Administering Social Security: Challenges Yesterday and Today
Administering Social Security: Challenges Yesterday and Today
by Carolyn Puckett
The author is with the Office of Research, Evaluation, and Statistics, Office of Retirement and Disability Policy, Social Security Administration.
Acknowledgments: The author wishes to thank the many people in SSA who helped her locate material and those who reviewed her paper and suggested improvements. Special thanks to Susan Grad for her help and patience and to Larry DeWitt, SSA's historian, for sharing his knowledge.
|ALJ||administrative law judge|
|AWR||annual wage reporting|
|BDI||Bureau of Disability Insurance|
|BDP||Bureau of Data Processing|
|BOAI||Bureau of Old-Age Insurance|
|BOASI||Bureau of Old-Age and Survivors Insurance|
|CDR||Continuing Disability Review|
|CMS||Centers for Medicare and Medicaid Services|
|DA&A||drug addiction and alcoholism|
|DAO||Division of Accounting Operations|
|DDO||Division of Disability Operations|
|DDS||Disability Determination Services|
|DOC||data operating center|
|DOL||Department of Labor|
|EIN||employer identification number|
|FSA||Federal Security Agency|
|GAO||General Accounting Office|
|HEW||Department of Health, Education, and Welfare|
|IBM||International Business Machines|
|IRS||Internal Revenue Service|
|MCS||Modernized Claims System|
|OASDI||Old-Age, Survivors, and Disability Insurance|
|OASI||Old-Age and Survivors Insurance|
|PSC||program service center|
|RRB||Railroad Retirement Board|
|SMI||Supplementary Medical Insurance|
|SSA||Social Security Administration|
|SSI||Supplementary Security Income|
|SSN||Social Security number|
They said it couldn't be done. In 1935, the Social Security Board, predecessor of the Social Security Administration (SSA), started to plan the implementation of the Social Security Act. Board administrators contacted European experts who were experienced with such programs. The experts replied that it was impossible to maintain a system for tracking individuals' earnings histories of the scope proposed for the United States (McKinley and Frase 1970, 20–21; SSA 1997a; SSA 1964a). Despite these pessimistic assessments, the Board persevered, and the Social Security program was successfully launched 75 years ago this month—and while the agency may have stumbled a few times during its 75-year history, it is still on its feet and getting the benefit payments out via the Treasury Department every month. In fact, SSA has never missed a month of sending the payments out on time.
SSA is an efficient agency with very low administrative costs of 0.9 percent of total expenditures (Board of Trustees 2009). Agency employees have a very well-defined sense of the agency's mission, and SSA constantly strives to improve its service to the public.
Today, SSA faces many challenges. Nearly 80 million baby boomers will file for retirement benefits over the next 20 years, an average of 10,000 per day (SSA 2008e). The agency was already struggling with a backlog of disability claim hearings when the 2008 recession hit. The recession compounded the agency's problems because the number of individuals filing for retirement and disability benefits increased. In addition, some states furloughed the SSA-funded state employees who make disability determinations for Social Security claimants. Keeping abreast of the latest technology on a restricted budget has also been a problem. The agency is exploring solutions, such as deploying Internet-based applications that enable claimants and third-party helpers to file applications for benefits and take certain postentitlement actions themselves, freeing SSA employees for other tasks.
Nevertheless, in reviewing the SSA Annual Reports to Congress over the past 75 years, one is struck by the frequency with which the section on administering the programs starts out with a sentence such as "SSA has had a very challenging year." Reviewing some of the major challenges that SSA has faced over the years, and how SSA has met them, seems appropriate as the agency prepares to meet its current challenges.
Over the past 75 years, SSA's responsibilities have involved programs as wide-ranging as unemployment insurance, child welfare, and credit union supervision, among others. This article deals largely with administering the Old-Age, Survivors, and Disability Insurance (OASDI) program. Over the years, SSA has been tasked with administering other major programs in addition to OASDI—in particular, Medicare, Black Lung benefits, and Supplemental Security Income (SSI). This article also covers the challenges of administering those programs.
The article is not comprehensive—space constraints do not permit an exhaustive account of the many challenges the agency has faced. Also, of necessity, descriptions of legislative provisions and program policy rules are somewhat generalized. This article is meant to give the reader some sense of the scope of the programs that SSA administers and of the challenges that arise in administering such programs.
President Franklin Roosevelt signed the Social Security Act on August 14, 1935, establishing a three-person Social Security Board to administer a program of old-age retirement benefits based on a person's earnings history. The collection of payroll taxes was to begin on January 1, 1937, and the Board had to be prepared to keep records of the earnings on which those taxes were paid. So, the Board had less than 17 months to set up a recordkeeping system unparalleled in history. This would be a daunting task even if everything went smoothly, which of course it did not.
The first challenge the new agency faced was the absence of a budget. Senator Huey Long (D-LA) staged a filibuster on the closing day of the Senate session while the last deficiency appropriation bill, which included the Social Security item, was still pending. The session closed without an appropriation (Altmeyer 1966, 44). Given its deadline, the Social Security Board could not wait until the next legislative session to begin its work. The solution was to have the Federal Emergency Relief Administration, which had funded the President's Committee on Economic Security as a research project, set up another research project to develop ways and means of putting the Social Security Act into operation. Also, as the National Recovery Act had been declared unconstitutional in May 1935, the National Industrial Recovery Administration was liquidating and was "only too glad" to transfer office equipment and personnel to the Social Security Board (Altmeyer 1966, 44).
Building the Structure
First meeting of the Social Security Board, September 14, 1935. Left to right: Arthur Altmeyer; Board Chairman John G. Winant; and Vincent Miles.SSA History Museum & Archives. The original structure of Social Security operations, created in December 1935, included three operating bureaus: Public Assistance, Unemployment Compensation, and Old-Age Benefits. The Bureau of Old-Age Benefits was responsible for Title II of the Social Security Act, providing for an old-age retirement benefit. Its functions included maintaining wage records, supervising field offices, examining and approving claims, and developing actuarial estimates. There were also five service bureaus: Accounts and Audits, Business Management, Research and Statistics, General Counsel, and Informational Service (Davis 1950, 53; SSA n.d. c).
Hiring workers to supplement the staff inherited from other agencies was another challenge. The Supreme Court declared the Agricultural Adjustment Act unconstitutional on January 7, 1936, calling into question whether Social Security would survive a legal challenge and discouraging job applications. Furthermore, a civil service register of eligible applicants was not yet available. The Board made extensive use of an exception to the requirement to hire from the register—an expert and attorney exemption clause—in order to make timely hires and circumvent salary restrictions. The Civil Service Commission limited to about 100 the number of field officers who could be hired under the expert clause, and friction soon developed when the Commission started questioning the Board's proposed classifications of workers. The Board also faced pressure from Congressmen to accept political appointments. Although a few compromises were made, the Board generally held fast against hiring those deemed unqualified (McKinley and Frase 1970).
Hiring for the Bureau of Old-Age Benefits was particularly hampered; as late as March 15, 1936, the Bureau had only five employees, including the director and his assistant. By June 30, 1936, the Board had hired 677 employees for its central office in Washington and only 71 for the field. It would be December 2, 1936, before the Civil Service Commission delivered a civil service register for the Bureau of Old-Age Benefits to use (McKinley and Frase 1970).
By December 2, 1935, the Board had established a Field Organization Committee to study problems and recommend ways to establish regional and field offices of the Bureau of Old-Age Benefits (Davis 1950, 117). The Field Organization Committee recommended locations for 12 regional offices, but the Board sometimes made "capricious and unfortunate changes" either to ward off or to satisfy pressure from senators, the White House, or Board members themselves (Davis 1950, 63; McKinley and Frase 1970, 96–102). The same was true for field office locations, with Congressmen appearing before the Board to plead the cause of specific cities (Zwintscher 1952, 70). In fact, when the Board temporarily decided to cancel one Senator's home town as a field office location and also resisted hiring an unqualified protégé of his, the incensed Senator attached an amendment to the Board's 1937 appropriations limiting...