Category Archives: Social insurance

Hank Aaron’s Chinese menu: Fixing Social Security at the NASI

The National Academy of Social Insurance hosted a decidedly unusual trio of luncheon speakers at its annual conference last week. Henry J. Aaron of the Brookings Institution, keynote, was there to unveil a new plan he’s devised to solidify Social Security’s funding for the next 75 years, if not beyond. Nancy J. Altman, president of Social Security Works, and Jason Fichtner, a senior research fellow at the Mercatus Center at George Mason University, were on hand to respond to and discuss Aaron’s proposal.

Aaron has perhaps the deepest knowledge of the Social Security system – and social insurance in general – of anyone alive today. Altman is also a leading expert and a longtime, passionate defender of the program against right-wing attempts to dismantle it. Fichtner served in the Social Security Administration under George W. Bush and is a critic of the program who has argued that it crowds out private savings and offers negative incentives to work and who advocates stabilizing its finances by cutting benefits while cutting payroll taxes.

Aaron and Altman have never been friendly to such ideas. Normally, that would place them on one side of the Social Security discussion and Fichtner on the other. That wasn’t so last week.

Continue reading Hank Aaron’s Chinese menu: Fixing Social Security at the NASI

Obama “expands” the Social Security Conversation

President Obama’s statement last week that he supports expanding Social Security was indeed a watershed in the discussion of the program’s future. What happens next is not clear, however, not least because “expand” can mean so many things to people of different political persuasions.

We should be strengthening Social Security,” the president declared during an economic speech in Elkhart Indiana. “Not only do we need to strengthen it, it is time we finally made Social Security more generous and increase the benefits so that today’s retirees and future generations get the dignified retirement that they have earned.” Expansion, he said, should be financed by “asking the wealthiest Americans to contribute a little bit more.”

The location was important: Elkhart was the first city Obama visited after assuming the presidency, in the midst of the worst economic downturn since the Depression. Last week’s speech itself was meant to highlight the progress the economy has made since then. In staking out his new position on Social Security, “Obama is getting on board a movement that’s been brewing within the Democratic party for a while now,” write Nancy Altman and Eric Kingson, co-directors of the advocacy group Social Security Works, noting that a host of prominent figures including this year’s presidential candidates Bernie Sanders and Martin O’Malley and even Hillary Clinton (somewhat guardedly) have endorsed the idea and that Sanders and Elizabeth Warren, among others, have proposed action in Congress to expand benefits and pay for them by extending payroll tax to cover higher incomes. Continue reading Obama “expands” the Social Security Conversation

Of Carrots, Sticks, and Disability

In the world of Washington, incentives—carrots and sticks—seem to be the answer for everything, including how to get people on disability back to work. But a new study suggests the problem is the same one the Americans With Disabilities Act identified 25 years ago: discrimination.

I took a certain amount of impolite criticism for my last post, in which I decried the “veritable national jihad” against disability fraudsters. The amount of abuse in Social Security’s Disability Insurance (DI) system isn’t anything like the monster it’s made out to be, and it’s unfortunate, to say the least, that the just-passed Bipartisan Budget Act throws more resources at ferreting out fraud and creating stiffer penalties for false benefit claims. For calling the vast overreaction to disability fraud a jihad, I was accused of insulting conservatives and indulging in hyperbole.

I’m not sorry to have used strong language to describe a years-long campaign against DI that’s out of all proportion to the size of the problem (would that as much effort was going into exposing and cracking down on the Pentagon’s cozy relationships with its contractors) by people who seem to have no idea of the challenges facing working people with disabilities. (The Washington Post was at it again today.)

But if the goal is to get people back to work who have something to contribute and would be better off for it, the real issue is where “incentives” ought to be applied: to disability recipients? or to their potential employers? Continue reading Of Carrots, Sticks, and Disability

The Soft Underbelly

Having failed in numerous frontal assaults on Social Security, the Republican congressional leadership several years ago adopted a new strategy for dismantling the program: attack and demonize Disability Insurance, which they consider to be its soft underbelly. With this week’s passage of the Bipartisan Budget Act of 2015, they drew blood.

We’ve been hearing it for years now: Disability Insurance is overgenerous, fraud-ridden, a well-intentioned program that’s mutated into a form of middle-class welfare. Criteria for awarding benefits need to be tightened, or the $150 billion DI trust fund will go bankrupt. The traditional solution for imbalances in Social Security’s trust funds—shifting money between the DI and the Old Age and Survivors’ (OASI) fund—shouldn’t be used unless “substantive reforms” are implemented.

How wonderful, then, that according to the Wall Street Journal, “Social Security will get its first upgrade since the 1980s to fix Disability Insurance,” thanks to a kumbaya moment between the White House and congressional Republican and Democratic leaders. The two-year Bipartisan Budget Act of 2015, Continue reading The Soft Underbelly

Hardship Case

Means-testing Social Security is a popular position among Republican presidential candidates this election cycle—if not among prospective voters. That means, essentially, turning the nation’s retirement system into a welfare program, targeted at those with real hardships. But how do you figure out who’s a “real” hardship case and who’s not? In fact, it’s well-nigh impossible.

When Alan Simpson and Erskine Bowles, the chairs of President Obama’s 2010 deficit commission, gave up on finding common ground with their colleagues and released their own set of deficit reduction proposal, they called for two big changes in Social Security: gradually raising the eligibility age for full benefits from 67 to 69 and upping the early-retirement age for reduced benefits from 62 to 64. They also directed the Social Security Administration to design a “hardship exemption for those who cannot work past 62 but who do not qualify for disability benefits.”

It all seemed eminently reasonable—so much so that most of our current class of Republican presidential candidates are calling for Continue reading Hardship Case

Social Security’s future is being written in the streets of Ferguson

Bernie Sanders’s confrontation with members of Black Lives Matter should teach a lesson to everyone engaged in the struggle to defend Social Security: Unless the campaign for economic equality recognizes the need to prioritize racial equality as well—that racial and economic issues are not separate—preserving and expanding Social Security will become increasingly difficult.

In politics, context is everything. The most passionate advocacy, even for an utterly righteous cause, can sound presumptuous when the advocate ignores another issue more important to the same audience. Witness Sen. John McCain’s recent humiliating treatment by the Navajo, who chased him off their reservation on August 16, when he came to discuss a feel-good memorial to the World War II Code Talkers—but refused to address complaints that he had failed to protect tribal water rights or to oppose a copper mine that’s about to be built on Oak Flat campgrounds, an area of spiritual significance to the Apache.

On the opposite end of the political spectrum, Sen. Bernie Sanders recently received a similar lesson. On July 18, Black Lives Matter protesters disrupted a Netroots Nation forum in Phoenix Continue reading Social Security’s future is being written in the streets of Ferguson

The liberal critics of Big Government

What does it mean to be a “progressive” or “liberal” in America today? More than anything else, perhaps, it implies a determination to defend the signature achievements of the New Deal/Great Society eras: Social Security, Medicare, unemployment insurance, and a collection of related programs. And that’s just the problem, say their critics on the right: for progressives, government is the answer for everything. But are conservatives the only ones concerned about the growth of the administrative state—of bureaucracy? Should progressives be worried as well?

We’re used to conservatives, from Ron Paul to Rush Limbaugh, complaining about Big Government. Believe it or not, however, there was a time when liberals—social scientists, lawyers, some members of the Roosevelt administration, even the philosopher John Rawls—worried about the consequences of a liberal state built on regulation and government services and the people’s loyalty to the institutions responsible for them. Anne Kornhauser’s new book, Debating the American State: Liberal Anxieties and the New Leviathan, 1930-1970 (University of Pennsylvania Press), reintroduces the liberal critics of Big Government, arguing that their concerns are still relevant today, particularly since Edward Snowden’s revelations about the National Security Agency refocused concern on the surveillance bureaucracy.

Discussing the implications of her book for today, Kornhauser, a historian at City College of New York, ticks off a number of other areas where the New Deal institutions and their progeny are not fulfilling their expected role, including health care and regulation of the financial services sector along with national security. Continue reading The liberal critics of Big Government

The Meaning of Harry Reid’s Departure

For the last decade, Harry Reid has been a bulwark against efforts by Republicans and members of his own party to send the core of the New Deal achievement down the road to oblivion. Other Democratic lawmakers may be equally committed, but almost none have the same close emotional ties that he possesses to the Rooseveltian state.

When Senate minority leader Harry Reid announced last week that he won’t run for reelection in 2016, the first thing that flashed through my mind was his age: he’s 75. Only nine senators are older than Reid, and only two of them are Democrats. That underscores how few people still serving in the Senate were born during the New Deal, the period that formed the modern US government, with its social protections, administrative apparatus, and (not so happily) military-industrial complex. For the past 35 years, roughly corresponding to Reid’s career in electoral office, the legislation that Washington enacted during the Great Depression has been a war zone, Continue reading The Meaning of Harry Reid’s Departure

The Origins of Pension Privatization: A New Perspective

Starting in the 1970s, governments authorized and promoted individual retirement accounts of various sorts. The commonly accepted explanation was that public pensions were no longer affordable and had to be supplemented or replaced by private saving. The truth, according to a revealing new paper, is that stock exchanges in developed countries promoted tax-advantaged private accounts as a quick way to build up domestic capital markets at a time of increasing global competition. The result has been an underfunded public sector—including cash-starved public pensions—and overfunded capital markets feeding unproductive financial speculation.

A wise person who had observed the private pension industry for many years once told me to remember that none of its structures—public pensions, employer-sponsored pensions, 401(k) plans, and every variation on these themes—are set up for the good of working people. They are products, designed to make money for the bank or insurance or mutual fund company that set it up and collects fees for managing and investing it.

That sensible, “follow the money” approach to understanding pensions informs an excellent new academic paper, “Feed the Beast: Finance Capitalism and the Spread of Pension Privatisation in Europe.” The authors, Marek Naczyk of Oxford University and Bruno Palier of the Centre d’Etudes Européenes at Sciences Po Paris, who first presented it at a conference last July, connect the dots to explain why the financial services industry in Europe first started pushing for pension privatization and why political leaders in these countries went along with the idea.  Continue reading The Origins of Pension Privatization: A New Perspective

Where’s the Rip-Off? Rand Paul in Perspective

Critics of Social Security’s Disability Insurance program would like you to think it’s riddled with incompetence and fraud. As for the spectacularly dysfunctional accounting and payment systems at the Defense Department … well, we just have to live with them, right?

Kentucky Sen. Rand Paul kicked up a fuss last week when he claimed the Disability Insurance rolls are rife with fraudsters claiming phantom ailments.

What I tell people is, if you look like me and you hop out of your truck, you shouldn’t be getting a disability check. Over half of the people on disability are either anxious or their back hurts—join the club. Who doesn’t get a little anxious for work everyday and their back hurts? Everybody over 40 has back pain.

This came soon after the Republican leadership of the House of Representatives announced new budget rules designed to force Congress to “repair” Social Security as a whole instead of shifting money into the DI fund to shore it up. Paul’s statement reinforced a line of attack Continue reading Where’s the Rip-Off? Rand Paul in Perspective