Big Social Security Bills in the Works With 2016 Cliff Approaching

Yes, it’s early, but Republicans in House and Senate want to lay the groundwork for action next year.

People line up outside of the Social Security Administration office February 2, 2005 in San Francisco, California. With an eye on his legacy at the start of his second term, U.S. President George W. Bush has ambitious Social Security reforms on his agenda. His 40 minute State of the Union speech, scheduled to be delivered at 9 p.m. tonight, is thought to be centered on controversial changes to the 70-year-old program.
National Journal
July 26, 2015, 4 p.m.

Con­gress is work­ing on le­gis­la­tion that would pack­age to­geth­er vari­ous re­forms to the So­cial Se­cur­ity dis­ab­il­ity pro­gram with the aim of avoid­ing a big be­ne­fit cut next year, ac­cord­ing to law­makers, con­gres­sion­al aides, and lob­by­ists in­ter­viewed by Na­tion­al Journ­al.

But many track­ing and work­ing on the is­sue ex­pect things to go down to the wire, and tem­pers are sure to flare over the third rail of Amer­ic­an polit­ics.

No fi­nal product ex­ists, and the House and Sen­ate likely will re­lease sep­ar­ate bills, but there is an emer­ging pic­ture of what the re­form le­gis­la­tion ul­ti­mately would look like. Changes to the ad­min­is­trat­ive-re­view pro­cess, work in­cent­ives, fraud pro­vi­sions, and some pi­lot pro­jects are among the items ex­pec­ted to make it in­to a bill that Con­gress hopes to pass to avoid a cata­stroph­ic 20-per­cent cut for those who re­ceive dis­ab­il­ity in­sur­ance.

So­cial Se­cur­ity’s dis­ab­il­ity fund, which cov­ers 10 mil­lion Amer­ic­ans, will be un­able to pay its full be­ne­fits start­ing in late 2016, the pro­gram’s trust­ees said last week. Re­pub­lic­ans on Cap­it­ol Hill have said that they won’t simply shift rev­en­ue from the much-lar­ger re­tire­ment fund to avoid the com­ing short­fall — they want to pur­sue changes to make So­cial Se­cur­ity more solvent.

Work is un­der way in both cham­bers, but those in­volved ac­know­ledge that Con­gress is likely to push right up against the dead­line. Some lob­by­ists fol­low­ing the is­sue said they don’t ex­pect ac­tion un­til the lame-duck ses­sion next year.

“It may be,” said Sen. James Lank­ford of Ok­lahoma in an in­ter­view at his of­fice. He plans to un­veil a re­form pack­age in the early fall. “I couldn’t be­gin to guess the tim­ing on that, but I don’t an­ti­cip­ate we’re go­ing to pass something in 2015. Be­cause every­body will say we still have six months to go or eight months to go. Why are we do­ing it this early?”

“I have zero con­fid­ence we will do any­thing early in Con­gress,” Lank­ford said. “The as­sump­tion for me is this is still go­ing to press till the end.”

Lank­ford’s start­ing point is a bill in­tro­duced in last year’s lame-duck ses­sion by his pre­de­cessor, Tom Coburn. The Coburn bill would have made a range of re­forms to the ad­min­is­trat­ive re­view pro­cess, from how at­tor­neys are paid to new rules for judges who over­see the pro­ceed­ings.

It also would have cre­ated a work-in­cent­ive pro­gram that would ad­just how much dis­ab­il­ity in­sur­ance a per­son re­ceives if they go back to work part-time. Lank­ford said he plans to in­cor­por­ate pro­pos­als from his work on the House Over­sight Com­mit­tee pri­or to his Sen­ate elec­tion, though he de­clined to be more spe­cif­ic.

On the House side, Rep. Sam John­son, who chairs the Ways and Means sub­com­mit­tee on So­cial Se­cur­ity, already has in­tro­duced some smal­ler bills, and Lank­ford said his staff is in reg­u­lar con­tact with the Texas con­gress­man. John­son’s bills would, for ex­ample, pre­vent people from re­ceiv­ing dis­ab­il­ity and un­em­ploy­ment in­sur­ance at the same time, tight­en rules for who can provide med­ic­al evid­ence for dis­ab­il­ity de­term­in­a­tions, and in­creases pen­al­ties for fraud.

Rep. Tom Reed, a New York Re­pub­lic­an who sits on the pan­el and has taken an act­ive in­terest in the dis­ab­il­ity cliff, said he an­ti­cip­ated that a more-com­pre­hens­ive bill would be in­tro­duced to­ward the end of this year or early next year.

“I think that gives plenty of time to avoid that in­solv­ency date and pro­tect be­ne­fi­ciar­ies from that 20-per­cent cut,” Reed said, “but at the same time, re­form this pro­gram and make it se­cure and bring back in­teg­rity.”

Com­bined, Lank­ford and John­son’s pro­pos­als point to what the Re­pub­lic­an Con­gress is look­ing to do. Ways and Means Chair­man Paul Ry­an, who is likely to be a ma­jor play­er as the con­ver­sa­tion con­tin­ues, has made work in­cent­ives a pri­or­ity; the full com­mit­tee held a hear­ing on the is­sue this month. Add in the ad­min­is­trat­ive re­forms, fraud pro­vi­sions, and some pi­lot pro­jects, and the frame­work of a bill starts to emerge.

The oth­er ex­pec­ted piece would be mov­ing tax rev­en­ue from the re­tire­ment trust fund to the dis­ab­il­ity pro­gram to ac­tu­ally avoid the 20-per­cent cut in 2016. That will still be ne­ces­sary even if Con­gress agrees on these re­forms, which one lob­by­ist said would be among the most am­bi­tious that Con­gress has at­tached to so-called real­loc­a­tion. Shift­ing money between the pro­grams has been done mul­tiple times in the past.

“There is no set of solu­tions that cur­rently ex­ist that I have seen any­where that keep us from go­ing in­solv­ent next year,” Lank­ford said. He ad­ded that Sen­ate Fin­ance Chair­man Or­rin Hatch and Demo­crat­ic Sen. Thomas Carp­er have also been in­volved on the is­sue.

“If we im­ple­men­ted all of the re­forms that I have and Sam John­son has and Or­rin Hatch has and Tom Carp­er has, if you took all of those and im­ple­men­ted today, we would still be in­solv­ent next year be­cause it takes so long to be able to roll those things out and get them in place,” he con­tin­ued. “So whatever we do, there will have to be some way to be able to add fund­ing or we’ll have a 20-per­cent cut to those that are in dis­ab­il­ity.”

Whatever le­gis­la­tion they come up with will face two tests: Does it do enough to con­vince Re­pub­lic­ans to sup­port real­loc­at­ing money and can it at­tract any Demo­crat­ic sup­port?

House Demo­crats re­leased a bill last week that would com­bine the dis­ab­il­ity and re­tire­ment funds to avoid next year’s cliff. The White House and oth­er out­side groups have also ex­pressed sup­port for a so-called ‘clean’ real­loc­a­tion, without any strings at­tached.

One Demo­crat­ic aide said they were un­nerved by re­cent com­ments from the AARP and what it might mean for the GOP’s plans. In a state­ment to Na­tion­al Journ­al last week, the in­flu­en­tial seni­ors group in­dic­ated it was open to the idea of “au­thor­iz­ing a loan between the trust funds” to avoid the 2016 cliff. The dis­ab­il­ity pro­gram would bor­row money from the re­tire­ment fund and have to even­tu­ally pay it back.

That concept is vig­or­ously op­posed by Demo­crats and oth­ers be­cause it would likely res­ult in the dis­ab­il­ity pro­gram fa­cing an­oth­er cliff soon. Some con­ser­vat­ive wonks, however, sup­port the policy for the same reas­on, hop­ing it would be the im­petus to a big­ger over­haul of So­cial Se­cur­ity.

“That’s def­in­itely our fear,” the Demo­crat­ic aide said. “We were hop­ing it wasn’t on the table be­cause it’s such a ter­rible idea “¦ It digs the hole deep­er.”

The oth­er likely con­cerns for Demo­crats and ad­voc­ates are changes to the big­ger re­tire­ment pro­gram and any cuts to be­ne­fits. Reed ad­dressed the former. “Right now, the fo­cus is on DI. Noth­ing go­ing onto the So­cial Se­cur­ity re­tire­ment side as of right now,” he said. “Just really fo­cus­ing on this ini­tial is­sue be­cause of the time-con­straint com­ing up in 2016.”

And Lank­ford ad­dressed the lat­ter.

“We’re not pro­pos­ing that and I don’t hear people pro­pos­ing, ‘Gosh, we’re giv­ing the dis­abled fam­il­ies too much money,’ ” he said. “I just don’t hear that.”

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