Thursday, February 26, 2015

Testimony from February 25 Ways and Means Hearing on Social Security Disability

Chairman Johnson Announces Hearing on Maintaining the Disability Insurance Trust Fund’s Solvency
B-318 Rayburn House Office Building at 2:00 PM

Feb 25, 2015
U.S. Congressman Sam Johnson (R-TX), Chairman of the House Committee on Ways and Means Subcommittee on Social Security announced today that the Subcommittee will hold a hearing focused on the financial status of the Disability Insurance (DI) and Old Age and Survivors Insurance Trust Funds, and the available legislative options to ensure full DI benefits continue to be paid. The hearing will take place on Wednesday, February 25, 2015 in B-318 Rayburn House Office Building, beginning at 2:00 p.m.
Hearing Advisory
Witness List

Charles P. Blahous III, Ph.D.
Public Trustee, Social Security and Medicare Boards of Trustees
Testimony
(Truth in Testimony)
Ed Lorenzen
Senior Advisor, Committee for a Responsible Federal Budget
Testimony
(Truth in Testimony)
Webster Phillips
Senior Legislative Representative, National Committee to Preserve Social Security and Medicare
Testimony
(Truth in Testimony)

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Senate Budget Committee, Hearing on Social Security Disability

Held Feb 11 2015, 10:00 AM - 12:00 PM

The Coming Crisis: Social Security Disability

 

Witnesses:

Panel 1

Carolyn W. Colvin
Acting Commissioner of Social Security, Social Security Administration

Panel 2

Dr. Mark Duggan
Wayne and Jodi Cooperman Professor of Economics, Stanford University

Dr. Philip de Jong
Professor of Economics, University of Amsterdam - Amsterdam School of Economics

Kate Lang
Staff Attorney, National Senior Citizens Law Center

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Wednesday, February 25, 2015

Kolbe and Stenholm: Congress Can’t Dodge Disability Issue

Over at Roll Call, former Congressmen Jim Kolbe (R-AZ) and Charlie Stenholm (D-TX) – long leaders on Social Security reform – urge Congress to tackle the looming insolvency of the Disability Insurance trust fund:

As if stirring, like Rip Van Winkle, from a 20-year snooze, Congress is finally awakened to the teetering finances of the Social Security’s disability program. Better late than never, but policymakers have known for years that this day would arrive — and it has.

While some say the alarms being raised about the projected depletion of the Social Security Disability Insurance Trust Fund by late 2016 is a manufactured crisis easily fixed by accounting maneuvers, it is actually a stark reminder of the need to address the structural imbalance in the Social Security system. We can’t afford for Congress to ignore these challenges for another 20 years

Check out the whole article here.

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Monday, February 23, 2015

New paper from the NBER: “The Great Recession, Retirement and Related Outcomes”

The Great Recession, Retirement and Related Outcomes

by Alan L. Gustman, Thomas L. Steinmeier, Nahid Tabatabai - #20960 (AG LS PE)

Abstract:

This paper uses data from the Health and Retirement Study to examine retirement and related labor market outcomes for the Early Boomer cohort, those in their mid-fifties at the onset of the Great Recession. Outcomes are then compared with older cohorts at the same age.

The Great Recession increased their probability of being laid off and the length of time it took to find other full-time employment.

Differences in layoffs between those affected by the recession and members of older cohorts in turn accounted for almost the entire difference between cohorts in employment change with age. The Great Recession does not appear, however, to have depressed the wages in subsequent jobs for those who experienced a layoff.

In 2010, 17 percent of the Early Boomers were Not Working and Not Retired or Partially Retired, and 6 percent were unemployed, leaving at least 9 percent who were not working and not unemployed but not retired or only partially retired.

At the recession's peak, half of those who experienced a layoff ended up in the Not Retired or Partially Retired, Not Working category. But only a quarter of those who declared themselves to be Not Retired or Partially Retired, and were Not Working, had experienced a layoff.

Most of the jump in Not Retired or Partially Retired, Not Working appears to reflect a change in expectations about the potential or need for future work, a change that is not the result of an actual job loss.

http://papers.nber.org/papers/W20960?utm_campaign=ntw&utm_medium=email&utm_source=ntw

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New disability papers from the Social Science Research Network

"SSDI Reform: Promoting Gainful Employment While Preserving Economic Security"
Cato institute Policy Analysis, No. 762, October 2014

JAGADEESH GOKHALE, Cato Institute
Email: jgokhale@cato.org

The Social Security Disability Insurance (SSDI) program faces imminent insolvency. Annual expenditures totaled $143 billion in 2013, but program receipts amounted to $111 billion — a shortfall that is projected to continue indefinitely. According to the Social Security Trustees, the program’s trust fund will be fully depleted in 2016, compelling either a large benefit cut or a large tax hike — neither option being politically popular.
Regardless of the program’s insolvency, SSDI creates substantial work disincentives, causing many with medical impairments who could work to withdraw from the labor force and apply for SSDI. That undesirable outcome arises from the complicated rules and procedures that SSDI uses to establish benefit eligibility. But rectifying SSDI’s processes is a monumental task, unlikely to be accomplished in the short term.
Determining whether medical impairments imply inability to work is becoming more difficult in a growing number of cases, with the result that many applicants with residual capacities are admitted to SSDI. Many beneficiaries express a desire to return to work but fear of losing benefits and health coverage under SSDI’s current benefit rules impedes such a decision. Accordingly, this paper advocates a change in the structure of SSDI’s benefit payments to those admitted to the program. Shifting benefits at the margin toward paying beneficiaries to work rather than to remain out of the work force would encourage beneficiaries with residual work capacities to return to work. That shift would serve as a backstop to reduce the economic loss from wrongful allowances of applicants into SSDI. Such a switch in benefit design can be accomplished without compromising benefit eligibility for those who cannot work. The paper explains how to implement such a change to SSDI’s benefit structure and the advantages that would accrue from it. Apart from creating better incentives to work, the proposed reform complements other reforms Congress might adopt.

"Longitudinal Patterns of Disability Program Participation and Mortality Across Childhood SSI Award Cohorts"
Social Security Bulletin. 75(1): 35-64, 2015

KALMAN RUPP, Government of the United States of America - Social Security Administration
Email: kalman.rupp@ssa.gov
JEFFREY HEMMETER, Government of the United States of America - Social Security Administration
Email: jeffrey.hemmeter@ssa.gov
PAUL S. DAVIES, Government of the United States of America - Office of Research, Evaluation and Statistics
Email: paul.davies@ssa.gov

This article follows six annual cohorts of childhood Supplemental Security Income (SSI) disability awardees between 1980 and 2000, for a time horizon up to 30 years after initial SSI award, in many cases well into adulthood. The authors compare trajectories of successive awardee cohorts as the SSI program evolves from 1980 to recent years. The results show that the proportion of awardees in SSI-only status declines over the life cycle, with over half transitioning to other statuses roughly after 10 to 15 years. Many awardees transition from the SSI program to concurrent or Disability Insurance-only benefit status, and increasing proportions of awardees are deceased or off the rolls and alive. These patterns are common for all awardee cohorts, but there are major changes in trajectories across cohorts. Compared with the early cohorts, the more recent cohorts display sharper declines in mortality and steeper increases in the proportion off the disability rolls for other reasons. These two trends have opposite effects on the duration of disability program participation over the life cycle, with important policy implications.

"Perspectives: Long-Term Work Activity and Use of Employment Supports Among New Supplemental Security Income Recipients"
Social Security Bulletin. 75(1): 73-95, 2015

YONATAN BEN-SHALOM, Mathematica Policy Research, Inc.
Email: yben-shalom@mathematica-mpr.com
DAVID C. STAPLETON, Mathematica Policy Research, Inc.
Email: dstapleton@mathematica-mpr.com

Long-term cumulative statistics on the employment activities of Supplemental Security Income recipients offer a different perspective than the Social Security Administration's published statistics, which are based on monthly or annual data, and have important policy implications.

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New papers from the Social Science Research Network

"Social Security Trust Fund Cash Flows and Reserves"
Social Security Bulletin, 75(1): 1-34, 2015

DAVID PATTISON, Government of the United States of America - Social Security Administration
Email: david.h.pattison@ssa.gov

This article examines the Social Security trust fund reserves and cash flows and their interrelationships with the Treasury's cash management operations and the budget of the rest of the federal government. The article considers the extent to which the trust fund reserves and interest income reflect cash transactions between the trust funds and the public and are not, as some commenters have asserted, just accounting fictions. It also considers whether, under the Social Security system's self-financing framework, an improvement in trust fund finances can help relieve the accumulated debt commitments of the rest of the federal government.

"Longitudinal Patterns of Disability Program Participation and Mortality Across Childhood SSI Award Cohorts"
Social Security Bulletin. 75(1): 35-64, 2015

KALMAN RUPP, Government of the United States of America - Social Security Administration
Email: kalman.rupp@ssa.gov
JEFFREY HEMMETER, Government of the United States of America - Social Security Administration
Email: jeffrey.hemmeter@ssa.gov
PAUL S. DAVIES, Government of the United States of America - Office of Research, Evaluation and Statistics
Email: paul.davies@ssa.gov

This article follows six annual cohorts of childhood Supplemental Security Income (SSI) disability awardees between 1980 and 2000, for a time horizon up to 30 years after initial SSI award, in many cases well into adulthood. The authors compare trajectories of successive awardee cohorts as the SSI program evolves from 1980 to recent years. The results show that the proportion of awardees in SSI-only status declines over the life cycle, with over half transitioning to other statuses roughly after 10 to 15 years. Many awardees transition from the SSI program to concurrent or Disability Insurance-only benefit status, and increasing proportions of awardees are deceased or off the rolls and alive. These patterns are common for all awardee cohorts, but there are major changes in trajectories across cohorts. Compared with the early cohorts, the more recent cohorts display sharper declines in mortality and steeper increases in the proportion off the disability rolls for other reasons. These two trends have opposite effects on the duration of disability program participation over the life cycle, with important policy implications.

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Friday, February 20, 2015

Rescheduled Event: Savings & Retirement Foundation

We've rescheduled the discussion with Mark Warshawsky for Friday, March 6. Please update your RSVP if you plan to attend.

LUNCH FORUM
Discussing
Illustrating Retirement Income for Defined Contribution Plan Participants:
A Critical Analysis of the Department of Labor Proposal

with Mark Warshawsky

Friday, March 6, from Noon to 1:00 at
Americans for Tax Reform

722 12th Street, NW
7th FLOOR
Washington, D.C. 20005
RSVP

(Pizza and soft drinks will be provided)
This is a widely attended event.

Mark J. Warshawsky is a visiting scholar at the Mercatus Center of George Mason University. His research interests include employer-sponsored retirement programs, social security, financial planning, health and long-term care financing, corporate and public finance, and macroeconomics. He is a co-author of the Fundamentals of Private Pensions, Ninth Edition (Oxford University Press, 2010) and author of Retirement Income: Risks and Strategies (MIT Press, 2012).

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