Thursday, September 02, 2010

Social In-Security

Social Security seems too good to be true.  When I reached retirement age a number of years ago. I  gratefully accepted the monthly benefit checks deposited into my bank account as a modern miracle, manna from heaven.  No matter that the FICA deductions from my salary over nearly 50 years of a working life were mandatory.  The end result was economic freedom at a time when age made me relatively unemployable.  I was lucky.  My income was a bit over $1,000 a month.  Although it kept me above the poverty line, you can't do much with that amount, just enough to pay rent on a tiny studio apartment, food and some entertainment.  The savings I had managed to put away, however, allowed me to travel, and eventually to move to Thailand where my monthly income was kingly.

Several weeks ago the Social Security Administration (SSA) celebrated its 75th birthday.  Congress passed the authorizing act as part of Franklin Delano Roosevelt's New Deal and it was signed into law in 1935.  According to one commentator, "The hope behind this statute is to save men and women from the rigors of the poor house as well as from the haunting fear that such a lot awaits them when journey's end is near."  It provided benefits to retirees and the unemployed and a lump sum benefit at death and was financed by a payroll tax on current workers' wages with half paid by employers.  In the beginning for various reasons most women and minorities were effectively excluded from benefits.  In 1937, after FDR packed the Supreme Court, the act was declared constitutional.  Payroll deductions went into a trust fund managed by the Secretary of the Treasury and coverage was gradually extended during the next thirty years. 

Social Security is an insurance program funded through payroll taxes.  In 1939, taxing provisions were taken out of the act and placed in the Internal Revenue Code and renamed the "Federal Insurance Contributions Act" (FICA) The main part of the program currently is Old-Age, Survivors, and Disability Insurance (OASDI).  For over 28 years, workers have paid in more than retirees have received and the extra money has gone into a trust fund that holds government bonds.  The OASDI trust fund had $24.5 billion in 1982 and it has ten times that much now, $2.45 trillion as of last year.  It is predicted to grow to $4.2 trillion in 2024.  More than 58 million people receive some sort of benefit from SSA which paid out nearly $700 billion to elderly and disabled Americans last year.  Sounds secure, right?

The average retired-worker benefit is nearly $14,000, a few thousand a year over the official  poverty guideline for a older single person, and nearly 15 per cent of retirees depend on Social Security as their sole source of income.  And yet that security net is threatened by politicians in Washington who see the Trust Fund as a resource to be plundered and earned benefits as carrot that can be extended or withheld to promote a hardline criminal justice agenda.

Just recently, Alan Simpson, the cantankerous retired Republican senator from Wyoming, called Social Security "a milk cow with 310 million tits."  The 79-year-old Simpson, certainly wealthy enough not to need to feed at the public trough, is co-chairman of President Obama's National Commission on Fiscal Responsibility and Reform,  which is tasked with the job of putting the faltering American economy back in the black.  The government has been borrowing recklessly from Social Security's Trust Fund for years, a legitimate debt which must eventually be paid back, and some fiscal conservatives seek to blame the $13 trillion national debut (increasing at $1 trillion a year) on social programs like Social Security and Medicare.  They want to cut benefits or raise the retirement age, and a few continue to seek privatization, arguing that the Trust Fund will be empty in 2037.  According to economic commentator William Grieder, the government "borrowed the money from us and spent it on other things.  Starting with Ronald Reagan, the federal government ran massive deficits on its own budgets and borrowed the savings from Social Security to pay for wars and military buildups, regressive tax cuts for the wealthy and corporations among other things."

Republicans, libertarians and others have long stoked fears that Social Security will soon go bankrupt.  Most seniors like me are concerned but believe that eventuality will probably not occur until long after we are out of the system.  But there is another reason why retirees could lose their supposedly secure income years before bankruptcy.  The SSA is currently denying benefits to seniors with an outstanding felony warrant on their record, a flawed policy now being challenged in the courts by public interest law groups.  Rosa Martinez, of Redwood City, CA, had her benefits stopped in 2008 when her name and birth date matched that of another woman sought by a 1980 drug warrant in Miami.  But she had never been to Miami and the fugitive was eight inches taller.  A Florida man lost his benefits because of a Texas warrant for a $300 bounced check, classified as a felony because the state had not updated the old law to account for decades of inflation.

The policy of denying Social Security income to "fugitives fleeing to avoid prosecution" is the result of the congressional welfare overhaul reform of 1996.  It was extended to include disability and old-age benefits in 2005.  Hundreds of thousands were targeted by matching names and Social Security numbers to a national warrants database.  In addition to denying future income, SSA billed for "overpayments" from the date the warrant was issued.  Those so accused were also billed for Medicare and lack of funds meant termination.  However, due to errors in the database, many were neither fleeing nor felons.  The first time most of them learned of the warrant was in the letter from Social Security informing them that their income had been suspended.  The National Senior Citizens Law Center (NSCLC) filed suit in Oakland in 2008 in the name of Rosa Martinez on behalf of an estimated 250,000 Social Security recipients who had lost $700 million in benefits, and argued that the database was filled with errors and the existence of a warrant proved neither flight or guilt. 

They won in Federal Court.  But that unfortunately is not the end of the story.  In the "Martinez settlement," the SSA agreed to deny benefits to an individual only if the outstanding felony warrant was issued for one of the following offenses: Escape, flight to avoid prosecution, confinement, etc., or flight-escape (each with a different offense code on the national database).  According to the settlement, benefits cannot be suspended only because of a felony warrant.  Besides actually escaping from custody, the warrant can only be for a violation of probation or parole.  Court decisions, however, are easier to make than to be enforced.

I received two letters from Social Security in May.  Although they were dated in March and April, they had been forward to me here by my son in California.  Besides informing me that I no longer had an income, the SSA  requested $7,047.40 in "overpayments" received since a warrant for me had been issued last November, and billed me $386 for three months of Medicare payments.  That deadline was yesterday, and now I've been terminated from the medical system for non-payment.  I've been told by Social Security representatives that there is no way to appeal the decision; only resolving the warrant will do, a prospect now made impossible by the loss of income.  I've been told by a lawyer for the NSCLC that I should be included in the Martinez settlement and my benefits returned, but there is apparently no means of enforcement.  The SSA is clearly evading the settlement by continuing to suspend benefits for a wide variety of felony warrants not limited to flight from prosecution.  If I were living in California, I would have easy access to legal aid societies and public defenders who might take up my case.  There is apparently nothing available for an expat determined to remain in the country of his choice.

I did not intend this to be a debate of the details and merits of my case, but rather to serve as a warning to those who think Social Security, despite the distant threat of bankruptcy, is secure.  If it can be used as an arm of the police, retirees could have their benefits suspended for a variety of violations, real and imagined.  Do you owe money to creditors, or perhaps back taxes?  In your youth did you fail to pay child support or money to an ex-spouse?  Once Social Security becomes politicized, it can be used as a weapon for numerous causes.  Despite AARP and numerous social services agencies, people surviving on Social Security tend to be weak and almost powerless.  Many are frail and feeble without any help to challenge City Hall.  As the suit by NSCLC noted, a large number of those denied benefits are the poor and people of color who are disproportionately represented in the criminal justice system.  They came for me today.  They could come for you tomorrow.


Anonymous said...

Scary shit, Will. I become eligible for Social Security in about two weeks, and I plan to start taking payments immediately, simply on the grounds that you never know what will happen to the program in the near future. But the idea that benefits could be wrongly terminated because of bullshit in a database somewhere never occurred to me.

--Jim Aikin

Anonymous said...

Fascinating post.
Thanks for this.

All the best, Boonie

Ellen S said...

Great post. NOBODY ever brings up the fact that Congress can and does use SS funds for other purposes when the impending short fall is cited. I wonder how much they owe the trust? I bet it significantly extends the viability of the trust.

The notion of privatizing SS as Bush wanted to do is horrifying. Can you imagine if that fund had been a victim of the recent market "downturn"?