Rectal Rhetoric From Senators Coburn & Hatch About SSDI Beneficiaries

This post has been edited to correct an error and to expand on ALJ decisions.

Senators Orrin Hatch (R-UT) and Tom Coburn (R-OK) are worried. They’re all sick and nervous about the Social Security Disability (SSDI) program. According to Senator Coburn, the “growth in this program has been horrendous.” The specific worry which is causing them to have the heebie jeebies is that some people may be using the program, again according to Senator Coburn, as “an extension of unemployment benefits.”
This delusion has caused them to request a meeting with Social Security Administration Inspector-General Patrick O’Carroll, Jr. They reportedly want him to look into why the number of people receiving SSDI benefits has increased and the “morphing of SSDI into long-term unemployment compensation at taxpayer expense.” Their words.

Let’s see if we can calm the Senators’ anxieties just a little bit.

First of all, there is a real problem here, but it one that the Social Security Administration has planning for for many years. The baby boom cohort (those born between 1946 and 1964), some 75 million people, is aging. The number of workers in the baby boom cohort is about half of the entire civilian labor force. The oldest of them (those born between 1946 and 1949) can file for early retirement now. Many have already done so.

The big bulge between 1946 and 1964, which is in blue, is the baby boom cohort. As I just said, they are approaching retirement age now. This is not a secret and never was.

In the early 1980s, a Republican President and a Democratic Congress, realizing that something had to be done, compromised and passed a series of amendments which were designed to guarantee long term solvency of Social Security. Please see my post Cuts To Social Security – It’s Been Done Before for details. I agree that the tone of that post is a little negative. I am beginning to see that the negotiators actually did a pretty good job. One intended effect of those amendments was a huge increase in the trust funds, which was meant to pay for the baby boomers when they retired, or became disabled prior to retirement. The last baby boomer will reach full retirement age (which will be age 67 by that time, under current law) in 2031. The Old Age And Survivors Insurance (OASI) Trust Fund will run out in 2036 or 2037, having served its purpose. Unfortunately, after the trust fund runs out, there will only be enough income coming into Social Security to pay about 75% of benefits due. Action does need to be taken to protect the beneficiaries who will be on the rolls at that time. The sooner Congress and the President take action, the easier it will be. I disagree very strongly with Senate Majority Leader Harry Reid, who said a couple of months ago that now was not the time to try and fix something that won’t happen for twenty-five years. He is wrong. If we wait until the trust fund is nearly or entirely gone, fixing things will be very expensive and will cause immediate and severe pain to a lot of Americans.

As I said, the negotiators did a pretty good job, but it was impossible for them to achieve a perfect result. It was impossible to predict, from the vantage point of 1983, what the economy would be like nearly 30 years later. They had no way to know just how irresponsible President George W. Bush and the Congress, which was under Republican control during the first six years of the Bush presidency, would be. Nor could they have foreseen the near collapse of the US economy and the resulting high and intractable unemployment we have had since then.

About 13.9 million people are unemployed and receiving unemployment benefits. These workers comprise 9.1% of the overall labor force. Neither these unemployed workers nor their non-existent employers are paying any FICA taxes into the trust funds, which forces Social Security to cash in its Treasury securities to a greater degree than the 1983 negotiators planned for. The Treasury Department has to repay Social Security upon demand. This is getting much harder now, because of all the political haggling over the budget deficit and the national debt.

When George W. Bush became president on January 20, 2001, the national debt was about $5.7 trillion. When he left office eight years later, the national debt was $10.6 trillion. Most of this increase was due to four things Bush and the Congress did from 2001 through 2006 – the Bush-Era Tax Cuts, the war in Afghanistan, the war in Iraq, and Medicare Part D. None of these things were paid for; they were just stuck onto the deficit. And they are the gift that keeps on costing. The Bush-Era tax cuts continue to add $370 billion per year to the annual budget deficit. Medicare Part D adds about $150 billion per year. The various wars the US is involved in now add about $120 billion per year. Before the draw-down in Iraq, this amount was higher. Another 2 1/2 years of these costs, the Bush Wall Street bailout, and the Obama Stimulus package, and we arrive at the current national debt of $14.3 trillion.

It is important to point out that the four Social Security trust funds (OASI, DI (Disability Insurance), HI (Health Insurance (Medicare Part A)) and SMI (Supplemental Medical Insurance (Medicare Part B)) together comprise about $2.95 trillion. This money has all been invested in Treasury securities, as the law requires, which, in effect, means it was loaned to the Federal government. This money is already part of the overall national debt. Now that all four programs are paying out more than their income, the government is obligated to repay what it borrowed from the four trust funds. They can do this one of three ways, increasing taxes (either FICA or other taxes), particularly on the rich and on wealthy corporations, cutting benefits, or borrowing other money from somewhere else (which is revenue neutral as far as the national debt is concerned, but not a good thing to do.) The only option that Republicans will consider is cutting benefits, which will do absolutely nothing to reduce the national debt, but will reduce pressure on the government to repay what it has borrowed. This is the real reason for Senator Coburn’s and Senator Hatch’s anxiety. If they can throw some people off SSDI or make it even harder to get SSDI at in the first place, they will be much happier.

But what they are using as basis for their argument is just a variation of Big Lie #3. Their twist on this is that workers who have been unemployed for a long time and whose benefits have run out or are about to are somehow just switching to SSDI. The two programs are entirely different. UIB pays temporary benefits to workers who have become unemployed through no fault of their own. SSDI is only paid to people who meet SSA’s definition of disability, which means they have have a medically determinable physical or mental impairment, which has lasted or is expected to last for at least a year or result in death, and which prevents them from engaging in substantial work.

As I mentioned earlier, the two Senators are concerned about the “horrendous growth” in the number of disability beneficiaries. They are also concerned that the percentage of disability beneficiaries has risen from 13% of the total number of beneficiaries in 2003 to 17% in 2009. We can assuage their anxiety but unfortunately not their hypocrisy or use of Big Lie #3.

Many people in their 40’s, 50’s, and early 60’s begin to develop disabling conditions, which they ignore and keep working. Let’s call them Group A. Others can no longer work, and file for disability. Let’s call them Group B. Both groups are increasing in number as the baby boomers age. This year, boomers range from age 47 through age 65. Roughly half the labor force are baby boomers and the other half are younger. Most people older than the baby boomers have already retired and are collecting their benefits.

When the 1983 Amendments were passed, the negotiators were aware that the number of people in groups A and B would increase in the early 21st century. Between 1983 and 1999, the allocation of FICA taxes between the OASI and DI trust funds fluctuated considerably. Finally, in 2000, the allocation settled at the current rates of OASI at 5.3% and DI at 0.9%. In 1984, the portion allocated to the DI trust fund was 0.5%. With the steady increase in the number of workers in Group B, the number of disability claims has increased. This was anticipated. In a few years, the percentage of the overall beneficiary universe who receive SSDI will begin to decrease as more and more boomers become eligible for and filed for retirement.

The Group A people were not as well anticipated. I would expect that anyone in Group A who lost his job has filed for disability. But filing for SSDI is a long way from being approved. Currently about 65% of initial disability claims are denied. The majority of cases appealed to the first level, reconsideration, and the third level, Appeals Council review, are also denied. At the second level of appeal, a hearing before an Administrative Law Judge (ALJ), about 70% of denials are reversed to allowances. The chart below is based on a 2001 study but the approval/denial ratios are still about the same.

The Senators, in their letter, said they were concerned that some judges were approving appeals at unrealistic rates. They said, “Given the looming collapse of (the Social Security Disability Income program), it is imperative that disability claims are properly examined to ensure that only those who are lawfully entitled to benefits receive them.” Apparently, the triggering factor for the Senators’ letter was a story in The Wall Street Journal about a judge in West Virginia who approves nearly every one of the appeals he hears from people who were first denied disability benefits.

This is a link to a table showing the the denial rate for all 1,413 ALJs who issued decisions from 2005 through 2008. The average denial rate was about 28%, which means that the rate of reversal to an allowance was about 72%. About half of the ALJs exceeded this average reversal rate and about half were under it. Are Social Security’s Administrative Law Judges fair? The table is sortable; see for yourself.

I have sorted the data in deciles, each corresponding to a 10% denial rate. You can see from this table that nearly half of the ALJ’s have denial rates within about 10% of the average denial rate (the actual count from 18% through 37% is 620.)

Decile Percentage # ALJ # Decisions # Denied
0.0 – 9.9% 191 191704 11000
10.0 – 19.9% 269 365757 56141
20.0 – 29.9% 345 431089 109002
30.0 – 39.9% 299 392309 136392
40.0 – 49.9% 167 203820 90849
50.0 – 59.9% 87 106675 57661
60.0 – 69.9% 24 29283 19075
70.0 – 79.9% 14 14973 11117
80.0 – 89.9% 2 1418 1144
90.0 – 100% 4 634 591

Why the large disparity? One poster on a discussion forum devoted to ALJ improvement put it this way:

The disparity is easily explained. This is a quasi legal inquiry and lawyers/judges view the facts and regulations through their own lens. The biggest example is how one group finds a right to abortion in the Constitution, another doesn’t. Same document, no?

Some lawyers/judges read the regulations more narrowly than others that leads to the disparity. The most egregious fringe elements probably have some other concerns, but generally the lawyer/judge that allows 75% simply views the regulations in a more claimant favorable light (social support), as a matter of legal interpretation, more or less. The 30% allowance attorney/judge has a less claimant favorable interpretation (taxpayer protection and/or greater demand of a work ethic) of the relevant regulations, even assuming the same facts. That is the nature of the law, and when you do 100,000 cases it is just a little more evident.

Like judges everywhere, they work from their interpretation of the law. Another factor is that the ALJ is the only decision maker who actually sees the applicant face to face. Initial claims and reconsideration decision makers, who are state employees who make these disability decisions never see the applicant. They are also bound by what SSA says the law and implementing regulations mean. The ALJs are not. The Appeals Council exists to insure that the ALJ’s decision was legally sound and supported by evidence contained in the case file.

The Senators also commented on the Social Security Administration requirement to do regular reviews to ensure those collecting the payments still deserve them. But the agency’s inspector general estimated that the backlog of Continuing Disability Reviews would reach 1.5 million this year and that more than $1 billion may be paid out to people who don’t deserve the benefits. Of course, both Senators support cutting SSA’s funding and staff to 2008 levels, which will slow everything down, including Continuing Disability Reviews.

Lastly, Senator Coburn had a touching personal anecdote which he included in the letter. He hired a man in his hometown of Muskogee to do some yard work. The man told him that he was collecting Social Security disability payments. What does this prove, anyway? The man did a little casual labor. Unless this is his business, in which he performs significant services and receives substantial compensation, it is completely immaterial. Another point to consider. Coburn doesn’t say what the man’s disability was. It could have been mental, or metabolic, or be a chronic condition. Nothing in what Coburn said about this man indicates that he is receiving SSDI benefits incorrectly. It’s like Ronald Reagan’s welfare queen and her Cadillac.

To close, I will repeat something former Representative Alan Greyson (D-FL) said during the health care debate, changing just a couple of words to fit the current situation.

The Republican Plan For Saving SSDI

1. Don’t become disabled,

2. If you do become disabled…

…die quickly.

This entry was posted in Big Lies About Social Security, Disability Benefits (SSDI), Political Events Affecting Social Security. Bookmark the permalink.

9 Responses to Rectal Rhetoric From Senators Coburn & Hatch About SSDI Beneficiaries

  1. Sarah says:

    Regarding the “raising FICA taxes on wealthy corporations”, there’s no way to target a company and say… you MUST pay more of your employees FICA taxes than that company next door. So when you target businesses, you’re hitting small businesses as well. I own a small business. I pay the full FICA amount for myself and my husband. I also pay half of my employees FICA. Should I be paying more? I’m already paying more than my “fair share”.

    • ssapotluck says:

      I don’t believe I said anything about raising FICA taxes on wealthy corporations. It makes no sense. I do believe that corporations have access to a great many tax loopholes that allow obscenities like GE to have no tax liability on a net income of billions of dollars, or huge, highly profitable corporations like Bechtel or Koch Industries or the Tribune Company to be classified as “small businesses,” which they clearly are not. This is a Republican meme, and like all such Republican memes is meant to distort the facts. Making big corporations (which masquerade as “small businesses” pay real, higher income taxes on their profits has nothing to do with FICA, nor with legitimate small businesses such as yours sounds like.

      Let’s look at your small business. You and your husband run the business, and have employees. You pay “the full FICA amount” on yourselves, and pay the employer’s portion for your employees. I am guessing that you are a sole proprietorship filing on a Schedule C. The cap on earnings subject to FICA withholding is $106,800.for the OASI and DI trust funds and is unlimited for the HI trust fund. I have never encountered a Schedule C business where the owners netted this much, or paid this much to their employees. Raising the FICA cap to 90% of wages over a period of time from where it is now (about 83%) would be immaterial to such businesses.

      Additionally, the employer part of FICA taxes you pay on your employees is a business expense, deductible on the schedule C. One half of your Self Employment Tax thatt you pay on yourselves (actually a little more than half in 2011) is subtracted on your schedule A when determining your AGI.

  2. scared says:

    Being on SSDI and now in my mid-50s and alone (no family/support), I am TERRIFIED of losing SSDI. It is the only way I survive. If I could work, I would, believe me. I have multiple “invisible” disabilities for the most part. With the budget talks now going on which I don’t even pretend to try to fully understand, it just sounds like Congress wants to get get rid of the disabled, then they’ll probably go after the elderly. Well they already are trying to talking about cuts to medicare but raising the monthly cost. Things are so scary for so many of us. We don’t know what to do or where to turn. Thanks for your blog and your work and research. I still don’t get everything you’ve written with the math stuff, but I get it that we’re not wanted, and I already feel like I wasting space or a burden. Guess they feel the same way.

    • ssapotluck says:

      Thank you for your comment. You have every right to be scared. These are scary times. Both the Democrats and the Republicans are saying things in the media to try and make the public more frightened of the other party’s policy proposals. This is not a new tactic; it is just the same old tired melodrama that has been going on pretty much the whole time this country has been in existence. It seems worse now, because that is immediate to us. But in the end, it will turn out to be nothing more than empty rhetoric and a lot of bluffing.

      SSDI isn’t going anywhere. No one has even proposed any cuts to it. The only things I have read as possible proposed cuts are 1.) a change to the method by which COLAs are calculated; 2.) raising the full retirement age from 67 to 69 and the early retirement age from 62 to 64, to be phased in from 2027 to about 2075; 3.) raising the Medicare eligibility age from 65 to 67, phased in over an unspecified period of time; and 4.) raising the cap on covered earnings so that 90% of wages are covered (as opposed to about 83% now), to be phased in over an unspecified period of years. That’s it. Believe me, I’ve Googled on this every night, and that is all that anyone has said. The backlash must be ferocious, because no one has said anything specific for about a week now.

      Both Speaker Boehner and particularly Senate Minority Leader McConnell have begun to backtrack their rhetoric. They will probably be arguing about the FY 2012 budget well past October 1, when FY 2012 begins, but the debt ceiling will be decoupled from the budget argument and raised very soon. Wall Street will not permit their bought and paid for Congressmen and Senators to allow default and cost them billions of dollars. Wall Street owns a lot of the national debt — they won’t accept late interest payments. And 70 million or so Americans who receive monthly benefit checks from Social Security or other programs won’t accept late payments caused by patently obvious partisan bickering.

      I understand fully your concept of “invisible” disabilities. My wife has multiple “invisible” disabilities as well. My disability is only visible at all because I have to use a walker. But it doesn’t matter if your disability, or my wife’s disability, or mine are all invisible; they are still real. And none of us is a waste of space. Fight back. Call your Congressman and your Senators. Tell them that you will not accept cuts in Social Security or Medicare or Medicaid. Tell them that the real solution is raising taxes on millionaires, billionaires, and corporations, all of whom are obscenely undertaxed. Tell them that how they vote on the 2012 budget will affect how you vote in 2012. There are a huge number of Americans who are realizing now how they are being screwed by their elected representatives, and they are mad. I think 2012 will be a bloodbath for the Republican Party, and their anti-American policies.

      It is very important to contact those representatives who are most opposed to entitlement programs. What they want most is power, and anything that threatens their power, such as angry constituents, will demand their attention. The millionaires and billionaires and corporations have most of the money, but there are over 150 million voters. We outnumber them by an enormous margin.

  3. Thank you for writing this. I’m so sick and tired of the scare tactics and the targetting of the sections of society that have already had everything wrung out of them and who cannot protect themselves by the body politic. It’s nice to finally find a site that hashes out what’s really going on, good, bad or ugly, for those who need to know.

  4. KURT MYERS says:

    I am a 62 year old male on SSDI with numerous chronic diseases and an August 2006 onset date for disability.. I am impressed with your comentary, facts and graphs as well as your response to the ignorant members in the Washington replubican party… I sincerely hope that the republicans are run out of Washington in this next cycle… Religion and the extreme right ideology in politics can not coexist…

    • revenuer says:

      Mr. Myers,

      Thank you for your comments. We also would like to see the Republicans and others who oppose social programs turned out of office. These programs belong to all of us and should be available to those who need them to enable them to live a healthy and peaceful life without fear or worry of tomorrow.

      Potluck and I think that the most conservative members of government will be turned out and we are writing to and calling conservatives, moderates and progressives to express our hopes and expectations. If you feel that you can do this, it could be of great help. We are finding and intend to post links to phone numbers, email addresses and regular mailing addresses as quickly as we can if you want to avail yourself of them.

      As to their putative “religion” which they are trying to force on everyone, let me share a quote with you that I picked up while posting in a political forum. “This is my country, not your church.” Many religions or no religion at all can exist side by side. It is a personal choice. But our constitution calls for separation of church and state and that is the law which should bind the government.

      Again, thank you for your erudite and well expressed comments.

      • kurt myers says:

        I sincerely wish you and yours a happy, safe holiday(s) and many more to come. Peace and good health to you and to all.

      • ssapotluck says:


        Thank you so much for your kind wishes. They mean a lot to us. Revenuer and I would like to express the same wishes back to you. We will hold you in the light.

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