Sen. Tom Coburn’s cuts: Tackling Social Security

August 4, 2011

Editor’s note: S en. Tom Coburn (R-Okla.) released a plan in July that he said would achieve $9 trillion in deficit savings over the next decade. Here we review parts of the proposal.

Coburn likes to remind people that in 1935, when President Franklin D. Roosevelt signed the Social Security program into law, the average life expectancy was 64 and the earliest retirement age under the program was 65.

“Today, Americans on average live 14 years longer, retire three years earlier (at 62) and spend 20 years in retirement,” Coburn has written, implying correctly that this is one reason the system is running out of money.

Pertinent facts that “better reflect life expectancy,” Coburn argues, justify his plan to continually raise the Social Security retirement age beyond the scheduled bump to 67 in 2027. Those who want to retire early, at age 62, will be able to do so in 2022, but they would receive only 70 percent of what they would have received by retiring at 67.

Coburn would have retirement ages automatically increase, but gradually, one month every two years. Under his plan, someone who turns 62 in 2026 could begin collecting at 68 and someone who hits 62 in 2070 would have to wait until age 69.

However, Coburn directs much of his attention in preserving Social Security to two other programs run by the Social Security Administration.

One is the Social Security Disability Insurance program, whose separate trust fund “will be exhausted by 2018 or 2016 under the high cost assumptions,” Coburn said. Quoting the 2011 report of the board of trustees of the federal programs, which said “legislative action is needed as soon as possible.”

Created in 1956, SSDI was to be “a safety net of last resort for disabled Americans who could not work,” but as Coburn put it, there was always concern that determining who qualified was going to be a problem.

Recently, “disability rolls have been increasing at an exponential rate,” he said, providing a Congressional Research Service chart showing that in 2000, there were 6.7 million SSDI beneficiaries receiving $55 billion, but by 2010 there were 10.2 million receiving $124 billion.

Benefits continue as long as the person remains disabled or, if still living, until he or she reaches retirement age.

“Very few leave the disability rolls due to returning to work or medical improvement,” Coburn said. In 2009, for example, of 630,074 benefit terminations, only 5.1 percent returned to work. About 54 percent reached full retirement age while on the rolls and 35 percent died. Only 3.2 percent showed medical improvement.

Coburn argues that billions could be saved on SSDI if the Social Security Administration conducted “continuing disability reviews” of beneficiaries. He noted that 669,000 CDRs were done in 2003, but only 322,000 in 2010 — at a time when the numbers were quickly rising. This year, 2.8 million beneficiaries are scheduled to receive CDRs, but only half that number will be carried out, leaving 1.4 million unexamined.

In 2010, the Government Accountability Office reported that it found 1,500 disability beneficiary recipients who had been receiving payments for 12 months or longer at the same time they were collecting federal paychecks. Coburn quotes a Social Security inspector general’s finding last year that eliminating the medical CDR backlog “would result in saving $15.8 billion in improperly paid lifetime federal benefits.”

The second troubled program is Supplemental Security Income (SSI), which was established in 1972 and is a means-tested benefit to the disabled poor, elderly and blind. Payments under SSI in the current fiscal year are expected to go to more than 6.8 million people and cost more than $53 billion. In 2000, payments totaling $24 billion went to 5.1 million people.

Coburn said one serious concern in the program, which sets income limits and the holding of assets, is that payments are going to improper people or at the wrong level. The Social Security inspector general testified in June that in 2009 $4 billion in overpayments went “to SSI recipients who did not properly report assets,” one of the main qualifying elements.

SSI recipients are required to report changes in income, resources and living arrangements, and the administrating agency is supposed to regularly perform “redeterminations” of recipients’ non-medical situations. From 2003 to 2008, as the rolls increased, redeterminations dropped 60 percent, Coburn said.

The Social Security inspector general said that if redeterminations had been carried out at the 2003 level, his agency “would have saved taxpayers $3.3 billion during fiscal years 2008 and 2009.”

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