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How cuts to Social Security Administration will hurt you

“Starving the beast” is a favorite conservative strategy for forcing cuts in federal spending. The idea is to deprive the government of revenue in order to force spending cuts – and resistance to new taxes is a central feature of the current

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Super Committee

deliberations in Washington.

Advocates for older Americans are watching closely to see how the committee’s work might lead to retirement benefit cuts via a higher Social Security retirement age, smaller cost-of-living adjustments or higher Medicare eligibility ages. Meanwhile, a separate starve-the-beast exercise goes mostly unnoticed: a big squeeze on the administrative budget of the Social Security Administration (SSA).

The SSA is funded through the same Federal Insurance Contributions Act (FICA) tax that pays benefits, so it doesn’t compete for general revenue to meet its costs. But Congressional appropriators — who oversee its budget — have been squeezing the agency anyway.

In fiscal 2011, Congress provided the SSA with about $1 billion less than requested by President Obama. Those cuts forced the agency to make cuts that beneficiaries have noticed. It suspended mailing of the annual statement of benefits, and it shelved plans to open eight new hearing offices to handle the backlog of disability claims, which has soared during the recession.

SSA had planned to restore the statement mailings in fiscal 2012 to people over age 60 not yet receiving benefits  – but that won’t happen “if Congress doesn’t provide adequate support,” says SSA spokesman Mark Hinkle. (The agency currently is operating under the second continuing budget resolution for FY 2012, which expires Nov. 18.)

This may sound insignificant, but it’s not. The benefit statement provides a valuable annual reminder of what you can expect to receive and how benefits are calculated – and it prompts us all to make Social Security part of our long-range retirement plans. For now, the alternative is to use the SSA’s online Retirement Estimator, which gives you a personalized projection of future benefits.

Hinkle says the SSA also has responded to the tight budget by reducing employee overtime by 80 percent. That has cut into the amount of time available to help people who come into SSA local field offices for face-to-face services. The agency also lost about 1,600 workers last year who can’t be replaced due to a hiring freeze.

Another major concern is processing of Social Security disability claims, which have soared in recent years. Unlike retirement benefit applications – which are handled in near-automatic fashion – each disability application is reviewed for approval. The average time for processing claims had peaked at 532 days in 2008, but SSA had cut that back to 346 days as of September this year through increases in the capacity to hold hearings. In FY 2011, the agency issued nearly 800,000 hearing decisions, an increase of 45 percent.

But that figure could fall as much as 400,000 in fiscal 2012 even if agency funding is held steady, according to the union that represents SSA workers. In a recent letter to the Super Committee, the National Council of Social Security Administration Field Operations Locals (part of the American Federation of Government Employees) outlined an array of negative impacts of budget cutting. Along with the threat to disability claims processing, the letter described potential further cutbacks in working hours and services.

What does it mean? Less face-to-face assistance for thousands of seniors, widows, disabled people and the poor — many of whom can’t easily resolve their benefit issues over the phone of the Internet.

Starve the beast? Indeed.

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