The Social Security Administration (SSA) is an independent federal agency that pays monthly sums to those who are retired or have disabilities. Social Security currently provides financial protection to more than 160 million workers and their families, and it pays approximately $580 billion annually in benefits to more than 49 million Americans who receive monthly Social Security retirement, disability or survivors’ benefits. Created during the Great Depression of the 1930s, Social Security was the first “entitlement” program created by the federal government, designed to help Americans during the latter years of life or those with disabilities. In recent years, concerns have been growing over how the federal government will maintain the program as retirees will soon outnumber workers whose payroll taxes fund the system. In 2005, Social Security reform was arguably the hottest political topic in Washington, DC, as President Bush tried to push through a radical change involving personal retirement accounts, a plan that failed dramatically.
Because it was created during the New Deal, many have credited President Franklin Roosevelt for establishing Social Security. However, the idea was really that of maverick Democratic Senator Huey Long of Louisiana, who proposed the “Every Man A King” program in 1930. Long proposed that every person receive an old-age pension when they reached the age of sixty. On June 8, 1934, the Committee on Economic Security sponsored the first ever national town-hall forum on Social Security and drafted a detailed legislative proposal for a social security program. The Social Security Act was passed in August 1935.
The Act established an independent Social Security Board (SSB). The very first social security number was issued to John D. Sweeney, Jr. of New Rochelle, NY. The lowest number ever issued was 001-01-0001, to Grace Dorothy Owen of Concord, NH. Monthly benefits did not start until 1942. Prior to that, recipients received lump-sum payments upon retiring. The first person to receive such a payment was Ernest Ackerman of Cleveland, OH, who retired one day before the Social Security System went into effect. For his one day in the program, Ackerman had a nickel withheld from his paycheck. He then received a lump-sum payment of 17 cents. The average lump-sum was $58.06.
In 1939, Congress adopted two important changes to Social Security. One made spouses and children of retired workers eligible for social security income in the event the worker died. The other change moved the SSB into the newly created Federal Security Agency.
Seven years later, SSB was renamed the Social Security Administration. In 1953 the Federal Security Agency was abolished and the Social Security Administration became part of the Department of Health, Education and Welfare. The 1950s also saw important changes to the program. Benefit levels were increased for the first time (by 77%) to provide greater assistance to retired Americans. In 1956, lawmakers passed an amendment that granted benefits to adult workers age 50-65 who became disabled and to disabled adult children. In succeeding years, Congress opened the disability portion of Social Security to adults of all ages.
In 1961, the retirement age was lowered to 62 for men to qualify for Social Security (women received this benefit in 1956). A few years later, President Lyndon Johnson and Congress approved one of the largest expansions ever in Social Security history by creating the Medicare program. Under Medicare, Social Security beneficiaries 65 and older qualified for the new government health insurance program. Nearly 20 million people enrolled in Medicare during its first three years.
During the 1970s, cost-of-living adjustments and wage indexing were implemented for Social Security to help retirees better cope with inflation. The Social Security Income (SSI) program was established to oversee the distribution of benefits to the disabled. Another important change removed Medicare from the Social Security program and entrusted its administration to the newly created Health Care Financing Administration.
The SSA moved again with the creation of the Department of Health and Human Services in 1980. The decade also represented the first time that lawmakers had to grapple with a financing problem for Social Security. President Ronald Reagan formed a blue ribbon panel led by Alan Greenspan to come up with solutions. Congress adopted amendments in 1983 at the suggestion of the Greenspan Commission, which included partial taxation of Social Security benefits, the first coverage of federal employees, raising the retirement age beginning in 2000 and increasing the reserves of the Social Security trust fund. Another change came about in 1989 with the requirement that the SSA send out annual statements to all persons working under Social Security.
It was not until 1994 that the Social Security Administration regained its status as an independent agency. SSA now reported directly to the President, and a seven-member bipartisan Social Security Advisory Board was formed to provide advice and counsel on the program. In the late 1990s, SSI benefits for non-citizens were scaled back, and the Ticket to Work and Work Incentives Improvement Act of 1999 was adopted. The latter provided vouchers to SSI recipients to help or encourage them to find employment (and thus reduce their reliance on Social Security).
In 2000, President Bill Clinton signed the Senior Citizens’ Freedom to Work Act, which eliminated rules that penalized seniors who choose to work after retiring. The remainder of this decade has been preoccupied by debate over Social Security reform. In 2001, President George W. Bush commissioned a special repot on how to avoid Social Security from running out of money (scheduled to happen in the decade of 2030). Following his reelection in 2004, Bush made social security reform a major goal of his second term. Included in his proposed changes were plans to partially privatize Social Security - a controversial idea that Republicans and Democrats in Congress refused to embrace.
Administrative History of SSA 1993-2000
The Social Security Administration (SSA) is responsible for distributing retirement benefits and disability payments to Americans. SSA implements two main programs. The largest is the Old-Age, Survivors Disability and Insurance, which is commonly referred to as Social Security. This program provides funding to 49 million Americans who are age 65 and older. The other program, Supplemental Security Income (SSI), provides financial support to more than 7 million Americans who are aged, blind or disabled adults and to children with limited income and resources.
Key SSA Offices
Retirement/Disability Policy (RDP) is the principal advisor to the Commissioner of Social Security on major policy issues and is responsible for all major activities in the areas of strategic and program policy planning, policy research and evaluation, statistical programs, and overall policy development, analysis and implementation. RDP serves as the lead spokesperson in presenting policy proposals and analysis within and outside the Executive Branch. The office directs and manages the planning, development, issuance, and evaluation of operational policies, standards, and instructions for the Retirement and Survivors Insurance, Disability Insurance, Supplemental Security Income (SSI) program and other SSA programs. The office assists in achievement of consistency in program policy across programs administered by SSA. The Office is involved in analyses of legislative and regulatory specifications and budgetary impacts of legislation on programs administered by SSA. The office produces, presents, supports, and publishes program data, statistics, research, analyses and reports that detail trends and effects of the programs on recipients and potential recipients. It explains impacts of reform proposal options to enhance program provisions or solvency. The office develops and evaluates demonstrations and studies that support the policy development of SSA. The office works with the Department of Treasury on issues of policy relating to the Federal Insurance Contributions Act and the Self-Employment Contributions Act, including such matters as definition of wages and implementation of laws. It manages a nationwide network of medical, psychological and vocational experts who assist Administrative Law Judges (ALJs), the Decision Review Board (DRB), State Disability Determination Services(DDS) and the Office of Quality Performance (OQP) in making disability determinations and decisions.
Disability Adjudication/Review administers the nationwide Disability Adjudication and Review program for SSA. It provides the means through which individuals and organizations dissatisfied with determinations affecting their rights to and amounts of benefits or their participation in programs under the Social Security Act may appeal these determinations in accordance with the requirements of the Administrative Procedure and Social Security Acts. The office includes a nationwide field organization staffed with Administrative Law Judges (ALJs) who conduct hearings and make decisions on appeals filed by claimants, their representatives, providers‑of‑service institutions and others under the Social Security Act.
Operations directs and manages central office functions and those spread across the country. It oversees regional operating program, technical, assessment and program management activities. It directs studies and actions to improve the operational effectiveness and efficiency of its components. It promotes systems and operational integration and defines user needs in the strategic planning process. It determines automation support needs for office components. It oversees the coordination and implementation of SSA’s policies for the electronic delivery of agency services to the public.
Quality Performance is responsible for rendering formal advice and recommendations to SSA executives on a range of issues relating specifically to quality performance management in each of the agency’s core business areas. It works with deputy commissioner-level components to direct SSA’s quality performance management program, its policies and initiatives involving one or more components of SSA. It also provides oversight for SSA’s computer matching operations.
Systems directs systems and operational integration and strategic planning processes and the implementation of a comprehensive systems configuration management, data base management and data administration program. It initiates software and hardware acquisition for SSA and oversees software and hardware acquisition procedures, policies and activities. It directs the development of operational and programmatic specifications for new and modified systems and oversees development, validation and implementation phases.
Actuary plans and directs a program of actuarial estimates and analyses pertaining to the SSA-administered retirement, survivors and disability insurance programs and supplemental security income program and to projected changes in these programs. It evaluates operations of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund; estimates future operations of the trust funds; conducts studies of program financing; performs actuarial and demographic research on social insurance and related program issues; and estimates future workloads. It also provides technical and consultative services to the commissioner, the Board of Trustees of those two trust funds, and, as requested, congressional committees. It appears before Congressional committees to provide expert testimony on the actuarial aspects of Social Security issues.
Budget, Finance, Management directs SSA management programs, including budget, acquisition and grants, facilities management and publications and logistics. The office directs the development of SSA policies and procedures as well as the management of financial systems.
Legislative Affairs develops and conducts the legislative program of SSA, serves as the focal point for all legislative activity in SSA, analyzes legislative and regulatory initiatives and develops specific positions and amendments. The office evaluates the effectiveness of programs administered by SSA in terms of legislative needs and analyzes and develops recommendations on related income maintenance, social service and rehabilitation program proposals, particularly those which may involve coordination with SSA-administered programs and on other methods of providing economic security.
General Counsel advises the commissioner on legal matters, is responsible for providing all legal advice to the commissioner, deputy commissioner and all subordinate officers (except the inspector general) of SSA in connection with the operation and administration of SSA. The general counsel is responsible for the policy formulation and decision making related to the collection, access and disclosure of information in the records of the Social Security Administration and processing of Freedom of Information requests and appeals.
Communications
is responsible for SSA’s national public information/public affairs (PI/PA) programs. It performs SSA Press Office functions and provides guidance and direction from a PI/PA standpoint to the development of agency policies and decisions and assesses their potential impact on the public and SSA employees. It also creates and develops all SSA communications and PI/PA activities, both internal and external.
SSA provides benefits to nine out of ten individuals age 65 and older. Approximately 69% of benefits paid go to retired workers and their dependents, 17% goes to disabled workers and their dependents and 14% are paid to survivors of deceased workers. Social Security is primarily financed through taxes paid by employers and employees. Employers and employees pay 6.2% of their wages up to a maximum of $97,500, while the self-employed pay 12.4% of their wages. These taxes account for approximately 85% of the funding for social security and disability. The remaining 15% is composed of interest earnings from the federal government and taxation of social security benefits.
SSA also spends on private contractors to help it administer its programs and carry out its mission. According to USAspending.gov, the agency spent $5.4 billion from 2000-2008 on 10,557 contractors. The largest expenditures were for telecommunications services, including data storage on tapes and compact disks ($982 million), software ($400 million) system configuration ($378 million) input/output and storage devices ($320 million) and guard services $182 million).
The top 10 contractors were:
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Lockheed Martin
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$654,780,336
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IBM
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$280,101,792
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Dell Inc.
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$174,203,463
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Northrop Grumman
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$156,486,420
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Verizon Communications
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$142,987,328
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Vion Corporation
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$133,596,976
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Prudential Financial
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$113,074,876
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Softmart, Inc.
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$103,789,787
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Unisys
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$102,495,474
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Maximus, Inc.
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$89,651,275
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Bush Pushes Private Accounts to Solve Social Security Dilemma
Fresh off his reelection victory in 2004, President George W. Bush decided to make Social Security reform one of the hallmarks of his second term. With Republicans still in control of both houses of Congress, the President felt now was the time to make dramatic changes to the entitlement program to keep it from going bankrupt in the near future, as most experts project will eventually happen.
A key portion of Bush’s plan was to allow workers to divert a portion of their payroll taxes - money that’s currently used to finance the Social Security trust fund - into personal retirement accounts. This so-called partial privatization of Social Security was lauded by conservatives, but heavily criticized by Democrats and liberals. Critics asked how shifting money away from Social Security and into private accounts was going to help solve the pending insolvency problem for the entitlement program.
During the first several months of 2005, Democrats and Republicans debated the issue. The president warned against “scare tactics” in the debate. “We're not going to play political gotcha,” Bush said. “Now is not the time to make this issue a highly partisan issue.”
Democrats were united in their opposition to private accounts. Meanwhile, with GOP lawmakers in the majority, it was members of the President’s own party who also balked at implementing radical changes to what many experts referred to as the “third rail” of politics. By the spring, the reform plan was teetering, as lawmakers and the administration could not agree on ways to backfill Social Security coffers if money was diverted into private accounts. By the summer, the battle was over, as Bush began to back off creating private accounts, which angered GOP supporters, leaving little support of any kind for the reform proposal.
Same as It Ever Was: McCain Bashes Social Security
In June 2008, Republican presidential hopeful John McCain told a town hall meeting in Denver that the situation today with the way Social Security is operating is unacceptable. McCain told the audience, “Americans have got to understand that we are paying present-day retirees with the taxes paid by young workers in America today. And that’s a disgrace. It’s an absolute disgrace, and it’s got to be fixed.”
What McCain didn’t realize apparently was that’s how Social Security has always operated. Since its founding during the Great Depression, current workers have always paid the benefits of current retirees. The problem is one of demographics: the retirees of today (Baby Boomers) far out number the workers of today (Generation X), leaving the system in a serious cash-flow bind unless changes are implemented.
Social Security Judge Fired for Moonlighting
For three years, Kelly S. Jennings ruled on disability claims for the Social Security Administration while simultaneously serving as an active-duty lawyer for the Army.By doing so, Jennings helped add to the backlog of cases that SSA is struggling to process. As a result, a fellow administrative law judge ruled that Jennings should be removed from hearing Social Security cases.
Jennings worked in SSA’s Atlanta North office, known as the agency’s“backlog capital” of the country. With an average wait of 838 days, the office in May ranked as the slowest in the nation in resolving the appeals of people who say they are too sick or injured to work. Jennings made more than $300,000 a year working for both Social Security and the Army. SSA has sought to recover more than $309,000 in back pay and interest from Jennings.
Social Security disability backlog blamed on judge: Other job as active duty lawyer for Army hampered work, ruling says (by Ann Hardie, Atlanta Journal-Constitution)
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Founded: 1935
Annual Budget: $696 billion
Employees: 62,000
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Social Security Administration
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Astrue, Michael
Commissioner
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A native of New Jersey, Michael J. Astrue has served as the Commissioner of Social Security since February 12, 2007. His six-year term expires on January 19, 2013.
Astrue received his bachelor’s degree from Yale University. He then moved to Washington, DC, to work for US Sen. Richard Schweiker (R-PA) before attending Harvard Law School, where he received his JD.
Astrue clerked for US District Court Judge Walter J. Skinner before going to work for the Boston firm of Ropes & Gray. A year later he returned to Washington to serve as a deputy assistant secretary within the Department of Health and Human Services (HHS), and then counselor to the commissioner of the Social Security Administration from 1981 to 1989. He later rose to general counsel of HHS. While serving as general counsel, Astrue tried the first HIV discrimination case. He won the case against the hospital, Westchester County Medical Center, which had disclosed to a prospective employer that a job applicant had the virus.
During the transitional year 1988-89 between the Reagan and Bush administrations, Astrue served as associate counsel to the President. Briefly, he also was commissioned as the White House ethics officer at the time of the Iran-Contra affair. He also helped draft the operations plan for the incapacitation of the president, and he did background checks on cabinet appointees.
During the 1990s, Astrue worked in the biotechnology industry. He served as general counsel for Cambridge-based Biogen Inc., before moving to Transkaryotic Therapies Inc. (TKT), a biotechnology firm that develops gene therapy products for common and rare diseases. He handled two high-profile patent infringement cases. One was with biotech giant Amgen Inc. over TKT’s erythropoietin drug Dynepo. A judge ruled that TKT infringed on eight of the 18 claims made by Amgen. The other case was with Genzyme Corp. over TKT’s drug Replagal to treat Fabry disease. Eventually, Astrue took over the leadership of TKT, serving as president and CEO.
In October 2001, Astrue was the favorite to win nomination to be commissioner of the Food and Drug Administration, but withdrew his name after opposition from several Democratic Senators including his home-state senator, Edward Kennedy, who objected to Astrue’s strong ties to the pharmaceutical industry.
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