workers
how much they have contributed to Social Security and estimate future
benefits. These core workloads continue to grow each year and will
increase significantly with the aging of the baby boom generation.
According to the agency's budget request, the President's budget
provides adequate resources for the SSA to: reduce overall disability
processing times, implement a new electronic disability process, reduce
erroneous payments and collect related debt, continue to improve
productivity, and expand online service options via the agency's web
site.
In addition to keeping up with growing core workloads, implementing
Ticket-to-Work programs, and combating Social Security number misuse,
the agency faces several other major challenges including:
Implementing the Medicare Prescription Drug Law. The SSA
will play a substantial role in implementing the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003 (P.L. 108-173).
Specifically, the agency will help identify low-income beneficiaries
for enrollment in the new prescription drug benefit, make low-income
subsidy determinations, calculate Part B premiums for high-income
beneficiaries, and withhold premiums appropriate to beneficiaries'
selected plans. To process this workload, the agency received $500
million in the Medicare prescription drug law and the President's
budget requests an additional $100 million contingency reserve from the
Medicare Trust Funds in the event costs exceed the amounts already
provided.
Improving the Disability Insurance and SSI Disability
Claims Process. While these programs continue to face tremendous
backlogs, the Commissioner recently moved forward with two initiatives
from the Service Delivery Budget Plan to improve accuracy and reduce
processing times in the disability determination process. In January
2004, the SSA began rolling out a new electronic disability claims
filing process, called AeDib. Converting from a paper to an electronic
folder will eliminate delays caused by the need to locate, mail, and
organize paper folders as disability claims move through the system. In
September 2003, the Commissioner announced her management reforms to
the disability determination process. These reforms, predicated on a
successful rollout of AeDib, include the establishment of ``quick
decision'' units, and the restructuring of several steps in the
disability determination process.
Improving Payment Accuracy. The Service Delivery Budget
Plan reaffirms the SSA's commitment to protecting the integrity of the
Trust Funds and the general fund by avoiding erroneous payments,
combating fraud, and enhancing efficiency. The President's budget
request supports this commitment by earmarking not less than $561
million for continuing disability reviews.
In announcing the hearing, Chairman Shaw stated, ``For the Social
Security Administration to fulfill their responsibilities to the
American people as summarized in the Service Delivery Budget Plan,
Congress must invest in the agency at the level requested by the
President. Shortchanging this investment breaks our promise to workers
who invested a portion of each hard-earned paycheck in exchange for
income protection for themselves and their families in the event of
retirement, disability, or death.''
FOCUS OF THE HEARING:
The Subcommittee will review how the President's fiscal year 2005
budget request for the SSA supports SSA's Service Delivery Budget Plan.
DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
Please Note: Due to the change in House mail policy, any person or
organization wishing to submit a written statement for the printed
record of the hearing should send it electronically to
[email protected], along with a fax copy to
(202) 225-2610, by the close of business, Thursday, March 11, 2004.
Those filing written statements who wish to have their statements
distributed to the press and interested public at the hearing should
deliver their 200 copies to the Subcommittee on Social Security in room
B-316 Rayburn House Office Building, in an open and searchable package
48 hours before the hearing. The U.S. Capitol Police will refuse
sealed-packaged deliveries to all House Office Buildings. Please note
that in the immediate future, the Committee website will allow for
electronic submissions to be included in the printed record. Before
submitting your comments, check to see if this function is available.
FORMATTING REQUIREMENTS:
1. All statements and any accompanying exhibits for printing must
be submitted electronically to
[email protected], along with a fax copy to
(202) 225-2610, in WordPerfect or MS Word format and MUST NOT exceed a
total of 10 pages including attachments. Witnesses are advised that the
Committee will rely on electronic submissions for printing the official
hearing record.
2. Copies of whole documents submitted as exhibit material will not
be accepted for printing. Instead, exhibit material should be
referenced and quoted or paraphrased. All exhibit material not meeting
these specifications will be maintained in the Committee files for
review and use by the Committee.
3. All statements must include a list of all clients, persons, or
organizations on whose behalf the witness appears. A supplemental sheet
must accompany each statement listing the name, company, address,
telephone and fax numbers of each witness.
Note: All Committee advisories and news releases are available on
the World Wide Web at http://waysandmeans.house.gov.
The Committee seeks to make its facilities accessible to persons
with disabilities. If you are in need of special accommodations, please
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four
business days notice is requested). Questions with regard to special
accommodation needs in general (including availability of Committee
materials in alternative formats) may be directed to the Committee as
noted above.
Chairman SHAW. Good morning. Today, our Subcommittee
welcomes the Commissioner of Social Security, Joanne Barnhart,
to review the agency's updated service delivery budget plan for
fiscal year 2005. That agenda may be a little bit expanded this
morning due to some comments made before the Committee on the
Budget by Mr. Greenspan yesterday.
The 5-year service delivery budget plan was first submitted
to the Office of Management and Budget (OMB) with the agency's
fiscal year 2004 budget request. Integrated with the 5-year
strategic plan, the service delivery budget plan provides a
framework to address the challenges facing the agency and to
improve public service. Recently, the Commissioner advanced two
initiatives from the service delivery budget plan. First, just
last month, the agency began rolling out a new electronic
disability claims filing process. That is something this
Committee has talked endlessly about and I am delighted to hear
that it is well underway. Converting from paper to electronic
folders will eliminate delays resulting from locating, mailing,
and organizing paper folders as a disability claim moves
through the system.
Second, this past September, the Commissioner premiered her
proposal to improve the disability determination process at a
hearing of this Subcommittee. Today, I look forward to hearing
the Commissioner's update regarding the progress of both of
these important initiatives. In addition to improving the
disability determination process, the updated fiscal year 2005
service delivery budget plan calls for the Social Security
Administration's (SSA's) 64,000 employees nationwide to process
more than 6 million claims for benefits, issue 18 million new
and replacement Social Security cards, post 267 million earning
items to workers' earning records, and pay monthly benefits to
more than 52 million people. These core workloads have grown
significantly in the last year, and will increase steadily with
the aging of the baby boom generation.
In order to support these and other activities in the
service delivery budget plan, the President's fiscal year 2005
budget requests $9 billion for Social Security administrative
expenses. That is a 6.6-percent increase over last year, and
among the highest increase for all Federal agencies. I want to
note that the administrative expenses of the SSA represent less
than 2 percent of the agency's total outlays, an
administration-to-benefit ratio that is much better than even
the most efficient nonprofit organizations. The President also
requested an additional $100 million for a Medicare reform
contingency reserve. This reserve, financed by the Medicare
Trust Fund, will ensure that all eligible persons seeking
benefits under the new Medicare Prescription Drug Improvement
and Modernization Act of 2003 (P.L. 108-173) can be served if
the original appropriation for implementation is exhausted.
Many people are unaware that the new Medicare prescription
drug law requires the SSA to provide substantial administrative
support to the Medicare program, including identifying low-
income Medicare beneficiaries for enrollment in the new
prescription drug benefit, making low-income subsidy
determinations, calculating Part B premiums for high-income
beneficiaries, and withholding premiums appropriate to
beneficiaries' selected prescription drug plans.
Finally, the President's budget reserves not less than $561
million for continuing disability reviews. These essential
reviews protect the integrity of the Trust Fund and the General
Fund by avoiding erroneous payments and combating fraud. The
President has done his part by requesting the budget and will
allow the agency to keep its commitment to seniors, individuals
with disabilities, and survivors, even in this tight budget
environment. Congress must fulfill its responsibility to Social
Security beneficiaries.
Chairman SHAW. I have amended my opening statement in this
way. We are here today to discuss the Commissioner's service
delivery plan for Social Security. However, there has been a
great deal of media attention regarding Federal Reserve System
Chairman Alan Greenspan's testimony before the House Committee
on the Budget yesterday on how to extend the life of Social
Security, which I think is quite appropriate to address at this
time. In a statement issued yesterday, I made a number of key
points. Chairman Greenspan is right to point out the
demographic challenges facing Social Security and Medicare.
Modern medicine is enabling people to live longer, and families
are having fewer children. In the long run, that means fewer
workers supporting each retiree, and it is important to keep in
mind Social Security right now is a pay-as-you-go program.
Chairman Greenspan is also right that tax increases are not
the answer to securing Social Security's future. We cannot risk
slowing economic growth. However, I respectfully disagree with
the Chairman's recommendation to cut promised benefits by
reducing the cost-of-living adjustment and increasing the
retirement age. Those proposals are not the right answer. My
message to seniors and those nearing retirement, you will
receive nothing less than 100 percent of what you have been
promised. Your benefits are safe. Your benefits are secure.
There is a viable alternative that doesn't require any tax
increases or benefit cuts. Allow workers to save today through
voluntary personal accounts that back Social Security with real
economic assets. These accounts would help workers build a
retirement nest egg, and deliver real retirement security. My
Social Security Guarantee Plus Plan, (H.R. 75) illustrates how
personal accounts will ensure payment of full promised benefits
and even provide enhanced benefits without tax increases and
without individual investment risk. Social Security will, and
should, continue as Americans, particularly younger Americans,
learn more about Social Security's challenges and options to
strengthen the program's future. I now look forward to working
with my Subcommittee colleagues and the Commissioner to develop
legislation that ensures that the SSA has the funding it needs
to efficiently serve the American people's Social Security
programs. They deserve no less. Ben?
[The opening statement of Chairman Shaw follows:]
Opening Statement of The Honorable E. Clay Shaw, Jr., Chairman, and a
Representative in Congress from the State of Florida
Good morning. Today, our Subcommittee welcomes the Commissioner of
Social Security, Joanne Barnhart, to review the Social Security
Agency's (SSA) updated Service Delivery Budget Plan for fiscal year
2005.
The five-year Service Delivery Budget Plan was first submitted to
the Office of Management and Budget with the agency's fiscal year 2004
budget request. Integrated with the five-year Strategic Plan, the
Service Delivery Budget Plan provides a framework to address the
challenges facing the agency and to improve public service.
Recently, the Commissioner advanced two initiatives from the
Service Delivery Budget Plan. First, just last month, the agency began
rolling out a new electronic disability claims filing process.
Converting from paper to electronic folders will eliminate delays
resulting from locating, mailing, and organizing paper folders as a
disability claim moves through the system. Second, this past September
the Commissioner premiered her proposals to improve the disability
determination process at a hearing of this Subcommittee. Today, I look
forward to hearing the Commissioner's update regarding the progress of
both of these important initiatives.
In addition to improving the disability determination process, the
updated fiscal year 2005 Service Delivery Budget Plan calls for SSA's
64,000 employees nationwide to: process more than 6 million claims for
benefits; issue 18 million new and replacement Social Security cards;
post 267 million earnings items to workers' earning records; and pay
monthly benefits to more than 52 million people. These core workloads
have grown significantly in the last year and will increase steadily
with the aging of the baby boom generation.
In order to support these and other activities in the Service
Delivery Budget Plan, the President's fiscal year 2005 budget requests
$9 billion for Social Security's administrative expenses, a 6.6 percent
increase over last year and among the highest increase for all Federal
agencies. I want to note that the administrative expenses of the SSA
represent less than 2 percent of the SSA's total outlays--an
administration to benefits ratio that is much better than even the most
efficient nonprofit organizations.
The President's Budget also requests an additional $100 million for
a Medicare reform contingency reserve. This reserve, financed by the
Medicare Trust Funds, will ensure that all eligible persons seeking
benefits under the new Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 can be served if the original appropriation
for implementation is exhausted.
Many people are unaware that the new Medicare prescription drug law
requires the SSA to provide substantial administrative support to the
Medicare program including: identifying low-income Medicare
beneficiaries for enrollment in the new prescription drug benefit,
making low-income subsidy determinations, calculating Part B premiums
for high-income beneficiaries, and withholding premiums appropriate to
beneficiaries' selected prescription drug plans.
Finally, the President's budget reserves not less than $561 million
for continuing disability reviews. These essential reviews protect the
integrity of the Trust Funds and the general fund by avoiding erroneous
payments and combating fraud.
The President has done his part by requesting a budget that will
allow the agency to keep its commitment to seniors, individuals with
disabilities, and survivors. Even in this tight budget environment,
Congress must fulfill its responsibility to Social Security's
beneficiaries. To this end I look forward to working with my
Subcommittee colleagues, and the Commissioner, to develop legislation
that ensures the Social Security Administration has the funding it
needs to effectively serve the American people. Social Security
programs deserve no less.
Mr. CARDIN. Thank you. Let me first thank Chairman Shaw for
holding this hearing, and Commissioner Barnhart, it is always a
pleasure to have you before the Committee. We very much
appreciate your dedicated leadership at the SSA and it is
always a pleasure to have you before the Committee.
If I might first comment on the Chairman's comments about
Chairman Greenspan's comments yesterday on the Social Security
benefits structure. We are in agreement, Mr. Chairman, in that
we would very much join you in opposing any effort to cut the
benefits, the cost of living adjustments, or any of the
benefits for the Social Security recipients. I can assure you
that, speaking for my colleagues on the Democratic side of the
aisle, we believe that is a non-starter, and will very much
oppose that. I think, though, what Chairman Greenspan mentioned
yesterday points out what the Democrats have been saying for a
long time, and that is, the budgets that we passed during the
last 3 years have put the Social Security system at risk, that
when you start using the Social Security surpluses to mask the
size of the deficit and to use it for every other purpose
imaginable, it put additional strain on the Social Security
system.
I thought we had a lockbox that the money was supposed to
be squirreled away and used only for Social Security. Well,
that hasn't been done during the last 3 years, and now as a
result of this reckless budgeting, we are faced with Chairman
Greenspan's analysis that now the Social Security is at risk.
So, Mr. Chairman, I hope that we will continue to have
hearings so we can figure out a way that we can have a
responsible budget that can assure the security of the Social
Security system for the future, because it is not just the
people who are receiving the checks today. We want to make sure
the people are going to be able to receive Social Security
checks in the future. We certainly look forward to working with
you and figuring out how we can get back to responsible
budgeting that will not put the Social Security system at risk.
Today's hearing is to talk about the adequate funding of the
SSA, the administrative budget, which is extremely important to
our constituents. Those who are seriously ill and disabled must
wait months and sometimes even years to get their claims
adjusted, and obviously the administrative support affects
that. Those people who want to get back to work and leave the
rolls of disabled, the support within the SSA helps us achieve
those objectives. Of course, program integrity is very
important.
I guess there is good news and bad news here. I want to
compliment the Commissioner. Clearly, her vision and the 5-year
service delivery plan that she has carefully crafted must have
been very impressive to the OMB, because you did very well
compared to other agencies. We applaud you in the budget that
has been submitted by the Administration. Despite that, this
Committee has gone on record over and over again, it has been
bipartisan, that you need to have adequate administrative
support in order to accomplish your objectives. In spite of the
success, the SSA remains under-funded. Its budget was reduced
by $168 million for fiscal year 2004, and the OMB cut $445
million from the Commissioner's original request for fiscal
year 2005. These cuts simply cannot be absorbed by the SSA. The
Commissioner has made it clear that these cuts mean fewer
continuing disability reviews and fewer Supplemental Security
Income (SSI) redeterminations. The SSA needs its full request
if it is to reduce the waiting time for disability applicants,
and keep ahead of the growing workloads, as the baby boomers
reach retirement age.
This is particularly important in several respects, and let
me just, if I might, be a little bit parochial, Mr. Chairman,
and talk about the State of Maryland, which froze enrollment
for 6 months, from January 9 until July 1, in a key program
that serves as a lifeline for about 11,000 other residents. I
am referring to the Transitional Emergency Medical and Housing
Assistance Program, which our State froze based upon the
concern that it takes too long for the SSA disability
determinations to be processed.
Now, Mr. Chairman, I am not sure my State is correct in its
analysis, and I want to make that clear. The information that
we have received from the SSA indicates that in some cases, we
have improved. In some cases, perhaps we have not improved. I
don't think my State action is appropriate, but I do want to
make it clear that it is important to our States to be able to
get these determinations made as quickly as possible. It is not
only to the individuals involved, but to supplemental State
programs that complement what we do here at the national level.
So, it is not just the Federal programs, it is also the State
programs that are impacted. I have had a conversation with
Commissioner Barnhart, and I look forward to getting those
figures straight and working with our State in order to be able
to hopefully correct what has happened in Maryland.
I want to conclude, Mr. Chairman, by indicating that I am
pleased that the budget includes an additional 2,000 work years
to be divided between new hires, and offering more overtime to
the SSA experienced staff. This is sorely needed. We also know,
as you pointed out in your opening statement, that the SSA is
also taking on a substantial new workload as it helps to
implement the Medicare drug bill. We will need to keep a close
watch as the implementation plans are developed to make sure
that these new tasks do not interfere with the SSA's
fundamental job of paying Social Security and SSI benefits. Mr.
Chairman, I look forward to hearing the testimony of
Commissioner Barnhart about her plans for the coming year, and
working to make sure that we can be as supportive as possible
in providing the resources necessary for the Commissioner to do
her important work.
Chairman SHAW. Thank you, Mr. Cardin. I think I should
point out that you and I have cosponsored legislation that
would take the administrative cost off budget, and that is
something that we should possibly reexamine. I know Mr.
Pomeroy, who has joined us here, also is working on legislation
that would do the same thing. To comment further as to how
Social Security got on budget and how it has been used to hide
the size of the deficit, this was done during the Johnson
Administration and has been through every Administration since
then. We have talked about and have voted, in fact, on taking
it off budget, but once you get the total budget, it is in
there.
It is important to realize that Social Security is a pay-
as-you-go system. It has paid for itself throughout the years.
It was designed that way, but it was not designed to continue
benefits when you get down to a little over two workers per
retiree, and that is the direction we are headed. If nothing
else, we ought to take Chairman Greenspan's announcement
yesterday, or his statement of his opinion, which you and I
both disagree with, but if anything else, it should be a wake-
up call that we are headed towards a cliff. That cliff is in
2018 when, for the first time since the creation of the
program, there will not be sufficient money coming in by the
way of payroll taxes to pay the benefits.
We have to add something to the Social Security program if
we are going to make it continue to grow as a stand-alone
program that takes care of itself. Workers pay into the
program. Workers are entitled to full benefits. You and I do
agree that we are not going to cut those benefits, and I assume
you agree, and perhaps you might want to comment on it, but it
is certainly not my intention to raise taxes on the American
workers, nor is it going to be necessary if we act now to
divert income taxes or other taxes into the Social Security
system. It can be maintained as a stand-alone program, but it
is going to require bipartisan action. I think Mr. Greenspan
also mentioned yesterday that we should do it sooner, rather
than later. So, I would hope that we can start moving forward
with this. I know election politics is going to get in our way,
which would make it doubtful that we would be able to reach an
agreement this year, although I would love to give it a try.
Mr. CARDIN. Would the Chairman yield?
Chairman SHAW. If I get any, and I tell you, if I can get
any bipartisan support for doing this, I would be delighted to
move a bill forward, and I yield to the gentleman.
Mr. CARDIN. I appreciate the Chairman yielding and I look
forward to working with the Chairman. The point I was raising,
though, 2 years or 3 years ago when we had the surpluses,
before the budgets that we passed basically used them all for
tax cuts or for whatever, we had additional options available,
including a bill that you had introduced that allowed us ways
of shoring up the system for the future, that are now not
available, and I think it is putting additional pressure on us.
So, I think our budgets that we passed that I really think were
reckless, and we said would not have any impact on Social
Security. Chairman Greenspan is now telling the American people
that, in fact, it does have an impact on Social Security.
The second point I was making is that we do have a Trust
Fund. The Trust Fund is required by law, and there is ample
moneys in those Trust Funds to pay benefits for a significant
period of time, well beyond the dates that we have been using.
We run into the revenues not being equal to the benefits. We
still have a Trust Fund balance at that time. That would extend
the Trust Fund for many decades beyond that. So, we still
have--we are not in crisis as far as paying the Social Security
benefits, but we will be in crisis if we don't have a
responsible budget. The underlying budget affects our ability
to continue the Social Security system and I don't think we
have been sensitive to that. I very much look forward to
working with the Chairman, with a responsible budget. Thank
you.
Chairman SHAW. Commissioner Barnhart, we are delighted to
have you again before this Committee, and Ben and I will
continue this debate after you leave.
[Laughter.]
It is my delight to recognize the Commissioner of Social
Security, Joanne Barnhart.
STATEMENT OF THE HONORABLE JOANNE B. BARNHART, COMMISSIONER,
SOCIAL SECURITY ADMINISTRATION
Ms. BARNHART. Thank you, Mr. Chairman. It is a pleasure to
see you again. I really enjoyed your comments earlier this
month at the disability forum in Florida. I have submitted a
longer written statement for the record, and what I would like
to do, so we can get right to questions as quickly as possible,
because I am sure the Members have a lot of questions, is just
to do a brief opening statement.
First of all, thank you, Mr. Chairman, and all the Members
of the Committee for this opportunity to discuss the Social
Security service delivery plan. I also want to say that I
really truly appreciate this Committee's interest in, and
support of, Social Security in the past. No doubt, without the
strong support of Members of this Committee, we would not have
fared as well, relatively speaking, as we did in fiscal year
2004 budget deliberations, and so I truly appreciate that. I
also look forward to continuing to work with you for the best
interests of the agency and the people who depend on our very
important programs.
I really want to spend my time right now answering
questions, as I said, and so the summary I want to provide
explains that the President's fiscal year 2005 budget
designated $557 billion for Social Security. This is a figure
that includes nearly $9 billion for administrative expenses. It
is a 6.8-percent increase for Social Security proper workloads
for fiscal year 2004.
Mr. Chairman, Social Security touches the lives of nearly
every American, and our requested increase is needed to supply
computer and telecommunications equipment, to support over
1,300 Social Security field offices nationwide, provide
salaries, benefits, and the training necessary for us to be
able to deliver the kind of quality service to the public that
they expect. This budget request, like last year's, I believe
demonstrates the President's commitment to Social Security and
its programs. I think this is especially true in the context of
the many competing priorities that the President and Congress
must balance, and though we didn't get our full budget request
for fiscal year 2004, I believe that, through the extraordinary
efforts of Social Security employees over the past year, and
with full funding of our fiscal year 2005 request, we can get
our service delivery plan back on track to meet our 2008
service delivery goals.
I want to take just a moment to share some of the things
that we have accomplished in the last year. We exceeded our
agency-wide productivity goal. Social Security offices
processed over 2.5 million disability claims. That is an
increase of more than 350,000 from fiscal year 2001. The
administrative law judge (ALJ) disposition rates are the
highest in history, at 2.35 cases per day. In fiscal year 2002,
our Office of Hearings and Appeals (OHA) processed 66,800 more
hearing decisions than in fiscal year 2001, and in 2003, 40,000
more than in 2002. In November 2001, the average time to appeal
an unfavorable hearing decision was 467 days. This past
November, it took 252 days. By incorporating technology at the
Office of Appellate Operations, we were able to reduce the time
required to code and file a bin of cases from 4.5 hours to 45
minutes. In January of 2003, it took an average of 120 days to
prepare a case for a hearing in Federal District Court. This
past December, it took 26 days. In 2002, we successfully opened
our first Social Security Card Center in Brooklyn, New York,
and as promised, and as the Chairman noted earlier in his
statement before this Committee, in January, just a few weeks
ago, we began to roll out the electronic disability system,
which is going to transform the way that we are able to process
disability claims at Social Security.
I have provided a set of charts that show the trend lines
for all of these accomplishments that I have mentioned as well
as some other performance indicators. There is a cover sheet
that shows our progress from 2001 through 2003 and what we
project for this year and for fiscal year 2005 if we receive
the full request that the President has made.
[The charts follow:]
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Performance Indicator Comparison 2001-2005
----------------------------------------------------------------------------------------------------------------
FY 2004
Performance Indicator FY 2001 FY 2002 FY 2003 Thru Jan FY 2004 Goal FY 2005 Goal
----------------------------------------------------------------------------------------------------------------
Initial disability claims 2,166,623 2,376,572 2,526,020 828,684 2,485,000 2,457,000
processed
----------------------------------------------------------------------------------------------------------------
Hearings processed (All) 465,228 532,106 571,928 173,247 588,000
SSA Only 156,931 538,000 596,000
----------------------------------------------------------------------------------------------------------------
RSI claims processed 3,092,743 3,265,473 3,238,871 785,667 3,285,000 3,305,000
thru Dec
----------------------------------------------------------------------------------------------------------------
800 number calls 59,300,000 51,800,000 53,700,000 17,556,431 52,000,000 52,200,000
handled
----------------------------------------------------------------------------------------------------------------
SSI non-disability 2,315,856 2,311,499 2,449,674 802,637 2,210,000 2,210,000
redeterminations
----------------------------------------------------------------------------------------------------------------
Periodic CDRs 1,762,517 1,586,091 1,371,255 467,934 1,537,000 1,569,000
processed
----------------------------------------------------------------------------------------------------------------
Annual earnings 274,427,394 266,777,009 257,188,087 4,703,507 262,500,000 267,200,000
items processed
thru Dec
----------------------------------------------------------------------------------------------------------------
SSN requests 18,179,115 17,679,490 17,523,560 3,983,001 17,500,000 17,500,000
processed
thru Dec
----------------------------------------------------------------------------------------------------------------
Initial disability claims 106.1 104.0 97.1 95.4 97 97
average processing
time (in days)
----------------------------------------------------------------------------------------------------------------
Hearings 308 336 344 372 377 344
average processing
time (in days)
----------------------------------------------------------------------------------------------------------------
Decisions on appeals 447 412 294 252 275 250
of hearings
average processing thru Dec
time (in days)
----------------------------------------------------------------------------------------------------------------
Initial disability claims 578,524 592,692 581,929 586,322 582,000 582,000
pending
----------------------------------------------------------------------------------------------------------------
Hearings pending (All) 435,904 500,757 591,562 618,528 629,000
SSA Only 584,634 586,000 550,000
----------------------------------------------------------------------------------------------------------------
__________
I talk about these accomplishments because I believe that
our budget request also reflects the President's confidence in
the ability and dedication of the men and women of Social
Security to be good stewards of the funds with which we are
entrusted. Being good stewards and providing high-quality
service also means having a Social Security system the American
people can have confidence in. I would like to reiterate
something that you, Mr. Chairman, said just a few moments ago,
and that President Bush said yesterday. Social Security
benefits for current and near-retirees are secure. The SSA
stands ready to work with the President and Congress to provide
the kind of service the American people expect and deserve,
and, through bipartisan efforts, we can ensure that our
children and grandchildren can count on Social Security.
I ask the Committee again for your support for the
President's budget, and I pledge to you on behalf of the men
and women of Social Security, our unceasing commitment to
providing quality service to the people of the United States. I
thank you for this opportunity and I will be happy to try and
answer any questions that you might have.
[The prepared statement of Ms. Barnhart follows:]
Statement of The Honorable Joanne B. Barnhart, Commissioner, Social
Security Administration
Mr. Chairman and Members of the Committee, I am pleased to be here
today to discuss the President's fiscal year (FY) 2005 budget request
for the Social Security Administration (SSA). I appreciate the
Committee's interest in and support of SSA in the past, and I look
forward to continuing to work with you. I want to thank you for holding
this hearing and giving me the opportunity to tell you of our
accomplishments and our plans for the future.
Overview of SSA's Programs and Overall Budget
As you know, SSA advances the economic security of the Nation's
people through compassionate and vigilant leadership in shaping and
managing America's Social Security programs. These programs include
Old-Age and Survivors Insurance, commonly referred to as Social
Security, Disability Insurance (DI), and Supplemental Security Income
(SSI). SSA also provides service delivery support to the Medicare,
Medicaid, Black Lung, Railroad Retirement, and Food Stamp programs. The
President's Budget request for the Social Security Administration is
driven by our Agency Strategic Plan, which focuses on four strategic
goals: service, stewardship, solvency, and staff.
For FY 2005, SSA will spend $557 billion to pay monthly benefits to
more than 52 million people. SSA's administrative expenses, driven by
the size of the programs we administer--both in terms of the amount of
work we do and the number of people we need to do it--are less than 2
percent of total outlays.
Let me give you a sense of the vast number of tasks that our
dedicated employees will perform in FY 2005. We will process almost 6
million claims for benefits; issue 18 million new and replacement
Social Security number (SSN) cards; process 267 million earnings items
for workers' earnings records; handle approximately 52 million phone
calls to SSA's 800-number; issue 136 million Social Security
Statements; adjudicate appeals of disputed decisions; process millions
of actions to keep beneficiary records current and accurate; and
conduct continuing eligibility reviews to avoid erroneous payments to
Social Security and SSI beneficiaries.
President's Request for SSA's Limitation on Administrative Expenses
The President's budget includes $8.878 billion for the Limitation
on Administrative Expenses (LAE), a 6.8 percent increase over our FY
2004 appropriation. Given the very tight fiscal environment for FY
2005, we believe this increase in funding reflects the President's
continued support for our programs and confidence in the Agency. And
given the severe budget constraints of the last two years, I want to go
on the record as thanking you for your support of our Fiscal Year 2004
and 2005 budget requests.
The 6.8 percent increase is needed to provide the salaries and
benefits, facilities, computer and telecommunications equipment, and
training needed to deliver service to the American public. Mandatory
increases in personnel costs occur every year due to annual Federal
employee pay raises, career ladder promotions and benefit cost
increases, and about 75 percent of our administrative resources are
used for personnel expenses.
Our budget places a priority on delivering high-quality, citizen-
centered service, and this year our commitment is to achieve at least a
two percent improvement in productivity. With the proposed FY 2005
funding levels, SSA will be able to keep up with key service workloads
as well as fulfill our responsibilities in implementing the historic
Medicare prescription drug law. While I will describe each of the
following workloads and initiatives in more detail shortly, let me
mention that the budget will allow us to reduce hearings backlogs,
increase the number of continuing disability reviews (CDRs), and
continue to lower overall disability processing times for the American
people. It also allows us to focus on implementation of AeDib, our new
electronic disability claims process, which we began to roll out in
January.
SSA is a results-oriented organization, driven by our workloads. We
recognize that the number of people we have to ``do the job'' matters
significantly. The dedicated men and women of SSA will continue to give
the American people the service they expect and deserve. However, the
reality is that fewer resources mean less work is completed, and that
we must balance those resources against our workloads carefully.
For instance, in FY 2003, we were not able to keep up with our
projected CDR workload, and the same will be the case in FY 2004. We
know that CDRs are very cost-effective, and that they add significantly
to program savings. For every $1 in administrative resources spent to
process CDRs, SSA has generated approximately $10 in government-wide
savings. However, the alternative to reducing the number of CDRs
conducted would be to process fewer disability claims, thus increasing
the time disability applicants must wait for a decision, and that is a
tradeoff I am not willing to make.
When I began my term as Commissioner of Social Security, I vowed
not to manage the status quo. I began a Service Delivery Assessment to
determine what our goals for service should be and to plan how we would
achieve those goals within five years. The budget increase the
President is proposing for SSA in FY 2005 enables the Agency to stay on
track to meet my service delivery goals by the end of the original five
year period--2008, producing positive results for the millions of
Americans who depend on our Agency.
Let me describe some of our recent accomplishments in meeting our
service delivery challenges.
SSA's Recent Accomplishments
In FY 2003, SSA paid nearly $499 billion in Federal benefits to
39.3 million OASI beneficiaries, 7.3 million DI beneficiaries, and 6.6
million SSI recipients, including individuals receiving benefits from
more than one program. In addition to carrying out these
responsibilities, SSA made progress in meeting a wide range of
challenges despite tough choices required to operate within
appropriated resources.
In FY 2003, we exceeded our Agency-wide productivity goal. SSA
offices processed over 2.5 million disability claims--an increase of
more than 350,000 from FY 2001. Administrative Law Judge (ALJ)
productivity rates were the highest in history--at 2.35 cases per day.
SSA's Office of Hearings and Appeals processed 40,000 more hearing
decisions than FY 2002. In November 2001, the average time to appeal an
unfavorable hearing decision was 467 days. In November 2003, it took
252 days. The number of people doing business with SSA and rating our
service as ``good,'' ``very good,'' or ``excellent'' exceeded 84
percent.
Maintain Service in the Face of Growing Workloads
The President's FY 2005 budget for SSA will allow us to continue to
provide this level of service for the American public. In FY 2005, we
will be able to add an additional 2,000 work years to our operations.
This level will be enough to maintain or improve service and will be
used largely to enhance our staff in SSA field offices and the Office
of Hearings and Appeals.
As I mentioned earlier, SSA will be able to reduce hearings
backlogs while continuing to lower overall disability processing times.
In FY 2005, SSA expects to increase the number of hearings it processes
to 596,000 from 538,000 in FY 2004--an 11 percent increase. This lowers
the number of pending hearings from 586,000 in FY 2004 to 550,000 in FY
2005--a decrease of 36,000. We project our average hearings processing
time for FY 2005 to be 344 days. Additionally, we will meet our
commitment to process as many initial disability claims as we receive,
keeping up with the pending workload level, while maintaining the
accuracy of our decisions.
In FY 2005, SSA expects to issue nearly 18 million new and
replacement Social Security cards after obtaining and evaluating
evidence of identity. As a way to streamline and improve service, we
opened a pilot Social Security Card Center in Brooklyn, New York in
2002. The Brooklyn Card Center exclusively processes requests for new
or replacement Social Security cards. While I am waiting to see the
final results from the review of the pilot, initial feedback has been
extremely positive. After considering the final results, I hope to open
at least one additional Card Center in FY 2004.
In FY 2005, SSA will also expand the range of services we offer
electronically to the public. We will continue to encourage the public
to use SSA's Internet website, and will partner with other Federal,
State and local entities to promote consolidated service delivery. SSA
has invested substantially in electronic service delivery and will
continue to do so as an efficient means of providing service to the
burgeoning population of baby boomers who will come to us for service.
SSA now has many of our forms and applications available online at
www.socialsecurity.gov. SSA is testing the marketing of Social Security
online services through the distribution of bookmarks and other
promotional materials in libraries, and is publicizing online services
among human resource professionals in large businesses and
organizations.
Invest in Technology and Implement an
Electronic Disability Claims Process
As you can see, Mr. Chairman, SSA places a high priority on
information technology investments. Our FY 2005 budget authority for
information technology is increasing from $392 million to $420 million,
an increase of $28 million, or 7.1 percent. SSA plans to invest in
infrastructure and office automation necessary for the support of
ongoing operation, including maintenance of SSA's National Computer
Center, telephone services, and hardware and software nationwide.
The most notable strategic investment is AeDib, an electronic
disability claims filing process, which replaces the paper-driven
process with a more efficient electronic system, and is expected to
reduce processing times significantly over the long term. As you know,
SSA began to roll out AeDib in January of this year. This system is
critical to our ability to maintain and improve upon the progress we've
made in making our disability process better, and the funds in the
President's budget request will allow us to complete the roll out
within our 18 month schedule.
As I mentioned earlier, SSA made significant progress in improving
overall disability processing times in 2003. In addition to the
processing time improvements of SSA's Appeals Council, average
processing time for initial claims was 97 days, an improvement from the
FY 2002 processing time of 104 days.
However, we recognize that there is still much more to be done.
Individuals who initially are denied disability benefits and who appeal
have to wait almost an additional year before a final hearing decision
is made, and that is simply unacceptable.
AeDib is truly revolutionizing the way we do work and is essential
for making changes for the long-term. While we have found that the
process does increase the time spent in the field office preparing the
claim by approximately 15 to 20 minutes, this additional time will
result in more complete case files and thus save many hours in overall
processing time. In addition, in the paper-driven process, when a
claimant requests a hearing, it often takes more than a month simply to
locate the claimant's folder and deliver it to the appropriate hearing
office. This will change with the new electronic process as costs
related to locating, mailing, and storing paper files will be
significantly reduced.
With regard to long-term improvements, the last time I appeared
before this Committee, I announced a new approach for improving the
disability determination process. The approach I discussed focuses on
making the right decision as early in the process as possible and
improving the quality of decisions at all levels of the process. The
proposal is predicated on the successful implementation of AeDib, which
would allow disability claims and quality reviews to be worked at any
location. We are continuing to pursue a collaborative approach in
developing the new process as we receive input, comments and ideas from
Congress, the public, organizations, advocacy groups and employees to
refine the new approach.
Increase SSA's Overall Productivity
As SSA deals with significant workload growth and an increased
number of employee retirements, improved productivity is essential to
meeting the challenges ahead. In FY 2003, we exceeded our Agency-wide
productivity goal. We achieved a 2.1 percent increase in productivity,
due largely to the dedication of our employees. Considering that we had
a 5.1 percent increase in productivity in FY 2002, our achievement in
FY 2003 is even more noteworthy. Our goal for FY 2005 is to again
increase productivity by at least 2 percent.
In addition to our other systems improvements and automation
efforts I have already mentioned, the President's budget includes a
legislative proposal to implement an Electronic Death Registry (EDR)
where States would report the death of an individual within five days.
The budget also includes funding to make improvements to the earnings
process, continuing redesign of the Title II system, and modernization
of our SSI systems.
Ensure the Integrity of SSA's Programs
SSA's mission demands that we balance our commitment to service
with our responsibility to be good stewards of the programs we
administer. We fulfill this responsibility through program integrity
work such as CDRs, periodic non-disability redeterminations of SSI
payments, overpayment collections, and strengthened management of our
programs.
As I mentioned, the President's budget proposes $561 million in
dedicated funding to ensure continuation of CDRs, which have a very
high return in program savings for administrative dollars spent. The
President's budget proposes that discretionary spending caps be
reinstated in any budget reform legislation that Congress considers. If
caps are reinstated, the President proposes to adjust the caps for
SSA's funding for CDRs. I know the Committee is familiar with the cap
adjustment for CDRs under the previous discretionary spending caps. In
FY 2005, SSA will process 1.569 million CDR's, an increase from 1.537
million in FY 2004.
We will continue to strengthen our management of the SSI program by
reducing erroneous payments through use of such tools as periodic non-
disability redeterminations, and proposing legislative remedies
consistent with the Agency's SSI Corrective Action Plan, which was
developed in response to GAO's designation of SSI as a high-risk
program. As you know, many of the legislative proposals in the
Corrective Action Plan are in H.R. 743, and we are continuing to look
for ways to improve and simplify the SSI program. We will propose
legislative remedies as necessary based on this ongoing analysis. We
expect to process 2.21 million redeterminations in both FY 2004 and FY
2005.
We will also continue to reduce SSN fraud through improvements to
the enumeration process. The SSN has become the single most widely used
identifier for Federal and State government, as well as the private
sector. As uses of the SSN increase, so has the potential for misuse.
Individuals seeking an SSN must provide proof of identity, age, and
U.S. citizenship or legal alien and work authorization status, and SSA
must evaluate all of these documents for authenticity. To detect
fraudulent documents and to prevent improperly issuing SSNs, we are
developing ways to share information with other Federal and State
agencies to decrease reliance on documents presented by SSN applicants.
We are also developing automated alerts to detect potential fraud.
Finally, Mr. Chairman, we are looking forward to implementing all
the provisions in H.R. 743 as they serve to further strengthen the
integrity of our programs.
Implement Medicare Reform
SSA is facing new responsibilities as we help to implement the
Medicare prescription drug law signed by the President in December
2003. SSA will answer general inquiries and make referrals and send
letters this spring to Medicare beneficiaries who may be eligible for
the prescription drug discount card and related transitional
assistance. We will calculate Part B premiums for high-income
beneficiaries and withhold the premiums for this program from
beneficiaries' Social Security checks. We will also determine
eligibility of low-income seniors for drug benefit subsidies under
Medicare Part D.
I have created a team in my office to work with the Department of
Health and Human Services and oversee the Agency's implementation
efforts. I would like to take this opportunity to express my
appreciation for their hard work and efforts to make sure we fulfill
our responsibilities under this important legislation. I know the team
has made good progress in assessing what we need to do and how we will
do it to effectively implement the new law. Their analysis will include
plans for efficient use of our available resources to accomplish all
that is required of us. As we complete our assessment and proceed with
our implementation, we will keep you informed.
Congress provided $500 million for SSA's startup costs in FY 2004
and FY 2005. In addition to these funds, the President's FY 2005 budget
includes an additional $100 million for a Medicare reform contingency
reserve, which will remain available through FY 2006. This reserve will
ensure that all eligible persons seeking benefits under the new law can
be served if the original appropriation for implementation is
exhausted. Consistent with the provisions in the original legislation,
the reserve funds may be transferred between SSA and the Centers for
Medicare and Medicaid Services.
Conclusion
The President's FY 2005 administrative budget for SSA, including
$8.878 million for LAE, $100 million in a Medicare reform contingency
reserve, and $92 million for the Inspector General will provide the
resources to help us: maintain service in the face of growing
workloads; fully implement an electronic disability claims process;
continue to increase overall productivity; ensure the ongoing integrity
of our program; and, help administer the Medicare prescription drug
plan.
I am proud of our record of accomplishment in management of the
Social Security Administration. We earned the highest status score--
green--on the President's Management Agenda in Financial Management. We
are one of only four Federal agencies to have a green in status in
Financial Management. We also scored green in progress on all 5 areas
of the President's Management Agenda, specifically: improved financial
management; strategic management of human capital; expanded electronic
government; budget and performance integration; and competitive
sourcing.
We also are proud that we have received a number of awards and good
``grades'' from independent sources. We have received unqualified
opinions on our financial statements since 1994 and the Association of
Government Accountants ``Certificate of Excellence in Accountability
Reporting'' for fifth straight year. Our computer security efforts
earned a B+ on the House Committee on Government Reform's annual report
card, placing SSA among the top three Federal agencies. In addition,
SSA executives have received individual awards from the Association of
Government Accountants, the Joint Financial Management Improvement
Program, the General Services Administration, the American Society for
Public Administration, and the National Academy of Public
Administration.
We also are pleased that SSA's SSI program has been removed from
GAO's high-risk list of government programs considered especially
vulnerable to waste, fraud or abuse. To continue to reduce improper
payments, we are committed to processing substantial numbers of
continuing disability reviews, SSI redeterminations and special
workload cases affecting the accuracy of benefit payments; and to
continuing to make progress on the SSI Corrective Action Plan.
I want to thank this Committee for all its hard work in the recent
passage of H.R. 743. The bill includes many important provisions, but I
want to point out two SSI provisions that were in H.R. 743 and also in
an Administration bill that SSA submitted to Congress last July. One
provision would exclude small amounts of income paid as interest or
dividends on an SSI beneficiary's resources and increase from $20 a
month to $60 a quarter the amount of infrequent income an individual
can receive without it affecting his or her SSI benefit. By eliminating
the reporting and recording of these very small amounts of income, SSI
overpayments are avoided and the program is simpler and more efficient.
The second provision eliminates the situation in which income
received in the first month of eligibility is counted three times even
if it were only received once. This triple-counting caused beneficiary
confusion and was very difficult for SSA employees to administer and
explain. While the budget impact of these provisions is negligible
because they do not affect very many individuals, the proposals are an
important first step in simplifying the SSI program. I assure you that
we will continue, with the help of Congress, to improve and simplify
SSI.
Thank you for the opportunity to discuss SSA's budget request with
the Committee. I look forward to working with you and appreciate your
continued support of our programs and people.
Chairman SHAW. Mr. Pomeroy.
Mr. POMEROY. Mr. Chairman, thank you. I want to begin with
the observation that I believe the Federal Reserve Board
Chairman's comments yesterday, Alan Greenspan's comments, that
the deficits we are dealing with will require Social Security
cuts, place squarely before this Congress the consequences of
these huge and unsustainable deficits. As we have passed tax
cuts, as we have seen deficits soar to historic levels, there
has really been no discussion from the Administration or from
the majority about what the consequences of this are. In fact,
there has been red-faced denials that this would ever lead to
cuts in Social Security.
Alan Greenspan, a pretty well-regarded expert in terms of
this Nation's financial matters, assesses the deficit picture
and says benefit cuts in the future are inevitable. Now, I
don't agree with his conclusion, but I do agree with the
reality that he made clear to the American people yesterday,
and that is the deficits that we are under. The deficits that
have risen to historic highs, and in the end, imperil our
ability to deliver the Social Security promise to Americans.
One group that has been consistently discussed as being held
immune from benefit cuts are those in retirement or near
retirement. Commissioner, do you have information in terms of
what ages we are talking about as near retirement?
Ms. BARNHART. Let me explain it this way. In terms of near
retirement, that age has not been defined in any general sense.
There are different plans that have been put forward by
different Members of Congress that define it in different ways.
So, in terms of a general definition of near retirement, no, I
couldn't say.
Mr. POMEROY. I am 51. Some in North Dakota may think I am
near political retirement, not of my own volition, but would--
this classic baby boomer, right in the middle of the baby boom
bulge, would that be an age that you would view as near
retirement?
Ms. BARNHART. Well, I think for purposes of near
retirement, the way I view it is, an individual who wouldn't be
able to adjust to any changes that Congress might make, and let
me give an example. In 1983 when the Congress took action on
Social Security and increased the retirement age, they did so
in 1983 but it didn't go into effect until after the year 2000,
and even then, the retirement age goes up 1 month a year until
it gets to age 67. So, that allowed people the opportunity to
plan for that change, to understand that change, and to make
whatever kinds of adjustments they needed to make in their
financial planning. So, for my purposes, and what I think is
important in this discussion is that, when we talk about near
retirement, we are talking about people who would not have the
ability to adjust to changes that would be made.
Mr. POMEROY. That is a very interesting analysis, and I
like it. On the other hand, what the Chairman is talking about
isn't the micro-situation of the individual Social Security
beneficiary, and whether or not they have time to adjust. He is
talking about whether the Federal budget has time to adjust,
and, of course, the hit to the Federal budget is really felt
when the baby boomers move into retirement in the next decade.
So, I am not sure that if you--my opinion is baby boomers don't
have a lot of time to adjust to these changes, and so based on
your analysis, you would probably hold them harmless from
changes. Based on what the Chairman said yesterday, that is the
very group that you need to cut their benefits or you are going
to blow the budget sky high in light of these deficits.
Ms. BARNHART. I think if we look at the----
Mr. POMEROY. Do you think that we can keep the full promise
of Social Security to the baby boomers?
Ms. BARNHART. Let me explain this way. The Social Security
Trustees' Report for the last several years, pointed out that,
as we look to the long-term financial stability of the Social
Security program, what we see is a situation where, by 2043,
the Trust Funds would be exhausted. That means not only would
we have been spending the interest on the Trust Funds, but
there would actually be nothing left in the Trust Fund, and at
that point in 2043, we would be reliant solely on the taxes
paid every month to pay the benefits----
Mr. POMEROY. That would cover about two-thirds, three-
quarters of the benefit?
Ms. BARNHART. It covers about 73 percent of the benefits
initially, and----
Mr. POMEROY. So, 40 years from now, if we don't do
something, we will be able to cover three-quarters of the
benefit?
Ms. BARNHART. That is about right. Then, of course, as you
move on in time, because of life expectancy, and the fact that
boomers will probably live longer than senior citizens today
simply because of medical advances, lifestyle changes and those
kinds of things, then we will actually see another reduction in
benefits about 25 years later, which would mean we would only
be able to pay 65 percent of benefits, so----
Mr. POMEROY. Sixty years from now?
Ms. BARNHART. Something like that, yes. I can't give you
the precise year, but relatively speaking. So, what we are
looking at is a scenario that, absent any action, there would
be an effect on scheduled benefits for baby boomers who would
live beyond 2043.
Mr. POMEROY. Do you believe this level of deficits that our
budget is running will require benefit cuts before 2043?
Ms. BARNHART. I am sorry, I----
Mr. POMEROY. In light of the deficits the Chairman was
speaking about yesterday, Greenspan noted that this level of
deficit, largest in the history of the country, is going to
force cuts, and he suggests Social Security cuts. Is it your
view that this level of deficits, our budget being so radically
out of balance in the very decade before the baby boomers
retire, will require benefit cuts prior to the time they
otherwise would have been expected or projected actuarially in
the year 2043?
Ms. BARNHART. As I look at the situation from my
perspective as Commissioner of Social Security, I look at it
from the standpoint of the funds that we have in the Trust
Fund, and by that obviously the funds that have been posted
against the Trust Fund, currently around $1.5 trillion will
grow over time until it reaches $2.7 trillion. I think it is up
to a couple trillion by 2008, making good on those bonds is
going to be required, obviously, in order to pay the benefits
for the baby boomers and people who retire once we have to, as
the Chairman pointed out, dip into the Trust Funds, and can no
longer simply be reliant on the interest on those funds.
My personal experience--I have been in Washington for 30
years. In the past, we have had to do that. We have actually
had to make good on those bonds. That is what led to the
changes in 1983, and the system has done that, and the people
have had faith and confidence that the system would do that.
They are Treasury bonds. So, from my perspective as
Commissioner, when the bonds come due, we make good on the
bonds, and assuming that, absent changes, we are able to pay
full scheduled benefits until 2043, and then, as we discussed a
moment ago, that amount would drop to 73 percent.
Mr. POMEROY. Just a closing observation, Mr. Chairman.
Right now, our budget on the unified basis basically counts the
surplus coming in from Social Security, and at that point in
time, Social Security won't be contributing funds, it will be
drawing funds. So, without a sound fiscal position for the
country, meeting the bond requirement is going to be a
challenge. This is why we need to start working our fiscal
position into better shape right now. In closing, I want to
commend the Commissioner, whose job is to run the program under
the laws of this country as passed by Congress and signed into
law by the President. I believe this Commissioner is doing just
a terrific job. It is a delight to work with you on running
this important program.
Ms. BARNHART. I appreciate that.
Chairman SHAW. I agree with the last statement made by the
gentleman.
[Laughter.]
I would like to address just a couple of things that I
think need to be addressed, particularly when we are talking
about the budget, and talking about the effect of Social
Security. We are going to have a surplus until 2018, but 14
years from now, the payments into Social Security are not going
to take care of the benefits, and we are going to have to start
sending those Treasury bills, or making the book entries so
that we are drawing then from general revenue, in order to pay
the benefits, unless we start forward funding Social Security
through something extra in addition to Social Security. That is
the key, that is what we have got to do, and that is what the
President has talked about.
Also, I think it is important, if you read Mr. Greenspan's
entire statement made before the Committee on the Budget, he
also recommends that we do not raise taxes. So, I think we tend
to quote Mr. Greenspan, on both sides of the aisle, quote from
him as to what we agree to, and don't comment on what we
disagree to. The surplus is there, and it will continue to be
there for the next 14 years. However, if we don't do something
now, it is like putting your head in the sand and saying the
problem is going to go away. Again, we did have a wake-up call
from Mr. Greenspan, and it is necessary that the Congress act,
and act responsibly, if we are going to continue Social
Security as a pay-as-you-go program.
It can be done now. The bill that I have referred to, that
I have filed, shows that it can be done, and it can be done
actually over 75 years. It will create a surplus of itself
instead of the deficit that we are now facing over the next 75
years of over $25 trillion. That would sink our economy. This
is one of the biggest dangers that lies in the future of this
country, and I might say other countries, because the birth
rates are going down in the entire industrial world, and some
other countries have even a bigger problem than we have. Ms.
Tubbs Jones?
Ms. TUBBS JONES. Thank you, Mr. Chairman, and I want to
compliment you on hosting these hearings with regard to Social
Security. Madam Commissioner, it is good to see you again. Once
again, I want to thank you for coming to Cleveland to host a
hearing for my constituents with regard to Social Security
disability claims and the backlog of cases. Just for the
record, we had more than 300 people there at the hearing, and a
staff of about 20 persons from Social Security came to talk
individually with my constituents. I am wondering, part of our
conversation was that the backlog was due, in part, to the low
number of ALJs available to hear cases in Cleveland. How are we
coming with hiring ALJs, Madam Commissioner?
Ms. BARNHART. I am very happy to report, Ms. Tubbs Jones,
that we are making a lot of progress. We are in the process now
of interviewing 57 candidates that we have received from the
Office of Personnel Management (OPM) register. The OPM has
worked very closely with us to make names available. We
anticipate that we will have at least 50 judges on board for
training by April 1, and Cleveland is a top priority. Cleveland
is one of the ``top 10'' hearing offices needing additional
judges, as we discussed when I was in Cleveland with you, and
in times past. We have identified 10 offices that we are going
to make a priority for the recruiting effort.
One of the issues we have to consider is the fact that for
each judge that we bring on board, it requires approximately
4.5 support staff. Cleveland happens to be in the situation
where we have enough support staff to bring on three judges
immediately. Certainly, we would be looking at doing that. So,
that should help. There is no question Cleveland has been one
of the hardest-hit offices in terms of ALJ departures, and an
insufficient number of ALJs.
Ms. TUBBS JONES. I am not one to get into the
administrative practices of any agency necessarily, but since
our hearing, there has been an issue with some of the ALJs
putting in place a pre-trial order, in essence, trying to get
the parties to have their information in prior to the hearing,
because when you have a hearing, it is delayed when people
don't have the adequate information. My experience as a judge
for 10 years tells me that the need to have pre-trial orders is
significant, even though it may not be necessarily implemented
in practice in the SSA.
I would only say to you, that, on behalf of those ALJs who
are trying to put some order to somewhat disorder because of
the large number of cases that they have, that that ought to be
taken into consideration as you take a look at what happens
with those judges. I would be interested to see where that
process is going, not today, but by way of letter at some
point.
Ms. BARNHART. I appreciate that, and I have been following
it very closely myself. As you say, it is an administrative
issue, and I think it would be inappropriate to get into the
details at this point in time----
Ms. TUBBS JONES. No problem.
Ms. BARNHART. Because of where it stands. I do want to say
that one of the things I attempted to get at with my new
approach to disability was, by putting in the reviewing
official that we have discussed in the past, to make sure that
we would be in a situation where the case would be prepared--
the proper materials would be going before the judges. So, it
is something I attempted to address on a system-wide basis, as
opposed to how the individual ALJs do it, but I appreciate the
point that you are making, absolutely.
Ms. TUBBS JONES. Let me say, I join with my colleagues, and
I won't repeat everything that they have said with regard to
the Social Security Trust Fund, and the need to secure Social
Security for all Americans no matter what age they are at in
this juncture. Before Chairman Greenspan spoke yesterday about
the situation we find the Social Security fund in, or the fact
that there is a lack of funds available to baby boomers going
forward, we knew that anyway, though, right? We knew that there
was a shortage of funds, and it didn't take Alan Greenspan to
get on television to tell us that we knew that, right?
Ms. BARNHART. Absolutely. As I mentioned, the Trustees'
Reports have been reporting that for several years. Yes,
absolutely.
Ms. TUBBS JONES. It becomes a big deal because, when Alan
Greenspan speaks, everybody listens. I suppose that is the
reason it becomes great fodder. The reality of all of this is
that, and I think that every Member of this Committee is
committed to assure to the people of the United States that
there will be adequate funds for them to receive their Social
Security checks. I ran on--that was my theme. I am going to
Washington to save Social Security. So, I am at least telling
everybody that I know, at least in the 11th Congressional
District of Ohio, I won't sit down and let that happen to them,
and I am confident my colleagues across the board are going to
work to assure the sanctity of the Social Security fund. Let me
just, finally--I guess I asked that question. What else did you
learn as a result of--we don't have but maybe 30 seconds to a
minute--from your visit to Cleveland and the hearing that we
hosted?
Ms. BARNHART. Well, I think it really reinforced something
that I felt pretty strongly about before--the human face of the
disability program. As you mentioned, you had over 300 people
there, and the vast majority of them were individuals who were
going through the disability process themselves, so I certainly
saw firsthand the effect that a system that takes too long has
on people. I also saw how very closely they are monitoring
their own situation, how every day of that process that now is
368 days, they are sitting there knowing it is another day in
that process. When you suggested that they might want to go
meet with the Social Security staff if they were there to find
out the status of their case, a sea of people got up and went
out the door, because that is really why they were there. So, I
think that was very important because it really just emphasized
to me the importance of doing everything we can to improve
disability processing.
Ms. TUBBS JONES. Mr. Chairman, just one more thing. As I
was on my way to Washington on Tuesday, I received a call from
a constituent and what she asked me to say to my colleagues,
and to you, was she is seeking her disability claim. She said
she has taken--had, five operations. She has taken every type
of medication that there is, trying to secure her problem, and
she just wanted people to know that there are people seeking
Social Security disability claims that have legitimately tried
to work through the process, tried to get back to work and have
been unable to do so, and that they should not be painted as
people who are trying to work their way around the system. I
just promised her I would say something about that and to put
it on the record.
Ms. BARNHART. I certainly appreciate that, and I think that
is very important. That is why I said that the goal of my new
approach was to make the right decision as early in the process
as possible, the right decision, for someone like that. The
disability program exists for individuals who are unable to
work, who have tried to work and who can't do it, so that they
get the assistance that they need. That is exactly the kind of
person we had in mind.
Ms. TUBBS JONES. Mr. Chairman, thank you very much. I want
to associate myself with the comments of my colleagues who say
that this Commissioner is doing a great job in trying to work
her way through this process, and we just want more.
Ms. BARNHART. Thank you.
Ms. TUBBS JONES. That is all I can say. Thank you very
much, Mr. Chairman.
Chairman SHAW. Boy, this bipartisanship is getting scary.
[Laughter.]
Mr. Ryan?
Mr. RYAN. I will try and keep in the same vein, Mr.
Chairman. I also would like to associate myself with your
comments, Mr. Chairman, with respect to Federal Reserve
Chairman Alan Greenspan's remarks. We don't believe that it is
necessary, or right or proper, to cut benefits for those who
are at or near retirement, and you know what? You don't have to
do that. We have a problem. Chairman Greenspan was right to
point out the demographic problem, but his solution to that
problem is not one that I think we will ever pass in this
Committee. I think it is important that we make that point
clear. Also, I would say, that for those who say that the Trust
Fund is there, and we don't have to worry about 2018, that is
not true, either. The Trust Fund is there, but it is full of
IOUs. It is not full of cash. So, come 2018, we won't have the
money to pay the benefits. That is a point that has to be made.
I wanted to actually ask you, Commissioner Barnhart, a
couple local questions. I know we seem to have this pattern of
talking about this a bit, but I wanted to ask you specifically
about Milwaukee and Chicago. In November, the Office of the
Inspector General (OIG) issued a report that found that the
Milwaukee OHA had addressed most of the problems identified by
the review of the Chicago OHA, but the OIG also revealed a few
further problems. I wanted to see what the update on that is,
including a sharp increase in the number of backlogged
disability cases, from 4,247 cases in 2002, to 8,059 backlogged
cases in 2003. Could you comment on what the agency is doing to
address those backlogs, and then I will just ask my second
question, so we can get on about the Chicago office. Can you
update us on the situation of the Chicago Regional OHA, where
the contractors mishandled approximately 1,200 files? Has
everyone been contacted? Has everyone been put back in the
front of the line to get new hearings, and to have a chance to
adjust their records, and have safeguards been put in place in
Chicago and elsewhere to protect these kinds of files?
Ms. BARNHART. Well, why don't I start with Chicago, since
you asked a number of specific questions.
Mr. RYAN. Okay. I know that was a lot of--you can go
backward.
Ms. BARNHART. First of all, we have dealt with every case,
and let me explain to you where each of those stands. It
actually ended up being 1,367 cases.
Mr. RYAN. In Chicago?
Ms. BARNHART. Yes. Six-hundred seventy-three of those cases
have been decided. Four-hundred fifty-one were favorable, 128
were unfavorable, and----
Mr. RYAN. What was the first number, please?
Ms. BARNHART. One-thousand, three-hundred sixty-seven total
is what it ended up being. Six-hundred seventy-three of those
have been decided. Four-hundred fifty-one of those were
favorable, 128 were unfavorable, and 94 were dismissed. The
remaining 591 cases are pending in the hearing offices, and, of
those, approximately half are scheduled, and half remain to be
scheduled. In terms of the process----
Mr. RYAN. Everyone has been notified?
Ms. BARNHART. That is just to tell you where the cases are.
In terms of the process, and I will explain how we dealt with
ensuring that there was no harm to the individuals whose files
were part of that contractor situation. Let me just say again
how very disturbed we were, and I know that you know that, that
the whole situation occurred. We acted as quickly as we could
to deal with it. A notice was sent to each claimant to advise
them of the situation, and to offer them the opportunity to re-
examine their file to make sure that it included all relevant
evidence and material. By that, I want to say we offered to
have staff members sit down with them, and go through the
files. So, it wasn't just a matter of putting the whole burden
on the claimant. It was a mistake made at the office by a
contractor, and so obviously we weren't just simply going to
say, if you have got a problem, you let us know. We sat down,
and went through it with them. If additional evidence or
exhibits were needed, we actually took the action to secure
those for the claimants. For those claimants who didn't have
representatives, as I said, we had experienced employees who
sat down to go through everything with them. Those notices were
sent in August-September of last year, and if a claimant didn't
respond to the letter, then a closeout letter will be sent
before any decision or dismissal is made.
Also, we did this for every case. I want to be clear that
even for the cases that moved all the way through the system,
we did this, even if they had gotten a favorable decision. So,
we really did our best to make sure that no claimant was
harmed, and we don't believe they were. We have been monitoring
the situation very, very closely.
Mr. RYAN. Prospectively to prevent this from happening
again?
Ms. BARNHART. We have put a number of procedures in place,
at my request. We were conducting training prior to that for
the contractors, but we set up a more rigorous training
program. We have monitoring that takes place on a regular
basis. We have a protocol that has been established that is
used across the country.
Mr. RYAN. Did you investigate whether this was occurring,
or had occurred, anywhere else in the country?
Ms. BARNHART. We did. In fact, obviously, one of the things
I was interested in making sure of is that. Of the--at that
time I think we had somewhere around 100-plus contractors, we
had problems with 2 of them, unfortunately----
Mr. RYAN. In Chicago.
Ms. BARNHART. Yes. I was saying, unfortunately, they were
in your region, both of them.
Mr. RYAN. Yes, but what about Dallas, and what about other
areas?
Ms. BARNHART. We didn't have problems in other areas. Since
that time, however, though, we have identified one problem with
one individual in Boston. It really only affected a couple of
cases, but, because of the monitoring procedures we have put in
place, we have been able to ensure it doesn't happen again.
Mr. RYAN. The Milwaukee backlog?
Ms. BARNHART. The Milwaukee backlog. What we are doing
there is what we do typically in the offices where we have
enormous backlogs like that. Of course, we have backlogs
everywhere, they just happen to be particularly bad there. We
transfer cases. We have decision writers in other locations
that help write the decisions for the ALJs, and obviously we
will be looking at the ALJ ratio in Milwaukee to see if it
needs to be one of our target offices for putting more ALJs in.
The other thing that I am looking at doing is creating a
pre-screening unit to go to some of those offices that have
huge backlogs and have our pre-screeners go and identify the
cases that might be right for on-the-record decisions. So, we
could have a special unit of ALJs.
Mr. RYAN. Which is essentially the reforms you are
proposing system-wide. You just want to fast forward and get
some of those in Milwaukee?
Ms. BARNHART. That is where we would do some of these
things, exactly. What I am looking at there is to see if they
can do the screening of the cases in places like Milwaukee,
like Cleveland--as Ms. Tubbs Jones mentioned, they have similar
issues there--then, I could have a cadre of ALJs in a location
that could simply handle those cases coming in from all over
the country. So, that is what I am looking at doing for the
time being.
Mr. RYAN. Do you have with you the number of the backlog
right now? The 8,000 number is a little old. What----
Ms. BARNHART. Let me see if I have----
Mr. RYAN. If you could get it to me later----
Ms. BARNHART. I don't know if I have that number with me
right now, but I can certainly get it for you.
Mr. RYAN. Yes, could you----
Ms. BARNHART. We track it on a regular basis, and so the
number changes. I wish it changed a little more on the positive
side, but the number does change on a fairly regular basis. I
was just looking to see if I brought that with me, but I don't
believe I do have it, so----
Mr. RYAN. Okay. If somebody could send that to us, I would
appreciate that. Thank you. I yield.
[The information follows:]
The number of cases pending in the Milwaukee hearing office at the
close of February 2004, was 8,600.
Chairman SHAW. Mr. Becerra?
Mr. BECERRA. Thank you, Mr. Chairman. Commissioner, good to
see you again. Thank you very much. I especially thank you for
all the work you have been doing, and congratulations on some
of the successes that we have seen in the last couple of years.
It is a growing caseload, so it is always tough, and so please
tell all the folks that work at the SSA that we say thank you.
Ms. BARNHART. I will do that.
Mr. BECERRA. From dealing day-to-day with folks in Los
Angeles, with some of the SSA workers, you see the tremendous
amount of work that they have to do, and oftentimes for people
who are, in some cases, in very desperate straits. So, we thank
you, and we look forward to continuing to work with you and
your folks locally, as well.
I want to go back for a moment, before I go back into some
of the issues of the backlogs and so forth, to what was said
more globally about the whole issue of Social Security and
Chairman Greenspan's comments. Again, what he said was not new
to anyone. Those of us who have had to deal with Social
Security, and who have had to try to figure out how to best
protect it, have known about this, and so it is not a startling
bit of news. It is to the average American who is surviving on
the $935 or so, or $938, or whatever the average Social
Security benefit that Americans who are retired receive, to
hear that Chairman Greenspan is saying we are either going to
have to cut benefits, raise payroll taxes, or increase the
retirement age for people who are on Social Security. For them,
I think this is a startling revelation.
Let me ask you something. You are the Commissioner for the
SSA. Chairman Greenspan has spoken. He has said that we can't--
we are not going to tolerate this. There will be a break in the
system, and it is going to hurt people. Are you planning to
advise the President on whether or not he should increase
taxes, or cut benefits, or raise the retirement age?
Ms. BARNHART. What I have been trying to do since I became
Commissioner, is to make sure that our policy operation can
augment the work of our actuary, and we have an independent
actuary's office, as I know you are familiar, who does
estimates for Congress and other interested parties on the
effects of various proposals. What I have been trying to do is
make sure that we are in a position where we will be able to
provide the appropriate analysis of the effects of the various
proposals. For example, the proposal that the Chairman has
introduced, and----
Mr. BECERRA. Commissioner, let me stop you for a second. I
understand we will have proposals that are out there, but right
now we heard Chairman Greenspan say, not 30 years from now, not
3 years from now, but today, we know that there is a crisis
building if we don't act. So, my question is, the President--
remember in 1993, what was this, I have his quote here
somewhere. In 1993 in the State of the Union Address, the
President said we will not ignore, we will not pass along our
problems to other Congresses, other Presidents, other
generations. We will focus on them with clarity and courage.
Mr. POMEROY. In 2003.
Mr. BECERRA. I am sorry, 2003, yes. The 2003 State of the
Union Address. That is what he said. If we are going to focus
on them with clarity and courage now, and we are not going to
pass them on, we have to act today. So, what should the
President do? Should he, as Chairman Greenspan said, cut
benefits to current retirees or future retirees?
Ms. BARNHART. Obviously, cutting benefits is one of the
possibilities. I am certainly not saying that is something I
endorse. As you said----
Mr. BECERRA. Okay. I want to just know if you endorse
anything, because I want to know what the President will try to
say, or how he will respond to Chairman Greenspan.
Ms. BARNHART. Cutting----
Mr. BECERRA. So, if you are not going to endorse cutting
benefits, are you going to endorse increasing taxes, payroll
taxes?
Ms. BARNHART. Cutting benefits, raising taxes, what I meant
by saying that is, that in terms of looking at the options that
are there, cutting benefits, raising taxes, raising the
retirement age, creating personal accounts, which is obviously
something the President has talked about that the Chairman and
others have submitted legislation to do, those are all
possibilities. I believe we need to look at the tradeoffs
between all of those.
Mr. BECERRA. I understand all of that, Commissioner, and I
know this is a difficult issue. Is there anything you would
propose today of those four options that you mentioned, cutting
benefits to Social Security recipients, increasing the payroll
tax for people who pay into Social Security, raising the
retirement age before people can start to collect on Social
Security, or using privatized Social Security where you have
private accounts? Are you going to recommend any of those four
proposals?
Ms. BARNHART. Let me say, I don't have a proposal to
recommend to the President, if that is what you are asking.
Mr. BECERRA. Okay. Then I won't pursue it because----
Ms. BARNHART. No, I----
Mr. BECERRA. I understand that we will have to come up with
a solution. Let me ask you more specifically about the budget
that you have now. You have done tremendous work to try to
reduce the backlogs, which include more than a million people
in these backlogs trying to get their benefits, and so forth.
My understanding is that you are estimating, your projections
are, that you can reduce the initial determination level
backlog from--or keep it steady at about 582,000 cases.
Ms. BARNHART. Yes.
Mr. BECERRA. Your projection is that you will be able to
drop the backlog at the hearing level from 586,000 cases, to
550,000 cases, which is a whopping number, over a million
people backlogged, waiting. If your budget is the President's
budget, which is $445 million less than what you had requested,
can you keep those projections for this coming fiscal year?
Ms. BARNHART. We believe that we can keep all the
projections except for the continuing disability workload.
Mr. BECERRA. So, what loses? What will you not do if you
don't get $445 million that you requested?
Ms. BARNHART. We will do a couple hundred thousand less
redeterminations, as well as several hundred thousand fewer
Continuing Disability Reviews (CDRs). We have actually
identified some carryover funds that we have available for
information technology that are unexpended, that will help make
up for part of that. There are some issues related to our
infrastructure in terms of office improvements that we won't
do, in sort of the other object category. There are a variety
of things like that, but the major effect, the major
programmatic effect is the reduction in the number of CDRs and
redeterminations.
Mr. BECERRA. The CDRs are--those again are disability
beneficiaries who say they are still unable to work? Those
determinations, you will probably have to slow down on those,
and the redeterminations for SSI, which evaluate whether an SSI
recipient is sufficiently poor to qualify for the benefits.
Those populations will probably not see the accelerated effort
to try to reduce those backlogs as a result of less funding.
Ms. BARNHART. In terms of CDRs and redeterminations.
Mr. BECERRA. Well, hopefully we can work with you to try to
help you get the moneys you need so folks who are in need--we
are not talking about wealthy folks--have an opportunity to go
through the process. Hopefully, we don't expect all the folks
who work for you to try to do even more with less resources.
So, we hope to work with you.
Mr. Chairman, you have been gracious with the time, and
Commissioner, always--I apologize if I asked you some questions
which are tough, but we are going to have to answer them, and I
just wanted to find out if we had moved along any further
within the Administration in trying to resolve those. I thank
you very much, and Mr. Chairman, I thank you.
Ms. BARNHART. I appreciate that, and I would like just a
moment to clarify, if I may, Mr. Chairman. I want to make it
clear that I didn't really come here today to endorse one
approach versus another. I really don't think that we are at a
point in time where we have explored all the alternatives that
we need to explore. I also fully believe, and I say this with
great sincerity, that we really need to have a bipartisan
solution to this issue.
Mr. BECERRA. I absolutely agree.
Ms. BARNHART. I have been in Washington for 30 years, and
one of the things that has impressed me about our form of
government, and the way that we work in this country is that
when there is a situation of great national import, the
Republicans, Democrats, Congresses, Administrations have worked
together to solve it for the American people. I believe, as
expressed here today, that if we can work in a bipartisan way,
we can accomplish that. I don't think we are there, and I think
my endorsement of benefit cuts, tax increases, any of the
options that are out there would be inappropriate at this
stage, because I don't really think we have fully explored the
effects of what all these things could mean, and, of course,
like the Chairman's proposal on personal accounts. I just
wanted to clarify that point.
Chairman SHAW. Thank you, Mr. Becerra. I would like to
point out here, and I think this is important, the only plan
that is out there right now that I know of that has bipartisan
support as far as sponsors cuts benefits in the out years. I
don't believe it is necessary to cut benefits. I also would
point out, and I would love to be corrected on this, I don't
know of any Democratic plan that is out there, not one single
plan. So, we have the once-great party that developed Social
Security under Franklin Delano Roosevelt missing in action.
Mr. BECERRA. Mr. Chairman, if you would yield on that----
Chairman SHAW. Yes, sir.
Mr. BECERRA. If you recall, back when President Clinton was
still in office, he did propose a solution that took us quite a
bit away as it would have extended the solvency for Social
Security well beyond 2045.
Chairman SHAW. He talked about private accounts at that
time.
Mr. BECERRA. Well, he didn't talk about, so much, private
accounts. He talked about supplementing Social Security with
individual accounts, which you can call private accounts, but
not private accounts that would take the money out of Social
Security to put it into private accounts. It would have
supplemented what already goes into Social Security with what
could be considered private accounts.
Chairman SHAW. I visited with President Clinton with regard
to what was then the Archer-Shaw plan, which is very similar,
but not identical to the one that we have today. His
Administration under Social Security scored it as saving Social
Security for all time, as did the Bush Administration under the
one that we have done now. So, there are plans out there that
protect the solvency in the long run of Social Security, do not
raise taxes, and preserve the benefits. As a matter of fact, I
would invite the Members of this Committee to closely examine
the plan that I have out there because we actually add to the
benefit structure. It is a good plan, and it does work, but we
are going to have to start working together.
Mr. BECERRA. Mr. Chairman, will you yield?
Chairman SHAW. The President told me that if the leadership
here in the House, the Democrat leadership, would go along with
me, that he would help us and get it through. President Clinton
missed a golden opportunity to leave that as his legacy, but
there wasn't the will to do it here in the House among the
Democrat leadership, and he wasn't about ready to start down
that road without the backing of his own party.
Mr. BECERRA. Mr. Chairman, I would love to respond in such
time as you might yield.
Chairman SHAW. Yes, I would be glad to yield to you on
that.
Mr. BECERRA. I believe that it was unfortunate. Anytime we
have had an opportunity to fix this in a bipartisan manner and
missed it, it is unfortunate. The more recent administrative
culpability, I believe, falls on this Administration, who took
a situation where we had a budget surplus, and drove instead an
agenda that included very steep tax cuts, which have now pushed
us to historic deficits. I don't think there is any
disagreement by economists evaluating this matter that dealing
with our ongoing--meeting our ongoing commitments to Social
Security and Medicare, is made much more difficult when our
fiscal situation is in tatters with historic deficits, than it
was when we had a historic opportunity with surplus. So,
basically, when you impose--when you pass tax cuts that drive
deficits to historic levels, you put into play a situation
where Alan Greenspan says you have to cut Social Security, and
that is just----
Chairman SHAW. Let me quote from Mr. Greenspan's testimony,
where he said Social Security faces financial challenges
because of Democratic--demographic----
[Laughter.]
Mr. BECERRA. Thank you for that correction, Mr. Chairman.
Chairman SHAW. Demographic trends, and not tax relief.
Social Security trustees have been warning us of the program's
impending cash flow deficit for years, including during the
Clinton Administration, and well before President Bush enacted
tax relief. I would like to get back on the subject of this
hearing, if I might. I think we have got sort of a toss up as
to how much time we spend on this. As I mentioned in my opening
statements, I plan to develop legislation that ensures the SSA
has the funding it needs to effectively serve the American
people. What steps would the Administration support to protect
the SSA's budget, so that we don't see a repeat of last year's
appropriation process, where Congress cut over $200 million
from the President's request? Instead of proposing cap
adjustments for just continuing disability reviews, would the
Administration support a cap adjustment for the agency's entire
administrative budget? I know Mr. Pomeroy is also interested in
this, as well as Mr. Cardin.
Ms. BARNHART. Obviously, that is an issue for the Director
of OMB to decide ultimately, and certainly we were very
appreciative of the President's support for outside the cap
funding for our CDRs because we think that is a really cost-
effective thing to do. For every dollar that we spend there, we
save $10 ultimately for the program, and we really support
that. In terms of going beyond that, obviously that has broader
budget implications than just Social Security. It is my
understanding that OMB is now currently working on the language
that would incorporate the proposal that is in the President's
budget related to CDRs.
Chairman SHAW. I have another question here which is staff
generated. You have mentioned that because of the reduced
resource levels for fiscal year 2003 and fiscal year 2004, the
agency has had to cut back on the number of CDRs that it will
conduct. These reviews are important because they ensure only
those who continue to be disabled stay on the rolls, and also
generate Trust Fund savings, $10 for every $1 invested. How
large is the backlog for CDRs? If the agency receives the
President's request, will you be able to eliminate this
backlog? In the budget request, the President asked for
dedicated funds for those reviews. Why is it important to
dedicate funds for CDRs? Is there a need for us to address this
legislatively, as we have done in the past?
Ms. BARNHART. Last year, we did approximately 200,000 less
CDRs than we would have done, and approximately 200,000 fewer
redeterminations are in the budget for 2004 and 2005 than we
would have preferred to do. The budget as proposed does not
allow us to go back and make up for all that we didn't do, but
what it does is it allows us to do more than we did last year,
and let me explain. In 2003, we did 1.3 million CDRs. We think
we are going to do 1.5 million this year, and the 2005 budget
would contemplate doing 1.57 million in that year. For
redeterminations, we would do 2.2 million this year, and 2.2
million in 2005.
Chairman SHAW. Two weeks ago, the agency's Deputy
Commissioner for Disability and Income Security Policy, Martin
Gerry, gave an interview with National Public Radio where he
said that he doubted the ability of the Ticket to Work program
to get many on the disability rolls back to work, and that the
agency is trying to come up with a better approach. Can you
share with us what approach the agency is trying to come up
with and tell us whether you agree with the comments.
Ms. BARNHART. First, I would like to share with you that
those were paraphrased comments of Mr. Gerry. When I saw the
article that referenced them, I had a conversation with him
immediately and he assured me that, in fact, that is not what
he said. What he, in fact, said, Mr. Chairman, was that the
Ticket to Work program deals with a certain category of
disability beneficiary, and that some of our demonstrations
were looking at dealing with the individuals who wouldn't be
covered by the Ticket to Work program. For example, individuals
who might never be able to work full time in order to earn the
substantial gainful activity (SGA) amount. So, certainly, it
was not intended as a criticism of the adequacy of the Ticket
to Work program.
That said, we have been looking, and certainly with your
and other Members, and their staffs, urging, at ways that we
can improve our administration of the Ticket program. There is
no question, I think, we can do a better job than we are
currently doing. Mathematica Policy Research just completed an
evaluation of the Ticket program for us. It is in the final
stages of review in the agency now. They pointed out some very
real issues. Quite frankly, they reaffirm some of the things
that we knew and that, in fact, I had discussed with you and
Members of your staff at other times--things like we need to
reevaluate the payment points and the timing and the amounts
for the employment networks, because the employment networks
are finding it hard to provide the services that they need to
provide under the Ticket, given the current payment points and
so forth. There are a host of things. As soon as that report is
in final form, we would be delighted to come up and sit down
and talk to your staff about the findings of that report and
the steps we are taking to address it.
Chairman SHAW. Are the recipients or the people that are
eligible for the Ticket to Work, those that might be most
eligible to get into that program, are they being contacted?
Are they aware of this legislation?
Ms. BARNHART. Oh, yes, sir. In fact, we are in phase three
of a three-phase roll-out of the Ticket to Work program. The
first two phases are completed. When phase three is completed
in September of this year, approximately 9 million people will
have received their ticket. I should let you know that we have
about 35,000 people that have assigned their tickets to
Employment Networks (ENs), or assigned their tickets. About 10
percent of those are to ENs. The remaining 90 percent are to
State vocational rehabilitation agencies (VRs). We have 407
beneficiaries that are actually generating payments to ENs
under the ticket and we have, I believe, 360 individuals who
have had their benefits suspended because they have been
earning above the SGA. The numbers are small, but as this
Committee knows better than anyone, the numbers were extremely
small when we started in terms of employment among people with
disabilities, less than a quarter of 1 percent in some years.
I would point out this is a relatively new program. I know
it seems like forever, probably to you all, because you worked
for a long time to get it passed, and you passed it in 1999,
but really, the first ticket didn't go out until 2 years ago.
In fact, I was Commissioner when it went out. State VRs, their
experience is, it commonly takes at least 2 years for
individuals to receive support and services before they are
actually able to make the transition to employment. So, we are
really just starting to hit that now, at this point in time.
Chairman SHAW. That was a great bipartisan piece of
legislation----
Ms. BARNHART. It truly was.
Chairman SHAW. I really hope it does work to give people a
second chance without putting them at risk. Last July, you
briefed the Members of the Subcommittee about the agency's
preliminary negotiations to establish a totalization agreement
that would coordinate Social Security taxes and benefits
between the United States and Mexico. What is the status of
these negotiations? Do you anticipate finalizing the agreement
with Mexico sometime this year?
Ms. BARNHART. Let me start by just saying for Members of
the Committee who may not be aware of this that we signed an
agreement with Japan just a week ago, and so that will be
moving to the U.S. Department of State in the near future. That
was an agreement that was 25 years in the making in terms of
the negotiations, so we are very pleased that that is moving
ahead. As far as Mexico goes, when I did the briefing for
Members of this Committee and the staff last fall, one of the
concerns that was raised was the viability of the Mexican
computer system and its capacity to be able to actually post
wages properly for calculation of benefits by the Mexican
system. So, I sent a team led by Deputy Commissioner Gerry, and
a team of technical experts accompanied him, to visit various
locations outside of Mexico City, in the rural areas of Mexico,
to validate the system's capacity. That took place last fall.
The staff has put together a report for me. We continue to have
discussions with the Mexicans, looking at some of the issues
that would need to be resolved in considering totalization, but
no, we haven't moved toward that yet.
Chairman SHAW. So, you don't anticipate one this year?
Ms. BARNHART. I couldn't really say about the timing, Mr.
Chairman. It really depends on the kinds of issues and the
resolution of those issues.
Chairman SHAW. Thank you, and thank you again for appearing
before this Committee.
Mr. POMEROY. Mr. Chairman, can we go another round?
Chairman SHAW. If you need it, but let us be very brief
about it, if you can, please.
Mr. POMEROY. First, just in response to there not being any
Democrat plan for Social Security, I would say that I believe
there is strong commitment in the minority to try and move out
of this historic deficit situation back to a balanced budget.
If we are going to do as the Commissioner has said, meet the
commitment of those IOUs when they come due, we are going to
have to get out of this steep deficit situation back to a
balanced budget. The bigger the deficit, the more certain
Social Security cuts are, and probably earlier than otherwise.
So, I believe that, first things first. First, you stop
digging the hole even deeper. Certainly, the plans of the
Administration before us would dig the deficit hole even
deeper, and ensure that those deep deficits continue for the
next 10 years. That is the worst thing we can do relative to
making certain we are going to have a government with the
fiscal strength to meet its commitment to Social Security.
Moving on to the issues that the Commissioner has spoken to
relative to adequacy of resources to run the program, it does
concern me that you requested $445 million more than the OMB
decided you ought to have for purposes of running this program,
and you have told us, that essentially, that is going to mean
you have got to take down some of the things you are doing,
especially in the disability and SSI areas, in terms of program
administration. I would be very interested in working with the
Chairman and other Members of the majority and minority alike
in making certain that the funding of the administration of
Social Security is removed from the annual appropriations fight
on discretionary spending of the Federal Government. There is
nothing discretionary about the obligations of Social Security.
It is an entitlement program. You have to provide what people
are eligible for.
On the other hand, Congress determines the resources you
are going to have to meet that program commitment, and if we
don't give you enough resources, then you can't, in a timely
way, deal with people that are applying for disability and
getting those determinations made, and the like. Commissioner,
do you have any thoughts about the advisability of making the
administration of Social Security somehow less subject to this
discretionary appropriations fight, a fight that is going to
get even worse in the years ahead in light of the deficit
situation we are in?
Ms. BARNHART. Let me just say that last year the
Administration recommended legislation to put CDRs and
redeterminations in, basically, a program integrity fund for us
outside of any discretionary cap, and it wasn't adopted. I
think, looking at it from a realistic perspective for me, I am
very heartened by the fact that we got the support we got last
year from the OMB and the President, and got it again this
year, particularly when I look to other agencies.
Mr. POMEROY. Could that be described--they want to put in
an entitlement status those parts of the SSA that cut benefits,
but they want the parts of the SSA that provide benefits----
Ms. BARNHART. Well, they wanted to fund----
Mr. POMEROY. To be subject to the discretionary
appropriations process? That doesn't seem fair. It just
fundamentally doesn't seem fair. I think we ought to do it all,
the whole program administration. We don't want to just have
cutting benefits the favored part of this Administration. We
want to also do our job at providing benefits to people who
qualify.
Ms. BARNHART. Well, we wanted to fund program integrity
efforts, and it is not unlike the special CDR fund and
redetermination fund that was set up by this Committee and
Congress several years ago. It was sort of a continuation of
what was a 7-year plan that was originally conceived by the
Congress, and so it was really looking at making sure that the
effort that started 7 years ago would be able to continue as a
program integrity effort. So, I think it is important to make
that distinction.
Mr. POMEROY. I just think this is a terrific Commissioner,
Mr. Chairman. I am done with my questions.
Chairman SHAW. Do you all want to leave it on that note or
do you want to proceed?
[Laughter.]
Ms. Tubbs Jones, do you have----
Ms. TUBBS JONES. I have one question.
Chairman SHAW. Yes, ma'am.
Ms. TUBBS JONES. Thank you, Mr. Chairman. Can you talk,
Commissioner, to us about--we have been talking about the
backlog. We have been talking about the possibility of running
out of funds, but let us talk for a moment about your new
responsibility in administering the Medicare drug program. Can
you tell me how much money, or rather, can you tell me if the
$500 million that was allocated to you is sufficient to do the
job that is being proposed? In fact, the $500 million is just a
number. There was not a lot of analysis that was done to decide
how many people, how much money, how much time would be
allocated to this issue. Talk to me a little bit about that,
please.
Ms. BARNHART. I appreciate your interest, and obviously I
am very interested in meeting our responsibilities there, but
also at the same time not affecting our first order of
business, which is Social Security. At the time that the
allotment was set aside and targeted for our administrative
funding, we actually were working with the Centers for Medicare
and Medicaid Services actuaries, and developing estimates of
anticipated uptake of these various provisions. We estimated
that 65 percent of the 41 million Medicare beneficiaries would
be eligible for Part D that we would be dealing with initially,
and 1.3 million on an ongoing basis each year after that. For
the low-income subsidy, we estimated 5 million with an ongoing
workload of 244,000 a year in terms of individuals who we
determine the subsidy for. So, we actually used those numbers
in coming up with our estimates for what we would need in the
agency.
The President's budget includes a $100 million contingency
fund, which means that the $500 million would be increased by
$100 million should we need to tap into that. The schedule
basically, in terms of the expenditures, is something like $150
million in fiscal year 2004, $350 million in fiscal year 2005,
and if we need the $100 million extra, we can get it. It
translates into something for us around 4,000 staff, we believe
at this stage, although obviously how these provisions end up
being put into effect will have an effect on how many people it
takes to do it, and what the workload is.
Ms. TUBBS JONES. So, because the program does not actually
come into play until 2006, you have this year, and next year to
gear up and hire people----
Ms. BARNHART. That is correct.
Ms. TUBBS JONES. Figure out how you are going to process
them?
Ms. BARNHART. Absolutely, yes.
Ms. TUBBS JONES. I would be interested, as you go through
that, to hear how it is going, what kind of problems you are
facing, the need for additional money, because these seniors
are anticipating a program that will provide them this drug
benefit. There are questions on both sides of the aisle with
regard to it, but I would be interested in seeing how you are
coming into compliance with it, and I would appreciate hearing
from you.
Ms. BARNHART. Absolutely. I have a task force led by
someone who is working right out of my office to handle that
and we would be very happy to keep you apprised as we move
ahead, every step of the way.
Ms. TUBBS JONES. Mr. Chairman, thank you.
Chairman SHAW. Thank you. Mr. Becerra?
Mr. BECERRA. Mr. Chairman, I will also keep my questions
down to just one, as well. Commissioner, the Social Security
actuaries every year in the report that is submitted by the
Social Security trustees, give us a sense of what we can expect
for Social Security long-term. Traditionally, we look at a 75-
year time frame, correct?
Ms. BARNHART. That is correct.
Mr. BECERRA. So, while we can't be certain--no one can be
certain what is going to happen tomorrow, but we try to do the
best we can to project out over 75 years so we can determine
more or less where we are heading with Social Security, whether
we will be solvent, what we need to do to make changes. In that
report, the trustees have said in the past that what we are
looking at over the next 75 years is a bit of a deficit with
regard to Social Security in its ability to pay out, given the
number of people who will be retired. We are talking well into
the future now. According to the reports, if they are still
accurate, we are looking at something in the order of about a
$3.8, $4 trillion deficit over the next 75 years, if you talk
about it in present dollars.
Ms. BARNHART. That is correct.
Mr. BECERRA. You will be able to determine what a dollar is
worth today, next year, and in 75 years. Our deficit, if we
tried to take care of it right now, if we could plunk down the
money and take care of the deficit in benefits versus
beneficiaries requirements, we would have to plunk down about
$3.8 billion today--trillion dollars, excuse me, trillion
dollars today--to make sure that every single beneficiary from
today for 75 years will receive the benefits they expect,
correct?
Ms. BARNHART. Currently scheduled benefits, and the
estimate ranges actually between $3.5 to $3.8 trillion.
Mr. BECERRA. Right. There are a lot of factors involved,
how well the economy does in the next 75 years, and so forth.
If you translate that in terms of our gross domestic product
(GDP), our capacity, economic capacity, it is about 0.73
percent of our GDP. That is sort of the estimate. I am not sure
if you are familiar with that translation?
Ms. BARNHART. Yes, I am.
Mr. BECERRA. My understanding is that the President's tax
cuts of 2001, 2003, and if you make them permanent, if you
project those out over the next 75 years, the cost of those tax
cuts, that totals somewhere between $8 to $10 trillion,
depending on if you take care of the Alternative Minimum Tax,
try to make sure that we don't have too many people fall into
the tax brackets--and all these other concerns are sort of
factored into this estimate of somewhere between $8 to $10
trillion in costs of the President's 2001 and 2003 tax cuts if
you were to extend them permanently, as he is proposing that we
do. That, in terms of GDP, if you want to translate it a
different way, GDP is about 1.5 to 1.9 percent of GDP. If those
estimates are accurate, and I have found no one to tell me that
they are not, the Social Security dilemma that we have is one-
third the size of the cost over the same period of time of the
President's tax cuts. So, if we were looking for a solution,
couldn't we take a look at those tax cuts, which, if you take a
look at the numbers, were skewed tremendously toward the very
wealthy in this country and most of the folks who are receiving
Social Security are skewed toward the very low-income
populations of our country. Wouldn't it make sense to reexamine
those tax cuts that are going to cost us three times as much as
the entire solvency problem for Social Security over the next
75 years?
Ms. BARNHART. Mr. Chairman, as you----
Mr. BECERRA. You have given me a title that I hope to have
in the future, that I don't have right now.
[Laughter.]
Ms. BARNHART. Mr. Becerra, as you have alluded to, I am not
an economist, and I am confident that there are probably
factors built into the ongoing look at the actuarial balance of
the system to take into account economic growth and what we
expect to happen. So, for me to sit here and try and balance
out those two things and suggest they are equivalent or not
equivalent, or the effect of one on the other, it reminds me,
actually, of former Senator Bob Dole, in an interview I saw him
in, when he was asked a similar kind of economic analysis
question. I am going to give you the same answer he gave, which
is, ``I think you will have to find an economist to give you a
wrong answer to that question.''
[Laughter.]
Mr. BECERRA. Thank you very much, Commissioner. I
appreciate it. Thank you, Mr. Chairman.
Chairman SHAW. Thank you. Let me get a little clarity on
this, Mr. Becerra. Are you saying that the answer to the
pending Social Security deficit is to increase taxes?
Mr. BECERRA. No, Mr. Chairman. If you were to not extend
the tax cuts which the President and the Republican majority
made end after 10 years, you would save yourself over the next
10 years about $2 trillion, and so we could go a long way in
keeping Social Security from going into a real problem by not
driving ourselves into a further fiscal problem of extending
tax cuts, which all will agree are skewed toward the very
wealthy. So, I think we have ways to deal with this. I, for
example----
Chairman SHAW. Tell that to people who are saving money on
the marriage penalty. This seems to be on the very wealthy.
Well, tell them they are wealthy.
Mr. BECERRA. Mr. Chairman, I think that is a very good
point.
Chairman SHAW. Tell people making $50,000, $60,000 a year,
and struggling to pay a mortgage and raising families, tell
them that they should go back and we should sunset all of this
stuff and let them start paying more taxes. This is not--Social
Security, you have got to view this in many respects. I think
the safest answer, the Commissioner just gave, is to look for
an economist to give you the wrong answer, but I think we know
certain facts that we can look at. Fifty-two percent of the
deficit has been caused by the recession. We are working our
way out of it. Mr. Greenspan and just about all the economists
agree that the tax cuts that we put in place have made this
recession shorter and shallower than it would have been without
it. It has generated income and now we see the markets are
going back up.
We see the unemployment rate is falling, however not fast
enough, but 5.6 percent. It used to be, when I first came to
Congress, it used to be considered as full employment, but we
know we can do better, and we are going to continue to do
better, and those figures will continue to go down as we want
them to. I think if we all of a sudden take that tax cut away
and do not extend it, I think we will see a drop in the market,
which is going to be a drop in revenue to the Federal
Government, and this is not a good thing. Also, you have to
look at Social Security as a stand-alone program, one that was
designed to, and has always, held itself up, and as a matter of
fact, it has masked the extent of the deficit ever since the
inception of--ever since the unified budget, which was created
in the 1970s by President Johnson during the Vietnam War to
mask the cost of the deficit being caused by the war. I still,
and if you take the long view, you can see that we can save
Social Security, and we can save it and create a surplus and
make it even a better program for our kids and our grandkids,
and don't even have to consider raising payroll taxes or
dipping into general revenue. It can be done. I just keep
reaching out to your side of the aisle. Tax increases are not
the answer in saving Social Security.
Mr. BECERRA. Mr. Chairman, if I may respond, if the
Chairman would yield.
Chairman SHAW. Certainly.
Mr. BECERRA. There are no Democrats who are suggesting that
we increase taxes. As I said, the tax cuts, if you extend them
out, will cost us three times as much as it would cost to
resolve the solvency question for Social Security. So, you
could do enormous good by taking a third of the tax cuts which
benefit, for example, probably no more than about 10 percent of
the wealthiest Americans, and you could leave the family making
$50,000 completely intact with the tax cut that took place. You
would have every Social Security beneficiary for the next 75
years, and probably beyond, knowing that he or she would not
have to face increased retirement age, a cut in benefits, or an
increase in taxes if we were to do something where I believe we
are just trying to share the pain and the gain. Remember that
we are asking soldiers day to day in Iraq to sacrifice. I don't
know of any time in our history when we have had a President
who has proposed going to war, and cutting taxes for the
wealthiest at the same time.
So, I think there are ways we can do this, Mr. Chairman,
that don't require us to cause pain to middle America, and I
think we could get there, and at the same time do for
Commissioner Barnhart what she needs to make sure that Social
Security beneficiaries, including those who are disabled,
including those who are survivors of Social Security
recipients, have an opportunity to receive the benefits they
were expecting.
Chairman SHAW. Your proposition does not take away the
pending cliff that we are facing, even if every bit of the
revenue generated by doing away with the tax cut, and it is
arguable that there would not be----
Mr. BECERRA. Actually, Mr. Chairman----
Chairman SHAW. Revenue generated because of the effect on
the economy. President Kennedy, look back at the tax cut during
his Administration. It ignited the economy and made it grow and
it actually ended up producing more revenue. So, we have got to
have a historical view of this, and we need also to have a long
view, and this is what I keep talking about. You have got to
view this program with a long view, over 75 years, not just a
quick fix by grabbing revenue out of general revenue in order
to prop up the payments, because----
Mr. BECERRA. Mr. Chairman, if you would yield----
Chairman SHAW. The pending deficit has been placed at about
$25 trillion by two Administrations now, and $25 trillion is
not chump change. It is enough to sink this country if we
depend upon general revenue to make up that deficit or
borrowing to make the payments. It is not necessary. There are
plans out there that solve the problem of solvency of Social
Security, and we should embrace them.
Mr. BECERRA. Mr. Chairman, if you would yield for just a
moment just to clarify----
Chairman SHAW. Very, very briefly. There has got to be an
end to this.
Mr. BECERRA. Hopefully we will get there in a bipartisan
way to end this, but what I was proposing, what I suggested to
you in taking just a third of the tax cuts tilted toward the
wealthy is not a band-aid. It is not a temporary fix. It is a
permanent fix. It resolves----
Chairman SHAW. You are suggesting that we do away with the
tax cut and----
Mr. BECERRA. No, not do away with it----
Chairman SHAW. Funnel that money into Social Security?
Mr. BECERRA. Not do away with it----
Chairman SHAW. All right. What happens to it when you
funnel it into Social Security? Do you put it in a vault
somewhere?
Mr. BECERRA. What you are doing is you are reducing the
size of the national debt. By reducing the size of the national
debt, the government's obligations into the future are more
readily payable, including the debts we have to our retirees.
If you have got massive deficits and growing national debt, we
are spending more and more money, as we are today spending a
quarter of a trillion dollars simply to pay the interest on the
national debt that goes to do nothing serviceable for anyone,
but if we reduce the size of the national debt, we take care of
the size of that interest payment, and we also have moneys
available to take care of our greatest obligations to the
people who worked so very hard. So, the solution, no one is
saying to increase taxes. It is just saying, let us be
reasonable in how and where we cut those taxes, and take a
portion of what went principally to very wealthy folks,
including, for example, the estate tax, which benefits only the
top 2 percent wealthiest. Ninety-eight percent of Americans
will never benefit from the repeal of the $50 or $60 billion a
year estate tax because it goes only to the top 2 wealthiest
percent of Americans. So, we can figure out ways to let the
average American family, working very hard, trying to figure
out a way to send their kids to college, without jeopardizing
Social Security, and I think there are ways, bipartisan, for us
to get there, but I want to make sure it is clear. What I had
proposed in taking only a third of the tax cuts would be a
long-term, permanent solution, not a temporary band-aid.
Chairman SHAW. I will say to my friend from California that
I do have a great deal of respect for him. One of the
advantages of being Chairman is that you get the last word.
[Laughter.]
The last word is that you are wrong----
[Laughter.]
I will be happy to supply you with the figures proving that
you are wrong.
Mr. BECERRA. I look forward to receiving those figures.
[Laughter.]
Chairman SHAW. Ms. Barnhart, did you want the last word?
[Laughter.]
Ms. BARNHART. In this case, just for the benefit of the
current retirees, specifically. I am confident that, given the
controversy that has been generated these last 24 hours, and
the attention this has gotten on the national media, our 800-
number is probably getting many more phone calls today, from
people who are very concerned about whether or not their Social
Security benefits are safe. I do want to take this opportunity,
following up on the point that Mr. Becerra made earlier, that
certainly I join you, and I think all the Members of this
Committee in saying I do not endorse benefit cuts for any of
our current and near retirees. It is very important for them to
understand that their benefits are safe. They are secure. Those
checks will be going out for the people who are receiving
Social Security and very close to receiving it, because I do
think that as we discuss some of these very complicated issues,
sometimes we lose sight of the fact that for individual
Americans who are sitting there, they hear this and they get
worried and nervous and I just want to reassure our
beneficiaries on behalf of everyone.
Chairman SHAW. Thank you. Thank you, Commissioner. I think
you can see from the comments coming from both sides of the
aisle that you have got a great deal of affection and respect
from all of us here----
Ms. BARNHART. Thank you.
Chairman SHAW. We appreciate the good job that you are
doing. This hearing is adjourned.
[Whereupon, at 11:33 a.m., the hearing was adjourned.]
[Submissions for the record follow:]
Statement of AARP
AARP appreciates the opportunity to present its views regarding the
Social Security Administration's (SSA) Service Delivery Plan for the
record of the February 26, 2004 hearing.
With more than 35 million members, AARP is the largest organization
representing the interests of Americans age 50 and older and their
families. While most of our members are retired, half are working
either full-time or part-time, and all have a vital interest in the
retirement security offered by Social Security and the economic
security that Social Security Disability Insurance (SSDI) provides to
workers with disabilities and their families.
The Social Security Old Age Survivors and Disability Insurance
(OASDI) program pays monthly benefits to more than 46 million people,
including 7 million people of all ages who receive disability benefits;
29.5 million retired workers, and 4.5 million widows and widowers.
Social Security benefits are the primary source of retirement income
for more than half of people over age 65 and SSDI is the only long-term
disability insurance for most workers. AARP is committed to ensuring
that people can count on those benefits, not only today, but also for
generations to come.
The President's 2005 budget requests $8.878 billion for SSA's
administrative expenses. This is a 6.8 percent increase over the 2004
budget appropriation of $8.813 billion. An additional $100 million has
been requested to cover the administrative costs associated with the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
While SSA's proposed budget request compares favorably to many
other agencies, AARP is concerned that the increase may be inadequate
to administer the programs under its jurisdiction as well as the added
demands resulting from new legislation. The final funding level for
2004 approved by Congress fell short of the Administration's request,
and if SSA's budget is reduced below the President's request again in
2005, the high level of service that Social Security has always prided
itself on providing to the public could suffer.
Disability Review Process
AARP is pleased that the increase in the FY 2005 request for
information technology will allow the Social Security Administration to
complete the transition from a paper disability filing system to a more
efficient electronic one within the 18 month goal set for its
completion. This will allow for faster and more accurate processing of
disability claims. An efficient electronic filing system for disability
claimants' medical records is an essential part of the Commissioner's
proposal to streamline the disability review process.
An electronic filing system for disability claimants' medical
records will help streamline the claims process once it is fully
implemented, but for the near future SSA will continue to experience a
backlog. SSA expects to reduce the backlog by 36,000 from 586,000 in
this fiscal year to 550,000 in FY 2005.
Those who apply for disability insurance are less likely to be able
to work or to have the monetary resources to support themselves until
they begin to receive the benefits to which they are entitled. Thus,
SSA should consider short term remedies to reduce the backlog and
shorten waiting times for disability claimants.
AARP continues to monitor the development of Commissioner
Barnhart's proposal to streamline the disability determination process
over the long-term. Some of the announced changes appear to benefit
disability claimants, such as the new quick decision step for people
whose medical condition, would immediately qualify them for disability
benefits. Some of the proposed changes, however, could curtail the
rights of claimants whose initial application was turned down. These
include elimination of the existing Appeals Council, and closing the
medical record after a decision by an administrative law judge, but
before final review of a disallowance appeal by a newly created
Oversight Panel or a Federal court. AARP will remain an active
participant in the discussions about the impact of the proposed changes
on disability claimants and will work to ensure that the result is a
fair, understandable and speedy disability process that is adequately
funded.
Continuing Disability Reviews (CDRs)
SSA must consistently and accurately evaluate initial and ongoing
eligibility for beneficiaries with disabilities. The Subcommittee heard
Commissioner Barnhart testify that SSA was unable to keep up with the
continuing disability review workload in FY 2003. She stated that SSA
will process an estimated 1.569 million CDRs in 2004. This is an
increase over the 1.537 million CDRs that were processed in 2003, but
it will not eliminate the backlog that will carry over into 2005.
As a result of the continuing backlog in the number of CDRs, some
beneficiaries will continue to receive Social Security disability
benefits although they are no longer qualified. This is unfair to
individuals who have been overpaid because they may have difficulty
repaying the program and to the Trust Funds, which may lose money.
Supplemental Security Income
AARP is pleased that SSA's actions have resulted in removal of the
SSI program from GAO's list of high-risk government programs vulnerable
to waste, fraud and abuse.
SSA has a continuing responsibility to verify SSI eligibility both
initially and on an ongoing basis. It also has responsibility to
recover SSI overpayments, to combat fraud, and to develop and carry out
program management policies. Adequate budgetary resources are essential
to improve and maintain the integrity of the Supplemental Security
Income program.
Staffing
Social Security employees remain dedicated to providing good
service, but staff shortages and inadequate resources could have a
significant impact on long-term delivery.
SSA experienced a staff reduction of more than 20 percent from 1985
to 1990. Yet, a downsized SSA workforce was given additional
responsibilities, such as the widespread distribution of Social
Security benefits and earnings statements, limiting benefits for felons
and drug addicts, and verifying the status of some individuals
receiving Social Security and Supplemental Security Income benefits.
SSA will have added responsibility under the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003 and H.R. 743, the
Social Security Protection Act. Even though the 2005 budget calls for a
modest increase in staffing levels, the substantial increase in
responsibilities will continue to strain already limited resources.
This could hamper SSA's ability to maintain consistent and good quality
service as it is preparing for the retirement of the baby boomers.
By 2010, the first wave of boomers will be in their 60s, and SSA's
retirement and survivor beneficiary population will reach about 50
million. As the agency prepares for the influx of retiring boomers, it
may have proportionately fewer resources but more work. Congress should
consider this trend in determining future funding for SSA.
New Medicare Workloads
SSA has new responsibilities in implementing the new Medicare
prescription drug law enacted late last year, including informing
Medicare beneficiaries who may be eligible for the prescription drug
discount card, calculating the Part B premiums for high-income
beneficiaries, withholding the correct amount of Part B premiums for
all beneficiaries from Social Security checks, and determining
eligibility for drug benefit subsidies under the new Medicare Part D.
For this startup effort, Congress appropriated $500 million for FY
2004 and 2005. The FY 2005 budget request includes an additional $100
million for a Medicare reform contingency reserve to ensure that all
eligible persons seeking benefits can be served. Congress should
monitor the agency's ability to handle the new caseloads without
undermining service to existing beneficiaries.
SSA's Administrative Expenses
SSA's administrative expenses are paid mainly with Trust Fund
dollars. However, these funds are appropriated annually and are
included in congressionally-mandated discretionary spending caps. As a
result, the agency does not always receive sufficient funding to
address its service delivery needs. AARP supports removing the
administrative costs from the discretionary spending caps to ensure
that both current and future service demands are fully funded.
Virtually all of the funding to operate the program comes from payroll
taxes going into the OASDI Trust Funds, so savings from limiting SSA's
expenses cannot be transferred to other uses.
Conclusion
Millions of Americans count on Social Security as a base for their
retirement security as well as a safety net if they become disabled and
cannot work if the family breadwinner dies. They count on Social
Security to be there for them and for the Social Security
Administration to provide efficient, accurate and courteous service.
Adequate resources are necessary for the Social Security Administration
to fulfill its mission to administer the Social Security and SSI
programs, provide good quality service, and proper payments. AARP
recognizes that Congress should examine agency budgets carefully to
ensure appropriate funding levels and the judicious use of resources,
but it must also provide sufficient funding to ensure quality service.
Statement of Carlos Hernandez, Frankfort, Kentucky
As Medical Consultants in the Kentucky DDS, we wish to register our
objection to the proposed Social Security Administration Disability
Evaluation Proposal. We strongly believe that this proposed
reorganization of the Social Security Disability evaluation process is
unnecessarily complicated and ill defined. If implemented, we fear that
this plan will result in more delay in case processing, more expense
for the program, and more erroneous decisions.
The use of an electronic folder should theoretically streamline the
disability evaluation process. We believe that this is a worthy goal,
and that an electronic disability system will in time be of great
benefit to the program. We have learned over the years, however, to be
highly skeptical of anything in this program that is labeled
``accelerated.'' We are reminded of the recent expenditure of time and
resources on Disability Prototype. An accelerated implementation of the
electronic folder could well be a prescription for a similar debacle.
Adequate time must be given for pilot programs to carefully evaluate
the system and to correct the inevitable problems before any national
rollout can be seriously considered.
The proposal to replace local DDS Medical Consultants with
registered nurses raises serious concerns among all personnel who
actually perform the day to day work of DDS. The National Association
of Disability Evaluators (NADE) is on record as opposing the
elimination of Medical Consultants. The Kentucky DDS is emphasizing in
Medical Consultant's contracts the importance of mentoring and training
the examiner staff. It takes a considerable amount of time for a new
Medical Consultant to become comfortable evaluating impairments
according to the complex policies of this program. One must question
why it is felt that nurses with less training and expertise could
adequately replace physicians in these roles. We would ask the
claimants, ``Would you rather have your disability claim evaluated by a
nurse, or by a doctor?'' The success rate of telephone contact with
treating physicians can be expected to plummet, should this task be
assigned to nurses instead of physicians. So much of the success in
phone contacts to medical sources is a function of the collegial
relationship among the physicians in Kentucky, membership in the KMA,
etc. There is an assumption of shared knowledge and experience base
that does not include that of the nursing profession.
So much of the process of reliably determining a Social Security
claim is in the interplay between MCS and the Adjudicator Staff
(Examiners, Case Consultants, Supervisors, and QA). While the vast POMS
provides some structure for addressing the various allegations, the
accuracy of the ultimate decision is often a function of the
relationship between the MCS, a medical professional trained to listen
for relevant facts and clues, and to separate out irrelevant subjective
comments and biases. So often, conversations the Adjudicator has with
the Claimant and collateral sources are pertinent to development,
though such content may not be a part of the record. MCS are involved
in decisions about humans with various physical and mental allegations,
reviewing evidence gathered by humans of varying ability and
experience. To disrupt this chain of human contact through the proposed
regionalization, with staff on phones speaking with unknown staff,
reduced to the undemonstrated reality of the paperless claim, is to
disregard some of the most important aspects of this program of people
making decisions affecting people who see themselves as disabled.
In this DDS office, the increased demands on the Adjudicator teams
from the pressures of the Single Decision Maker model, the pressure to
institute the paperless claim system, and now the pressures from the
proposed loss of familiar/local MCS have further stressed and stretched
this workforce that is already characterized by high turnover and job
burnout. Many Adjudicators are very uncomfortable being forced to make
medical decisions with no medical training/degrees. The give-and-take
discussions with the MCS whom they have grown to know through hundreds
of shared cases are a means to help them adapt to such pressures. This
is lost with the regionalization of the MCS.
Another very real problem with the regionalization of the MCS is
the lack of familiarity of the subcultural and geographic contexts of
our Claimants. While we in Kentucky would have little awareness of the
reality of functioning in the neighborhoods of Harlem, we are familiar
with the reality of the medical community and the functional
expectations of Harlan, Kentucky. And this is relevant to decisions
regarding the ability of Claimant's to perform SGA. And finally in
terms of the importance of knowing the local sources, the MCS have read
hundreds of CEs from the various Vendors and know how to appreciate
their conclusions and opinions in the context of the medical record.
This is vital to knowing how to weigh that information and to
rationalize such weighting. A regional MCS would lack this important
awareness and would make a less informed determination.
Statement of National Education Association
Chairman Shaw and Members of the Subcommittee:
On behalf of the National Education Association's (NEA) 2.7 million
members, we would like to thank you for the opportunity to submit
comments on the Social Security Administration's Service Delivery
Budget Plan.
We will limit our comments to one provision in the Administration's
plan--the proposal to increase employer reporting requirements in an
effort to identify additional individuals who should be subject to the
Government Pension Offset (GPO) and Windfall Elimination Provision
(WEP). In short, we are deeply disappointed that the Administration has
chosen to focus on subjecting more retirees to the GPO and WEP instead
of seeking to eliminate these unfair and often devastating offsets.
The Administration's Plan: The Wrong Focus
The Administration proposes allowing the Internal Revenue Service
to notify the Social Security system about individuals who should be
subject to the GPO and WEP but whose benefits are not currently offset.
Specifically, the proposal would require State and local governments
paying pensions to indicate on their form 1099R report whether the
pension is based in whole or in part on earnings not covered by Social
Security.
The proposal would increase the number of employees subject to the
GPO and WEP. In addition, and perhaps even more disturbing, the
Administration would seek to collect so-called ``overpayments'' from
individuals who should have been subject to the offsets but instead
have received full benefits.
The Congressional Budget Office has estimated that the
Administration's ``enforcement'' proposal would generate $2.2 billion
over 10 years in additional Federal Government revenue. Unfortunately,
this revenue will come at the expense of retired public employees
struggling to make ends meet, many of whom will face significant
poverty if forced to repay earned benefits. In fact, some retirees
living on fixed incomes could be liable for overpayments of as much as
$20,000--an amount few, if any, would be able to repay without
significant hardship.
In addition, the Administration's proposal would be
administratively burdensome, while providing little additional
assistance to the Social Security Administration. Information on
earnings that have or have not been subject to Social Security taxation
is already provided to the Internal Revenue Service by public
employers, as is information on whether the employee is covered by an
employer pension plan. Pension paying entities, on the other hand,
generally do not have payroll tax information on employees working in
the many, in some cases thousands, of agencies and jurisdictions
covered by the retirement system. Requiring State and local government
pension systems to undergo potentially substantial and costly data
collection efforts for information that has already been provided to
the Federal Government (and may be impossible for a pension plan to
retroactively collect on retirees that have been out of the workforce
for years) is unreasonable and unnecessary.
Rather than seek to subject additional individuals to the GPO and
WEP, Congress and the Administration should focus on alleviating the
harsh impacts of these offsets on employees who have dedicated their
lives to public service.
The Government Pension Offset: A Devastating Loss of Benefits for
Widows and Widowers
The Government Pension Offset reduces Social Security spousal or
survivor benefits by two-thirds of the individual's public pension.
Thus, a teacher who receives a public pension for a job not covered by
Social Security will lose much or all of any spousal survivor benefits
she would expect to collect based on her husband's private sector
earnings. Estimates indicate that 9 out of 10 public employees affected
by the GPO lose their entire spousal benefit, even though their
deceased spouse paid Social Security taxes for many years. The offset
has the harshest impact on those who can least afford the loss: lower-
income women. Ironically, those impacted have less money to spend in
their local economy, and sometimes have to turn to expensive government
programs like food stamps to make ends meet.
NEA receives hundreds of phone calls and letters each month from
educators impacted by the GPO. Many are struggling to survive on
incomes close to poverty, fearing they will be unable to cover their
housing, medical, and food expenses on their meager incomes. For
example, NEA member Delona from Ohio reports:
On Christmas Eve, 2002, my husband passed away at the age of 66. He
had worked for 43 years. After applying for widow's benefits, I was
told I would start receiving a check for $1,032 around April 2003. . .
. On June 14, 2003, I retired after working 30 years for the Canton
City Schools. On September 30, 2003 [I was informed] that my husband's
benefits would be reduced from $1,032 to $77 a month, and that I should
not spend the $1,032 that had already been deposited by Social Security
into my bank account for September because they would be removing that
money.
The Windfall Elimination Provision: A Shocking Loss of Earned Benefits
The Windfall Elimination Provision reduces the earned Social
Security benefits of an individual who also receives a public pension
from a job not covered by Social Security. Congress enacted the WEP
ostensibly to remove an advantage for short-term, higher-paid workers
under the original Social Security formula. Yet, instead of protecting
low-earning retirees, the WEP has unfairly impacted lower-paid retirees
such as educators.
The WEP penalizes individuals who move into teaching from private
sector employment, or who seek to supplement their often insufficient
public wages by working part-time or in the summer months in jobs
covered by Social Security. Educators enter the profession often at
considerable financial sacrifice because of their commitment to our
nation's children and their belief in the importance of ensuring every
child the opportunity to excel. Yet, many of these dedicated
individuals are unaware that their choice to educate America's children
comes at a price--the loss of benefits they earned in other jobs.
Like the GPO, the WEP can have a devastating impact on educators'
retirement security. For example:
An NEA member in Texas writes:
As a single teacher, I have had to work second jobs just to afford
a home and make ends meet. My pension will never be enough to retire. .
. . If I have been willing to work 15-18 hour days to make ends meet, I
should get the same Social Security benefits that those who worked
beside me will be getting. It seems that the harder I work, the more I
am penalized for it.
Another NEA member writes:
It seems only fair to me that if I have enough gumption to work
multiple jobs I should receive the benefits from that hard work. The
sacrifices in time, energy and effort should not be punished. If I
choose to work 24/7 no one has the right to say I cannot receive the
pay and benefits from that work. I have raised 3 children by myself. .
. . At one time I taught school, drove a school bus, worked in a
greenhouse and had a small truck farm . . . I have qualified for
welfare several times but never took any. I just got another job or
worked harder. Please don't punish me.
The GPO/WEP Solution: Total Repeal
NEA is pleased that the Chair has committed to moving legislation
this year addressing the GPO and WEP. We urge the Chair to move quickly
on this important issue and look forward to working with the
Subcommittee.
NEA strongly supports the Social Security Fairness Act, sponsored
by Representatives McKeon (R-CA) and Berman (D-CA). This bipartisan
legislation, which would completely repeal both the GPO and WEP, boasts
the support of 287 Members of the House of Representatives. This broad
support reflects the deep concern on both sides of the aisle about the
impacts of the GPO and WEP on vulnerable retirees and recognition of
the need to act quickly to address the situation.
Conclusion
NEA strongly urges the Subcommittee to reject Administration
efforts to subject more individuals to the GPO and WEP and, instead, to
fix the underlying issue by moving legislation addressing these unfair
offsets.
We thank you for your consideration of these comments.
Statement of Union of American Physicians and Dentists, Oakland,
California
The Union of American Physicians and Dentists (UAPD), the
bargaining representative for the Social Security Evaluation Medical
Consultants who are contracted by the State of California, strongly
objects to the recently promulgated Social Security Administration
disability evaluation plan. Within this murky, complicated proposal, is
the plan to replace thousands of medical consultants in local
Disability Determination Services with registered nurse liaisons.
Eliminating Medical Consultants from local branches would result in
a significant decrease in efficiency and quality of decisions, while
providing no decrease in costs or processing time. The proposal appears
to be an extension of the failed and well-documented single decision
maker experiment of the past several years.
Speed of Decision
Medical Consultants case review comprises a relatively small
portion of the total mean processing time of a case--typically a week
or less. The bigger delays are in the evidence gathering and appeals
stages.
Replacing generalist Medical Consultants from local offices with
twice the number of RNs plus Medical Specialists in Regional Centers
will slow down and complicate the decision process. RNs do not have the
training, medical breadth of knowledge, familiarity with medical
evidence, nor specific knowledge of disability medicine to match
medical doctors.
One needs only to analyze the Social Security Administration's
failed single decision maker experiment of the past several years to
understand why registered nurses will not be successful. According to
the Social Security Administration's own report #A-07-00-10055,
published by the Office of Inspector General, claimant processing time,
appeal rates, pending cases and backlogs all increased in the 10 single
decision maker protocol states. Overworked and undertrained non-
physician analysts had to use sophisticated medicolegal analysis on an
ever increasing workload. The OIG report revealed striking statistics.
Of every 10 case clearances Single Decision Makers were deciding 2
cases on their own, used Medical Consultants as consultants in 3 cases,
received MC input on 4 cases and one clearance did not involve the
single decision maker at all. In other words, 7 of 9 Single Decision
Makers cases required some form of MC input.
According to the OIG report, the prototype Single Decision Makers
states initial processing time of cases increased by 23% in contrast to
comparison state increases of 10%. Prototype production per work years
fell in Single Decision Makers states from 253 cases to 219, while in
non-Single Decision Makers states production per work year increased in
the same period from 262 to 282. Backlog work pending rose from 10 to
15.7 weeks in prototype states, but only 11.3 to 12 weeks in non-
prototype states. Twenty-five percent of all prototype initial claims
were appealed in contrast to 19% in comparison states. This appeal
process further slowed decisionmaking.
In the Commissioner's proposal, RNs would be stationed in
Disability Determination Service facilities and act as intermediaries.
They would add additional time to case development if they consulted
with Regional specialists and then relayed the information back. The
same would be true if the RNs had to call community treating physicians
for medical evidence of record. This part of the process would be
slower still as community physicians would be less willing to give
their time to an RN than to a colleague Medical Consultant. Currently
working in teams, Disability Evaluation Analysts have great camaraderie
and respect for Medical Consultants. The National Association of
Disability Evaluators (NADE) opposed the elimination of Medical
Consultants. NADE said, ``Medical Consultants play a vital role in the
disability evaluation process, not only for reviewing medical evidence
and providing advice on interpretation, but in training and monitoring
disability examiners, as well as public outreach in the community.''
The question of an immediate decision for the obviously disabled
person already has an answer in the current, but underused,
``Presumptive Disability'' step. Obvious allowances cases--dialysis,
amputation, cancer--are supposed to have immediate priority. Improved
triage of these cases can solve this problem in the current system.
Only 10% of the caseload fits this criteria.
Quality of Decisions
Medical Consultants have superior medical education, clinical
experience and decision making. The Medical Consultants have great
expertise in reading medical records and making prognosis regarding
claimant's future condition. RNs do not have the same qualifications.
With the Social Security Administration projecting a 63.6% increase
in beneficiaries by 2010, the continued presence of local Medical
Consultants in the branch teams will be necessary and cost effective to
work with the overworked and underpaid analysts.
One of the major reasons the single decision maker prototype was
abandoned was the high turnover and attrition rates of the vital
disability evaluation adjudicators. Nationally, the attrition rate
increased from 10% in the 1997 prototype inception year to 13% in 2001.
Clearly, dealing with a large medical workload is stressful to the
nonprofessionally trained person. Easy and direct access to medical
consultants is the best model to reduce Disability Evaluation Analysts
stress and attrition, providing Disability Evaluation Analysts have
reasonable workloads.
The in-line quality review proposed by the Commissioner is best
served by the presence of a local Medical Consultant. Since most cases
are currently reviewed by Medical Consultants, we already have a review
of the file. On the other hand, a physically distant regional
specialist Medical Consultant will likely only have an edited small
portion of a record to evaluate, as presented by the liaison RN. A
total quality review will not be possible.
Local disability determination services Medical Consultants are
more familiar with the local medical culture, vendors, and treating
physicians than would be RNs or Regional Medical Consultants. Local
Medical Consultants provide a level of training, feedback, and
credibility to consultative examiner vendors which RNs would not have.
RNs could not do in-house training for other staff as effectively as
local medical consultants. Also, phone calls and faxes to local
treating physicians for medical records would be more effective from
colleague physicians rather than from RNs.
The proposed ``Quick Decision'' allowance steps using coding and
nonphysicians may lead to erroneous decisions which may not be
reversible at a later date. One erroneous allowance could cost at least
$10,000 per year.
Cost/Benefits
The UAPD believes that with a questionable software and computer
system, a complicated staff communication paradigm and less local
expertise under the Commissioner's proposal, there will be less
accuracy and more appeals to the legal levels. The OIG reports
prototype single decision maker states had a 1.5% increase in allowance
rate since 1999, higher than in comparison states. Each allowance costs
the SSA and taxpayers at least $10,000 a year. The client is usually on
the rolls for several years. The presence of Medical Consultants
locally will pay for his/her self in a short time by more accurately
and rightfully denying nondisabled claimants.
Social Security Administration is proposing nearly twice the number
of RNs to replace Medical Consultants. Regional medical specialist will
command a higher salary than the Disability Determination Services
generalist Medical Consultant, and the generalist is still better
suited to adjudicate cases with multiple areas of disability in the
same person than the specialist.
An underlying pillar to the assumption that the new proposal will
improve decision speed and save money is that the accelerated
electronic disability system (AEDIB) will be operational and cost
effective. Social Security Administration has a poor track record with
electronic data systems. In a 9/5/03 letter to the House Ways and Means
Committee, the General Accounting Office (GAO) noted ``. . . SSA has
not consistently followed sound practices in developing systems
designed to automate its disability claims processing. Thus, it has
experienced numerous software development problems over the past 11
years. . . . we are also concerned that the corresponding benefits
cited in SSAs cost/benefit analysis may be overstated.'' For instance,
SSA optimistically states 30% of claims will be processed
electronically by 2004. GAO estimates this figure to be 11%. The first
fledging pilot branch in California recently began to receive
electronic records. The electronic records are outsourced and scanned
in another state. There are many problems with the new software. It is
taking much longer to complete cases than with the traditional paper
records. Comprehensive end to end testing must occur before any
national rollout of the new process.
Legal Pitfalls
The Medical Practice Acts of most states allow only physicians
licensed in that state to order labs, EKGs, and imaging studies. Many
disability claimants require such testing. RNs could not order such
testing without contacting a Regional Specialist Medical Consultant.
Time and effort would be wasted. Worse yet, a Regional Specialist in a
different state may not have the correct state license to order the
tests.
When cases are appealed to an ALJ or a Federal court, a Medical
Consultant's opinion will carry more weight against a contradictory
treating physician than will a nurse or non-physician adjudicator's.
The substitution of the Reviewing Official for the reconsideration
step may not save time and may lead to more appeals. The Reviewing
Officer would not have the medical expertise to properly evaluate
appeals. Claimant attorneys may file more appeals.
Because of the role of nonphysician decisionmakers in this
proposal, including registered nurses and attorneys, questions of
procedural due process may arise. A claimant may state a vested right
to disability benefits if he meets the criteria of the program but is
denied. Thus, additional hearings may be required and with more delay
for clients and additional hearing costs. If cases continue to be
signed off by Disability Evaluation Analysts alone or aided by RNs,
they will be harder to defend on the appeal level.
In summary, while there are problems with the current system of
disability evaluation, removing local Medical Consultants from the
system, hiring twice the number of registered nurses to replace them,
and hiring new Region Medical Specialists will slow down and
destabilize the current system. This new proposal will not save time or
money.
Statement of Peter J.H. Walker, Las Vegas, Nevada
Mr. Chairman and Distinguished Members of the Subcommittee:
My comments will be short and to the point.
In response to Advisory SS-6 I filed a written statement. In a
couple of paragraphs included in that written statement I specifically
accused the Social Security Administration in being a ``behemoth
dinosaur'' that uses methods developed in the 19th century, and
steadfastly refuses to join the 21st century. I am repeating those
accusations now!
I am also requesting this Honorable Subcommittee to hold hostage
the SSA's budget and do NOT report it out of this Subcommittee, until
the Commissioner of Social Security personally certifies that certain
corrective actions have been taken by the SSA. As shameful as it is,
we, American Citizen Social Security Beneficiaries who are domiciled
abroad, NEED this kind of help from you! All we ask for is that the SSA
STOP DISCRIMINATING AGAINST US, and provide us with EQUAL TREATMENT!
Please, HELP!
It would take but only a day or less for the SSA to make its online
services available to ALL Social Security Beneficiaries, regardless
where we domiciled. Nevertheless, the SSA steadfastly refuses to make
available to us, beneficiaries who domicile outside the United States,
the means to use the Internet for reporting our address changes, etc.
Yet it is us who need it the most, due to the unreliability of postal
services in many foreign countries. THERE IS NO GOOD AND VALID REASON
FOR THIS, OTHER THAN CREATING UNNECESSARY PAPERWORK TO JUSTIFY THE
EXISTENCE OF OTHERWISE USELESS BUREAUCRATS WHO SHUFFLE IT!
This unreasonable, unjustifiable, idiotic behavior of the SSA is
the direct cause of the system failures that time to time knock the
food from my table and threaten to tear the roof from over my head! I
am not alone: there is a whole list of us, similarly situated, just
here in the Philippines, and most likely hundreds of thousands, if not
millions, more World wide.
Actual example:
I receive my Social Security benefits in the form of direct deposit
into my bank account. My home address is on record BOTH with the Social
Security Administration and with the United States Embassy's American
Services Section. (As a matter of fact, I am an official warden, under
the Embassy's Warden Organization System). However, to that address the
SSA DOES NOT MAIL ANYTHING OF VALUE: it mails ONLY various forms that I
need to fill in and get back to the SSA in Baltimore, MD, within 60
days after THEY mailed it from Baltimore, or the SSA cuts off the
payment of benefits to me! ! ! !
To start with: What difference does it make to the SSA where I
``lay me down to sleep''? ? ? ? All they do is mail some forms there
time to time!
Add to this the following: In order to change the address where I
sleep, I need to FILL IN AND SIGN A PAPER FORM that can be gotten only
from the U.S. Embassy in Manila. To get to the Embassy from where I
reside in one of the NEARBY provinces, takes about 5 hours, using
public transportation. (Sorry, on my little more than $600 per month
Social Security Benefits I cannot afford to keep a car.)
Then, when one gets to the Embassy, one needs to wait OUTSIDE under
the hot tropical sun, or in the downpour of heavy tropical rain, for
several hours. This is so, because for security reasons only 50 people
are allowed inside at a time. Due to the hundreds of Filipino visa
applicants in line, plus people waiting for other consular services,
this is quite understandable. And I am one of the lucky people: Some
other American Citizen Social Security beneficiaries live 2 or 3 DAYS
of travel time away from Manila! ! ! !
Well, of course, it is possible to call the Social Security Office
at the Embassy by telephone, or even e-mail them to request that they
mail the necessary form. I did just that in October last year (2003).
The Embassy's Social Security Office did mail me the form, I did get it
weeks later, filled it in, signed it where indicated, and mailed it
back. That was the last I heard from anyone, until on February 3, 2004,
I found out that my direct deposit was NOT credited to my bank account.
It took several expensive long distance telephone calls to find out
that the SSA Baltimore headquarters withheld the payment of my benefit
due for January, because they did not receive back from me the SSA 7162
form, which they mailed from Baltimore to my previous address! ! ! ! TO
THIS DAY I STILL DON'T HAVE THE MONEY, which is the ONLY income I have,
and which provides my livelihood! ! ! ! Today is February 23, 2004.
Subsequent investigation by Mr. Thomas Ashley, the head of the
SSA's Manila office, disclosed that the address change report form that
mailed back to the SSA office in Manila, was never received, thus,
DESPITE THE FACT THAT THE EMBASSY's AMERICAN SERVICES SECTION just down
the hall has my correct address on file, and DESPITE THE FACT that I
have reported my new address to the Manila SSA office by e-mail (their
record shows that they mailed the paper form there) I am left to starve
in a foreign country. I would have starved, if it would not have been
the charity of some Filipino friends.
I need to add here that the Manila SSA office was most helpful in
expediting the getting to me and the filing of the replacement SSA 7162
form. NEVERTHELESS, the SSA Baltimore has taken the leisurely position
of continuing to withhold my benefits; They notified Manila that on
March 3, 2004, they will pay double benefits to me. Apparently they
don't care if I last that long without money. IS THAT HOW THE SOCIAL
SECURITY ADMINISTRATION IS SUPPOSED TO ADMINISTER THE PAYMENT OF
BENEFITS? ? ? ? IS THAT THE RIGHT THING TO DO? ? ? ?
Mr. Chairman and Distinguished Members of the Subcommittee: the
above ACTUAL EXAMPLE shows just how badly the Social Security
Administration needs to modernize its ancient ways of doing business.
The above detailed atrocity was committed by the SSA because it refuses
to allow us, Americans who domicile abroad, to use the same Internet
facilities that Americans who domiciled in the United States are
allowed to use. THERE IS NO GOOD REASON, THERE CAN BE NO JUSTIFICATION
FOR THIS! ! ! !
IN CONCLUSION:
This Subcommittee has now the opportunity to force the behemoth
dinosaur, the Social Security Administration, to take one small step
toward embracing 21st century technology. If the SSA takes this small
step, it will result in reducing paper work, file space, eliminate
unnecessary and unjustifiable archaic bureaucratic procedures, save
money, and will deliver better services. Unfortunately, the SSA has to
be forced to improve.
Please, help us! Please refuse to report out the budget of the SSA
until it corrects this inequity that can (and in my above detailed case
almost did) have fatal consequences!
It should take no more than a few hours of programming work by a
capable computer programmer to make the online system available to all
American Social Security Beneficiaries, from any place on Earth! ! ! !
It can be done, IF MOTIVATED TO DO SO, in one day! ! ! !
Please, provide the motivation by holding the SSA budget back until
the Commissioner certifies that it HAS BEEN DONE!
Statement of Harry L. Williams, Jr., The Woodlands, Texas
I am a sitting Administrative Law Judge. My comments here are
limited to 3 suggestions for improving the viability of the Trust Fund
and fairness of the adjudication process. There are three immediate
changes that need to be made to the law:
1. The grid rules that mandate payment at age 50 and younger are
out of date and not reflective of the health of today's population.
Moreover, with the rolling increase in the eligibility age for
retirement, it is simply not equitable.
Recommendation:
Eliminate all grid rules that pertain to people under the age of
55. This only means that those claimants must establish disability and
will not automatically qualify based on age.
2. Many claims are filed by criminals who have no eligibility for
payment. Judges are forced to travel to their locations (the prisons)
to have the hearings. Additionally, prisoners with long sentences are
actually somewhat favored under the law as they have no work history.
Recommendation:
Dismiss all claims filed by persons imprisoned for felonies. They
can refile after release.
Count all time imprisoned over 6 months as dead time for
considering past relevant work--we now go back 15 years by law to look
for past relevant work. Any time in jail for over 6 months would be
added to the 15 years that we go back to look at past work. E.g., if in
prison for 5 years we would then look back 20 years for past relevant
work.
3. Claimants are favored under the law for not speaking English.
Recommendation:
Eliminate any references to mandatory favoring of claimants for not
speaking English. Vocational experts available at almost every hearing
can establish factually the problems of language at the hearing. For
example, speaking Spanish in Houston, Texas is not a barrier to many
jobs, yet Spanish only speakers are given a preference. This is
probably unconstitutional.
I am ready to explain these changes in more detail as necessary. I
have conducted over 3,000 hearings.