Because it was created during the New Deal, many have credited President Franklin Roosevelt for establishing Social Security. However, the idea was really that of maverick Democratic Senator Huey Long of Louisiana, who proposed the “Every Man a King” program in 1930. Long proposed that every person receive an old-age pension when they reached the age of 60. On June 8, 1934, the Committee on Economic Security sponsored the first-ever national town-hall forum on Social Security and drafted a detailed legislative proposal for a social security program. The Social Security Act was passed in August 1935.

The Act established an independent Social Security Board (SSB). The very first social security number was issued to John D. Sweeney, Jr. of New Rochelle, New York. The lowest number ever issued was 001-01-0001, to Grace Dorothy Owen of Concord, New Hampshire. Monthly benefits did not start until 1942. Prior to that, recipients received lump-sum payments upon retiring. The first person to receive such a payment was Ernest Ackerman of Cleveland, Ohio, who retired one day before the Social Security System went into effect. For his one day in the program, Ackerman had a nickel withheld from his paycheck. He then received a lump-sum payment of 17 cents. The average lump sum was $58.06.

In 1939, Congress adopted two important changes to Social Security. One made spouses and children of retired workers eligible for Social Security income in the event the worker died. The other change moved the SSB into the newly created Federal Security Agency. 

Seven years later, SSB was renamed the Social Security Administration. In 1953 the Federal Security Agency was abolished and the Social Security Administration became part of the Department of Health, Education and Welfare. The 1950s also saw important changes to the program. Benefit levels were increased for the first time (by 77%) to provide greater assistance to retired Americans. In 1956, lawmakers passed an amendment that granted benefits to adult workers age 50-65 who became disabled and to disabled adult children. In succeeding years, Congress opened the disability portion of Social Security to adults of all ages.

In 1961, the retirement age was lowered to 62 for men to qualify for Social Security (women received this benefit in 1956). A few years later, President Lyndon Johnson and Congress approved one of the largest expansions ever in Social Security history by creating the Medicare program. Under Medicare, Social Security beneficiaries 65 and older qualified for the new government health insurance program. Nearly 20 million people enrolled in Medicare during its first three years.

During the 1970s, cost-of-living adjustments and wage indexing were implemented for Social Security to help retirees better cope with inflation. The Social Security Income (SSI) program was established to oversee the distribution of benefits to the disabled. Another important change removed Medicare from the Social Security program and entrusted its administration to the newly created Health Care Financing Administration. 

The SSA moved again with the creation of the Department of Health and Human Services in 1980. The decade also represented the first time that lawmakers had to grapple with a financing problem for Social Security. President Ronald Reagan formed a blue ribbon panel led by Alan Greenspan to come up with solutions. Congress adopted amendments in 1983 at the suggestion of the Greenspan Commission, which included partial taxation of Social Security benefits, the first coverage of federal employees, raising the retirement age beginning in 2000, and increasing the reserves of the Social Security trust fund. Another change came about in 1989 with the requirement that the SSA send out annual statements to all persons working under Social Security. (As a cost-saving move, the SSA stopped such mailings in 2011, except for people age 60 and over.) 

It was not until 1994 that the Social Security Administration regained its status as an independent agency. SSA now reported directly to the President, and a seven-member bipartisan Social Security Advisory Board was formed to provide advice and counsel on the program. In the late 1990s, SSI benefits for non-citizens were scaled back, and the Ticket to Work and Work Incentives Improvement Act of 1999 was adopted. The latter provided vouchers to SSI recipients to help or encourage them to find employment (and thus reduce their reliance on Social Security).

In 2000, President Bill Clinton signed the Senior Citizens’ Freedom to Work Act, which eliminated rules that penalized seniors who choose to work after retiring. The remainder of this decade has been preoccupied by debate over Social Security reform. In 2001, President George W. Bush commissioned a special report on how to avoid Social Security from running out of money (scheduled to happen in the decade of 2030). Following his reelection in 2004, Bush made Social Security reform a major goal of his second term. Included in his proposed changes were plans to partially privatize Social Security—a controversial idea that Republicans and Democrats in Congress refused to embrace.

The SSA put several changes into effect in 2011. They included a lowering of the Social Security tax rate, introduction of a new “randomized” method of issuing Social Security numbers, and the elimination of paper checks, retroactive benefit suspensions, and interest-free loans to retirees. Also, for the second time since it was instigated in 1975, no cost of living adjustment (COLA) is being applied to benefit payments. Additionally, the agency announced a plan to ban people from visiting its offices, starting in November 2011, if they had ever made a threat against the SSA. In 2010, such threats increased by 43%—to a total of 2,800—over the previous year, including 352 people charged with killing, assaulting, or threatening SSA employees. SSA field offices were visited by 45 million people in 2010.

Historical Background and Development of Social Security

Historical Chronology

Text of the 1935 Social Security Act

Legislative Histories

Social Security Number History

Social Security Related Archives

Administrative History of SSA 1963-1968

Administrative History of SSA 1993-2000

The SSA is responsible for distributing retirement benefits and disability payments to Americans. The administration implements two main programs. The largest is the Old-Age, Survivors Disability and Insurance, which is commonly referred to as Social Security. This program provides funding to more than 54 million Americans who are age 65 and older. The other program, Supplemental Security Income (SSI), provides financial support to more than 8.1 million Americans who are aged, blind, or disabled adults and to children with limited income and resources.

Key SSA Offices

Retirement/Disability Policy (RDP) is the principal adviser to the Commissioner of Social Security on major policy issues and is responsible for all major activities in the areas of strategic and program policy planning, policy research and evaluation, statistical programs, and overall policy development, analysis, and implementation. The RDP serves as the lead spokesperson in presenting policy proposals and analysis within and outside the Executive Branch. The office directs and manages the planning, development, issuance, and evaluation of operational policies, standards, and instructions for the Retirement and Survivors Insurance, Disability Insurance, Supplemental Security Income (SSI) program and other SSA programs. The office assists in achievement of consistency in program policy across programs administered by SSA. The Office is involved in analyses of legislative and regulatory specifications and budgetary impacts of legislation on programs administered by SSA. The office produces, presents, supports, and publishes program data, statistics, research, analyses, and reports that detail trends and effects of the programs on recipients and potential recipients. It explains impacts of reform proposal options to enhance program provisions or solvency. The office develops and evaluates demonstrations and studies that support the policy development of SSA. The office works with the Department of Treasury on issues of policy relating to the Federal Insurance Contributions Act and the Self-Employment Contributions Act, including such matters as definition of wages and implementation of laws. It manages a nationwide network of medical, psychological and vocational experts who assist Administrative Law Judges (ALJs), the Decision Review Board (DRB), State Disability Determination Services (DDS) and the Office of Quality Performance (OQP) in making disability determinations and decisions.

Disability Adjudication/Review administers the nationwide Disability Adjudication and Review program for SSA. It provides the means through which individuals and organizations dissatisfied with determinations affecting their rights to and amounts of benefits or their participation in programs under the Social Security Act may appeal these determinations in accordance with the requirements of the Administrative Procedure and Social Security Acts. The office includes a nationwide field organization staffed with Administrative Law Judges (ALJs) who conduct hearings and make decisions on appeals filed by claimants, their representatives, providers‑of‑service institutions, and others under the Social Security Act. 

Operations directs and manages central office functions and those spread across the country. It oversees regional operating program, technical, assessment, and program management activities. It directs studies and actions to improve the operational effectiveness and efficiency of its components. It promotes systems and operational integration and defines user needs in the strategic planning process. It determines automation support needs for office components. It oversees the coordination and implementation of SSA’s policies for the electronic delivery of agency services to the public.

Quality Performance is responsible for rendering formal advice and recommendations to SSA executives on a range of issues relating specifically to quality performance management in each of the agency’s core business areas. It works with deputy commissioner-level components to direct the SSA quality performance management program, its policies, and initiatives involving one or more components of the agency. It also provides oversight for SSA computer matching operations.

Systems directs systems and operational integration and strategic planning processes and the implementation of a comprehensive systems configuration management, data base management, and data administration program. It initiates software and hardware acquisition for SSA and oversees software and hardware acquisition procedures, policies, and activities. It directs the development of operational and programmatic specifications for new and modified systems and oversees development, validation, and implementation phases. 

Actuary plans and directs a program of actuarial estimates and analyses pertaining to the SSA-administered retirement, survivors and disability insurance programs, and the SSI program, and to projected changes in these programs. It evaluates operations of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund; estimates future operations of the trust funds; conducts studies of program financing; performs actuarial and demographic research on social insurance and related program issues; and estimates future workloads. It also provides technical and consultative services to the commissioner, the Board of Trustees of those two trust funds, and, as requested, congressional committees. It appears before congressional committees to provide expert testimony on the actuarial aspects of Social Security issues.

Budget, Finance, Management directs SSA management programs, including budget, acquisition and grants, facilities management and publications, and logistics. The office directs the development of SSA policies and procedures as well as the management of financial systems. 

Legislative Affairs develops and conducts the legislative program of SSA, serves as the focal point for all legislative activity in SSA, analyzes legislative and regulatory initiatives and develops specific positions and amendments.  The office evaluates the effectiveness of programs administered by SSA in terms of legislative needs and analyzes and develops recommendations on related income maintenance, social service and rehabilitation program proposals, particularly those which may involve coordination with SSA-administered programs and on other methods of providing economic security. 

General Counsel advises the commissioner on legal matters, is responsible for providing all legal advice to the commissioner, deputy commissioner and all subordinate officers (except the inspector general) of SSA in connection with the operation and administration of SSA. The general counsel is responsible for the policy formulation and decision making related to the collection, access and disclosure of information in the records of the Social Security Administration and processing of Freedom of Information requests and appeals.  

Communications is responsible for SSA’s national public information/public affairs (PI/PA) programs. It performs SSA Press Office functions and provides guidance and direction from a PI/PA standpoint to the development of agency policies and decisions and assesses their potential impact on the public and SSA employees. It also creates and develops all SSA communications and PI/PA activities, both internal and external.

Inspector General is responsible for promoting economy, efficiency and effectiveness in the administration of SSA programs and operations, and to prevent and detect fraud, waste, abuse, and mismanagement. The office directs, conducts, and supervises a program of audits, evaluations, and investigations, and also searches for and reports systemic weaknesses, and follows up with recommendations for needed improvements and corrective actions. 

In 2011, the SSA announced forthcoming changes to the agency’s organizational structure, including the following: SSA’s Innovation and Investment Management offices, which have been part of the Office of the Chief Information Officer, would move to the Office of Systems, taking on responsibility for health IT initiatives. The SSA’s Office of Vision and Strategy would be split in two, with the Division of Strategic Services going to the Office of Quality Performance and the IT strategy unit moving to the Office of Systems. Security functions, which had been handled by facilities management, would become the responsibility of a newly created Office of Security and Emergency Preparedness. Logistics functions would be consolidated in a new Office of Facilities and Supply Management.

From the SSA Web Site:

Appeals

Baby Names

Business Services

Contact Information

Disability

Facts and Figures

FAQs

Forms

Fraud, Waste and Abuse Reporting

Medicare

News and Announcements

Press Releases

Publications

Reports

Retirement

SSA Office Locator

SSI

Survivors

The SSA provides benefits to nine out of ten individuals age 65 and older. As of July 2011, 64.3% of benefits paid go to retired workers and their dependents, 19% goes to disabled workers and their dependents, and 11.5% are paid to survivors of deceased workers. Social Security is primarily financed through taxes paid by employers and employees. Employers pay 6.2% and employees pay 4.2% of their wages up to a maximum of $106,800, while the self-employed pay 13.3% of their wages. In 2010 these taxes accounted for approximately 82% of the funding for Social Security and Disability. The remaining 18% is composed of interest earnings from the federal government, Treasury fund reimbursements, and taxation of Social Security benefits.

SSA also spends on private contractors to help it administer its programs and carry out its mission. According to USAspending.gov, the agency spent more than $8.9 billion this decade on 81,500 contractor transactions. The largest expenditures were for telecommunications services (nearly $2 billion), ADP software ($964,183,782), ADP input/output and storage devices ($462,727,353 ), ADP storage equipment ($409,191,467), and ADPE system configuration ($353,212,931).

The top five contractors between 2002 and 2011 were:

1. Lockheed Martin Corporation                                                         $1,026,538,857

2. IBM Corporation                                                                                $620,174,337

3. Dell Inc.                                                                                             $301,482,783

4. CA Inc.                                                                                              $237,466,689

5. Hewlett-Packard Company                                                               $224,398,362

Thousands of Living People Classified as Dead Each Year by SSA

Each year, thousands of Americans meet their untimely end, thanks to the Social Security Administration (SSA).

Due to clerical blunders, the SSA manages to falsely list 1,200 living Americans as deceased every month. That adds up to more than 14,000 a year.

The mistakes are entered into a federal database called the Death Master File, which was created three decades ago to help prevent consumer fraud.

Getting categorized as dead by the SSA can be a source of prolonged trouble. According to the agency’s inspector general: “Erroneous death entries can lead to benefit termination, cause severe financial hardship and distress to affected individuals, and result in the publication of living individuals’ [personal identifying information] in the [Death Master File].”

Even those high up in the Social Security Administration have encountered the mishap.  Commissioner Michael Astrue said both a close relative and close friend were erroneously listed as dead in the same week.

Social Security Administration Making Grave Mistakes (by Thomas Hargrove, Scripps Howard News Service)

Social Security Wrongly Declares 14,000 People Dead Each Year (by Blake Ellis, CNN Money)

Social Security Death File Mistakes Hit Home for Chief of the Agency (by Thomas Hargrove and Waqas Naeem, Scripps Howard News Service)

Hearing on Social Security's Death Records (Office of the Inspector General, Social Security Administration)

SSA Mistakenly Pays Out Millions in Benefits to Dead People

Even when it has its records straight, the SSA gets it wrong.

The agency’s inspector general found in 2011 that officials mistakenly sent out more than $40 million in Social Security checks to dead Americans. In many cases, the agency’s Master Death File has a person listed as dead, and still workers manage to mail out checks to them—in some cases for months or years.

Sometimes, surviving relatives try to take advantage of the mistakes, collecting thousands of dollars in benefits for the deceased. One man in San Diego County cashed his dead mother’s checks for 15 years, raking in $300,000 before he was caught and charged with felony grand theft.

The inspector general estimated that if the SSA got its act together on just the problem of being able to discern living recipients from dead ones, it could save more than $150 million per year. 

Social Security Pays Millions To Dead People (by Blake Ellis, CNN Money)

Hearing on Social Security's Death Records (Office of the Inspector General, Social Security Administration)

SSA Improper Payments

When it’s not overpaying people, it’s underpaying them.

The SSA overpaid recipients by $6.5 billion in 2009, according to the inspector general for the agency. Of this amount, $4 billion was misspent in the supplemental income program for poor people. Mistakes were made as a result of SSA workers not factoring in other sources of income for those receiving these payments.

Similar mistakes were made when issuing Social Security checks to spouses of dead recipients. In these instances, surviving spouses are entitled to receive their late husband’s or wife’s benefits. But those with government pensions of their own are supposed to receive less from the SSA. Overpayments were caused when these adjustments weren’t calculated in.

The inspector general also discovered that in addition to overpaying individuals, the SSA underpaid others by a total of $1.5 billion, raising the total amount of improper payments to $8 billion in the 2009 budget year.

The problem of improper payments has become such an enormous problem that Congress passed an act in 2010 specifically addressing it, requiring the SSA and other agencies to reduce such outlays by $50 billion in 2012.

Social Security Administration Overpaid $6.5 Billion In Benefits, Inspector General Finds (Associated Press)

IGS: IRS, SSA And DHS Lose Billions in Improper Payments (By Alice Lipowicz, Federal Computer Week)

Audit Report: Spousal Beneficiaries Who Reported They Were Entitled to a Government Pension (Office of the Inspector General, Social Security Administration)

SSA Should Lower the Retirement Age

With unemployment still running high during President Barack Obama’s first term, some suggested lowering the retirement age as a solution.

Instead of people retiring at 65 or 67, let them begin their golden years at 55, so goes the argument by economist James K. Galbraith and others. Also, increase Social Security benefits so retirees can realistically live without being employed.

Conservatives argue that such moves would bankrupt Social Security. But, say proponents, including Rep. Dennis Kucinich (D-Ohio), the opposite would actually come about.

By encouraging older Americans to leave the workforce, more job opportunities would come along for younger adults struggling to find employment. This would bring down the jobless rate and increase the number of people earning wages—which would expand consumer demand and a corresponding growth in production for goods and services.

With more people back to work, more tax revenues would be made available for the government, including monies to fill up Social Security coffers.

Actually, the Retirement Age Is Too High (by James K. Galbraith, Foreign Policy)

Should the Retirement Age be Lower, Not Higher? (by Carlos Lozada, Washington Post)

Want to Stimulate the Economy? Lower the Retirement Age to 55 Now! (by Thom Hartmann, Huffington Post)

SSDI Appeals Backlog

Despite years of trying, the SSA has continued to struggle to reduce its backlog of appeals from individuals seeking disability benefits.

As of September 2011, more than 770,000 people were still waiting for an administrative law judge to hear their petition, according to the law office of Sheryl Gandel Mazur, which specializes in Social Security Disability Insurance (SSDI) cases. The numbers were even higher for first-time SSDI claimants awaiting a decision—1.8 million individuals, with the average wait time being 800 days.

Earlier in 2011, The Washington Post reported that 728,000 Americans were awaiting appeal hearings for Social Security disability benefits. This total represented a 5% increase in pending cases since 2010.

The SSA set a goal to reduce the average wait time for processing appeals down to 270 days by 2013. Some experts doubted the agency would meet this goal, considering the average time from October 2010 to April 2011 was 367 days.

Backlog Grows for Social Security Appeals (by Kevin McCoy, USA Today)

Progress on Disability Benefit Backlog Disputed (by Lisa Rein, Washington Post)

Despite Efforts, Social Security Backlog Not Declining (The Law Office of Sheryl Gandel Mazur)

Social Security Judge Fired for Moonlighting

For three years, Kelly S. Jennings ruled on disability claims for the Social Security Administration while simultaneously serving as an active-duty lawyer for the Army. By doing so, Jennings helped add to the backlog of cases that SSA is struggling to process. As a result, a fellow administrative law judge ruled that Jennings should be removed from hearing Social Security cases. He was placed on paid leave while he appealed the case.

Jennings worked in SSA’s Atlanta North office, known as the agency’s “backlog capital” of the country. With an average wait of 838 days, the office in 2008 ranked as the slowest in the nation in resolving the appeals of people who say they are too sick or injured to work. Jennings made more than $300,000 a year working for both Social Security and the Army. SSA sought to recover more than $309,000 in back pay and interest from Jennings. On January 19, 2011, a federal Court of Appeals ruled on Jennings’ appeal, deciding the case in favor of the SSA.

Social Security disability backlog blamed on judge: Other job as active duty lawyer for Army hampered work, ruling says (by Ann Hardie, Atlanta Journal-Constitution)

Jennings v. Social Security Administration (U.S. Court of Appeals)

Same as It Ever Was: McCain Bashes Social Security

In June 2008, Republican presidential hopeful John McCain told a town hall meeting in Denver that the situation today with the way Social Security is operating is unacceptable. McCain told the audience, “Americans have got to understand that we are paying present-day retirees with the taxes paid by young workers in America today. And that’s a disgrace. It’s an absolute disgrace, and it’s got to be fixed.”

What McCain didn’t realize apparently was that’s how Social Security has always operated. Since its founding during the Great Depression, current workers have always paid the benefits of current retirees. The problem is one of demographics: the retirees of today (Baby Boomers) far outnumber the workers of today (Generation X), leaving the system in a serious cash-flow bind unless changes are implemented.

McCain Sparks Controversy with Social Security ‘Disgrace’ Comments (by Jonathan Weisman and Michael D. Shear, Washington Post)

Bush Pushes Private Accounts to Solve Social Security Dilemma

Fresh off his reelection victory in 2004, President George W. Bush decided to make Social Security reform one of the hallmarks of his second term. With Republicans still in control of both houses of Congress, the President felt now was the time to make dramatic changes to the entitlement program to keep it from going bankrupt in the near future, as most experts project will eventually happen.

A key portion of Bush’s plan was to allow workers to divert a portion of their payroll taxes—money that’s currently used to finance the Social Security trust fund—into personal retirement accounts. This so-called partial privatization of Social Security was lauded by conservatives, but heavily criticized by Democrats and liberals. Critics asked how shifting money away from Social Security and into private accounts was going to help solve the pending insolvency problem for the entitlement program.

During the first several months of 2005, Democrats and Republicans debated the issue. The president warned against “scare tactics” in the debate. “We’re not going to play political gotcha,” Bush said. “Now is not the time to make this issue a highly partisan issue.”

Democrats were united in their opposition to private accounts. Meanwhile, with GOP lawmakers in the majority, it was members of the President’s own party who also balked at implementing radical changes to what many experts referred to as the “third rail” of politics. By the spring, the reform plan was teetering, as lawmakers and the administration could not agree on ways to backfill Social Security coffers if money was diverted into private accounts. By the summer, the battle was over, as Bush began to back off creating private accounts, which angered GOP supporters, leaving little support of any kind for the reform proposal.

Bush’s plan for Social Security: The president offers some key details on reforms he is pushing, but still leaves some big questions (by Jeanne Sahadi, CNN Money)

Bush Wraps Up Social Security Tour: Charges Opponents Are Using 'Scare Tactics' To Frighten Seniors (CBS/Associated Press)

Bush’s First Defeat: The president has lost on Social Security. How will he handle it? (by Jacob Weisberg, Slate)

How President Bush's Social Security Reform Died (by Kevin Hassett, Bloomberg)

Should Social Security Be Privatized? (ProCon.org)

Social Security Solvency and Sustainability Act

Three Republican senators introduced a Social Security reform plan in 2011 aimed at extending the program’s solvency for decades to come.

S. 804 (the Social Security Solvency and Sustainability Act) by Senators Lindsey Graham (R-South Carolina), Rand Paul (R-Kentucky), and Mike Lee (R-Utah) would gradually increase the early and normal retirement ages and reduce benefits for the highest-income retirees.

Beginning in 2017, according to the bill, which as of July 2012 was sitting in committee, the normal retirement age would gradually increase from 66 to 70 for Americans born in or after 1970. The legislation also would increase the early-retirement age starting in 2021, from 62 to 64 for taxpayers born in or after 1966.

The bill’s changes with regards to reducing benefits for the rich would do the following:

• New Social Security recipients who averaged $106,000 annually would experience an 11.2% reduction in benefits by 2030, rising to a reduction of 36% for those retiring in 2080.
• Retirees entering the program in 2030 who had average earnings of $70,000 a year would endure an 8.8% cut in benefits, rising to a 28.4% reduction for those retiring in 2080.

The bill also called for smaller benefit cuts for lower-income Americans (4.5% for those making average lifetime earnings of $43,000 or more per year). Anyone averaging less than $43,000 annually would avoid a benefit reduction.

Senators’ Social Security Bill Trumps Empty Obama Rhetoric (by David John, Heritage Foundation)

How the GOP Social Security Plan Screws Everyone Under the Age of 47 (by Bruce Krasting, Business Insider)

Reforms from the Left, Right, and Center

There is seemingly no end to recommendations for changing Social Security. Organizations on the right and left, not to mention the political center, have ideas for restructuring the ailing entitlement program. Some ideas share common ground to some extent, such as encouraging Americans to rely more on personal or individual retirement accounts. But liberals and conservatives differ wildly on what to do with the accounts, and how to fund them using tax dollars in addition to what individuals put into them. 

On the Left

One example of a liberal perspective comes from the Center for American Progress. Its report, A Progressive Framework for Social Security Reform by Gene Sperling (pdf), offers these suggestions:

• Create a Universal 401(k) that would provide retirement savings in addition to Social Security. The key is a generous $2-to-$1 government matching contribution for initial savings of low-income families and $1-to-$1 matches for middle-income families. Also, establish a new Flat Tax Incentive of 30% for savings done by all workers. To help finance this plan, the federal government should increase the estate tax exemption to $5-7 million per couple.
• Adopt “Mutual Sacrifice and Responsible Financing” proposals that demonstrate how everyone, not just the wealthy, can benefit from government reforms, unlike President Bush’s tax cuts that favor upper income earners. Levy a 3% surcharge on all income over $200,000—whether from income, dividends or capital gains—dedicated to increasing national savings now and increasing Social Security solvency. The new surcharge would affect only the top 2% of taxpayers and, by taxing all income equally, would avoid introducing new distortions and incentives to try to turn wage income into dividends or capital gains to avoid payroll taxes. The surcharge could be contingent on a bipartisan agreement to find equivalent savings to shore up Social Security through measured revenue and benefit changes. 

On the Right

The only real solution, according to The Heritage Foundation, is to shift priorities toward personal retirement accounts (PRA) and stop wasting hard-earned tax dollars on Social Security. A multifaceted reform plan discussed in this article would:

• Create an account structure that uses a por­tion of existing payroll taxes and allows workers of all income levels an opportunity to build family nest eggs. The PRAs would be voluntary and would not affect current retirees or those close to retirement in any way. The Social Security PRAs should be funded by directing a portion of their Social Security retirement taxes into their PRAs. About 5% of income would be best, but the directed portion should not be less than 2% or more than 10%.
• Create a simple, low-cost administrative structure for the accounts that uses the cur­rent payroll tax system and professional investment managers. Using the existing pay­roll tax system would reduce costs. Rather than having the government invest PRA money, the agency overseeing the accounts should contract out fund management to pro­fessional fund managers.
• Create a carefully controlled set of invest­ment options that includes an appropriate default option. Initially, workers would be allowed to put their PRA contributions into any one of three balanced and diversified mixes of stock index funds, government bonds, and similar pension-grade investments.
• Adjust current Social Security benefits to a more sustainable level. Despite promises from both the left and the right to pay prom­ised benefits in full, this is simply not realistic. While current retirees and those close to retire­ment should receive every cent that they are due, future benefit promises must be scaled back to more realistic levels.
• Create a realistic plan for paying the gen­eral revenue cost of establishing a PRA sys­tem. The necessary general revenue will have to come from some combination of borrowing additional money, collecting additional taxes, reducing other government spending, and reducing Social Security benefits. While some Representatives and Senators will be tempted to cover Social Security’s deficits with higher taxes, this is the wrong approach. The neces­sary amounts are so large that such a tax increase would consume enough resources to stall economic growth.
• Create a system that allows workers flexi­bility in structuring their retirement bene­fits while ensuring that they receive an adequate monthly benefit. A PRA plan should require all retirees to use some of that money to purchase an annuity that would guarantee at least a minimal level of income for life, including an adjustment for inflation. This requirement would protect taxpayers against retirees who could otherwise spent their entire PRAs and then expect some form of govern­ment handout to meet their monthly expenses.

How to Fix Social Security (by David C. John, Heritage Foundation)

In the Center

In 2005, three former political aides got together to see if they could craft a nonpartisan plan for saving Social Security. The three were: Jeffrey Liebman, former Special

Assistant to President Clinton for economic policy, who coordinated the Clinton administration’s Social Security reform technical working group; Maya MacGuineas, former Social Security adviser to Senator John McCain during the 2000 presidential campaign; and Andrew Samwick, former chief economist on the staff of President Bush’s Council of Economic Advisers, where his responsibilities included Social Security.

The Liebman-MacGuineas-Samwick (LMS) plan, laid out in the Nonpartisan Social Security Reform Plan (pdf), “demonstrates the types of compromises that can help policy makers from across the political spectrum agree on a Social Security reform plan. The plan achieves sustainable solvency through progressive changes to taxes and benefits, introduces mandatory personal accounts, and specifies important details that are often left unaddressed in other reform plans. The plan also illustrates that a compromise plan can contain sensible but politically unpopular options (such as raising retirement ages or mandating that account balances be converted to annuities upon retirement)—options that could realistically emerge from a bipartisan negotiating process, but which are rarely contained in reform proposals put out by Democrats or Republicans alone because of the political risk they present.

The LMS plan contains four key elements:

• Benefit cuts (through progressive reductions in the primary insurance amount [PIA] factors that are used to project retirement benefits at full retirement and an increase in the retirement age).
• New revenue (through a mandatory additional 1.5% contribution into personal retirement accounts and a gradual increase in the payroll tax cap to 90% of earnings).
• Mandatory personal retirement accounts (equal to 3% of earnings, funded half by new contributions and half redirected from the Social Security Trust Funds, with full annuitization required upon retirement).
• Other updates to the traditional system (minimum benefit for low-wage workers, increase in widow(er)s’ benefits, decrease in spousal benefits, possible progressive matches for accounts).

Other Social Security Reform Suggestions:

Government Accountability Office (GAO): Social Security Reform-Answers to Key Questions (pdf)

The Politicization of the Social Security Administration - House of Representatives Committee on Government Reform-Minority Staff (pdf)

Social Security Administration on Reform of Social Security

National Center for Policy Analysis on Reform Proposals

Common Sense on Social Security: Breaking the Stalemate by Steven H. Johnson

American Institute of Certified Public Accountants: Understanding Social Security Reform: The Issues and Alternatives (pdf)

Social Security (AARP)

Myths and Realities about Social Security and Privatization (National Committee to Preserve Social Security and Medicare)

The Century Foundation on Social Security Reform (pdf)

American Academy of Actuaries: Social Security Reform Options (pdf)

Social Security Reform (Urban Institute)

Top Ten Myths of Social Security Reform (Center for Retirement Research at Boston College) (pdf)

 Social Security (CATO Institute)

International Social Security Association

Strengthen Social Security…Don’t Cut It (Strengthen Social Security) (pdf)

Should the Social Security Administration Raise the Retirement Age?

Social Security could run out of money by 2033, according to a 2012 assessment, prompting some policymakers to suggest it’s time to raise the retirement age. Currently, the “normal” or full retirement age is 66, and the government already plans to increase this to 67 by 2022. But some want to go even higher, all the way to 70, as a way to reduce the amount of money paid out of Social Security.

Pro:

With Americans living longer and spending more years in retirement than they did when Social Security was established, proponents say the qualifying age for this benefit must be raised. To do so would extend Social Security’s solvency by decades. For instance, raising the full retirement age to 68 for today’s 50-year-olds (those turning 62 in 2022) would reduce the program’s 75-year funding gap by 29%. House Speaker John Boehner (R-Ohio) has gone on record saying he would favor lifting the age to 70 for those not reaching retirement for another 20 years.

The Red-Hot Debate over Raising the Retirement Age (by Jeanne Sahadi, CNN Money)

John Boehner: Raise Social Security Retirement Age to 70 (by Brian Montopoli, CBS News)

Con:

Steve Cunningham of the American Institute for Economic Research disagrees with this strategy, claiming it would fail to reduce costs and disproportionately hurt blue-collar workers. Making the latter work extra years would be cruel, given how physically demanding their jobs can be. The same reasoning can be applied to low-income groups whose life expectancy has yet to catch up to others. Still other critics argue the issue isn’t when people are retiring, but how much they’re paying into the system. Plus, many people over 65 could be hurt financially due to age discrimination that can make it difficult for seniors to secure jobs.

Should We Raise the Retirement Age? (by Karen Datko, MSN.money)

Can Extending Retirement Age Help Social Security? (by Michel Martin, NPR)

Should the SSA Deny Public Access to the Death Index?

Open to the public since 1980, the Social Security Death Master File (aka Death Index) is a database used by genealogists and businesses to locate or verify deceased individuals. Containing names, dates of birth, dates of death, states of issue and ZIP codes of those who have died since 1962, the database has become a source of controversy, thanks to identity thieves who have lifted names and Social Security numbers for fraudulent purposes.

To rectify this problem, lawmakers in Congress introduced legislation in 2011 that would cut off the public’s access to the Death Index. As of June 2012, the “Keeping IDs Safe Act of 2011” was awaiting action in a House committee.

Pro:

Proponents of H.R. 3475 say the bill is necessary to reduce the problem of identity fraud. They cite numerous instances where the identities of dead people, especially children, have been used for illegal activities, such as claiming them on income tax returns. One expert estimated that the identity theft rate among children was 51 times higher than among adults, with at least 500,000 children having had their identities stolen by a parent.

The U.S. House of Representatives: Oppose H.R. 3475 Keeping IDs Safe Act of 2011 (Change.org)

Con:

Opponents are sympathetic to the reasons for introducing H.R. 3475. But they argue the bill would do more harm than good. For starters, the Death Index became publicly accessible decades ago to help curb identity theft, by allowing businesses and credit card companies the ability to check a customer’s identifying information. To cut off this access would make it harder for businesspeople to verify legitimate, or catch fraudulent, Social Security numbers in use. Also, prohibiting public access would greatly hurt the work of genealogists or people delving into their family history.

Proposed Legislation Could Eliminate Public Access To Historical Research Data (by Ray Johnson, Chicago’s Strange and Haunted History)

Other links:

Are We Going to Lose the Social Security Death Index (SSDI)? (by Megan Smolenyak, Roots World)

Hearing on Social Security's Death Records (Office of the Inspector General, Social Security Administration)

Linda S. McMahon (Acting) (January 2007 to February 2007)       

Jo Anne B. Barnhart (November 2001 to January 2007)

William Halter (Acting) (January 2001 to March 2001)

Larry G. Massanari (Acting) (March 2001 to November 2001)

Kenneth S. Apfel (September 1997 January 2001)

John J. Callahan (Acting) (March 1997 to September 1997)

Shirley S. Chater (October 1993 to February 1997)

Louis D. Enoff (Acting) (October 1992 to July 1993)

Lawrence H. Thompson (Acting) (July 1993 to October 1993)

Gwendolyn S. King (August 1989 to September 1992)

Dorcas R. Hardy (June 1986 to July 1989)

Martha A. McSteen (Acting) (September 1983 to June 1986)

John A. Svahn (May 1981 to September 1983)

Herbert R. Doggette (Acting) January 20, 1981 May 5, 1981

William J. Driver (January 1980 to January 1981)

Herbert R. Doggette (Acting) (January 1980 to January 1980)

Stanford G. Ross (October 1978 to December 1979)

Don I. Wortman (Acting) (December 1977 to October 1978)

James B. Cardwell (October 1973 to December 1977)

Arthur E. Hess (Acting) (March 1973 to October 1973)

Robert M. Ball (April 1962 to March 1973)

William L. Mitchell (February 1959 to April 1962)

Charles I. Schottland (August 1954 to December 1958)

John W. Tramburg (November 1953 to July 1954)

William L. Mitchell (Acting) (April 1953 to November 1953)

Arthur J. Altmeyer (July 1946 to April 1953)