Social Security Commissioner Warns of Painful Cuts

March 9, 2011— -- Elderly Americans would suffer considerably under proposed Social Security Administration budget cuts outlined in House Republicans' continuing resolution, the head of the agency warned today as budget-related disputes continue to flare on Capitol Hill.

The House GOP budget proposal that would fund the government for the rest of the fiscal year yanks $125 million from the SSA's current levels and $500 million from the reserve fund.

The cuts could cost 3,500 employees their jobs, affecting the quality and quantity of services to Americans, SSA Commissioner Michael J. Astrue testified in Washington.

"I regret we may not be able to keep our commitment to the American people because we don't have the necessary support to move forward," Astrue said today at a Senate subcommittee today. "We cannot meet our stewardship duties unless Congress provides us the funds to do the job."

Democrats, who are against the cuts, echoed his concern.

"Social Security is the centerpiece of America's social safety net," said Sen. Tom Harkin, D-Iowa. "Delaying basic services isn't just bad for the economy, it's devastating to the most vulnerable citizens who depend on them."

Concerns about the burgeoning budget deficit and its long-term implications have brought new scrutiny to entitlement programs such Social Security, Medicare and Medicaid.

Economists and experts agree that Social Security needs to be fixed immediately to keep future generations from losing out on an important benefit. But neither President Obama nor members of Congress has put forth any concrete proposals.

The president has acknowledged the need to overhaul entitlement programs and says he welcomes proposals, but Republicans argue that Obama should take the lead.

GOP leaders say the cuts to SSA's pocketbook is needed to balance the budget, and that it's a first step toward addressing the issue.

There's a "long, slow march to insolvency if we don't do anything about it," Sen. Richard Shelby, R-Ala., said today, drawing a comparison to a "classic ponzi scheme."

Republicans also argue that the structure of the Social Security Disability Insurance hinders many people from working and finding employment, and that there needs to be a greater push toward finding and addressing fraudulent claims.

"What makes the problem worse is that ... there's no time limit on how long the person can receive SSDI," Shelby said. "Their incentive to return to work is very low, results in workers never seeking gainful employment at the risk of losing future benefits."

Social Security in the Limelight

More than 54 million Americans -- about one in four U.S. households -- receive benefits each month through Social Security. About 70 percent of the checks, which average $1,076, go to retired workers and their families, and the rest to disabled Americans and recipients' survivors.

The number of enrollees is expected to grow as the baby-boom generation begins retiring, while the pool of workers who contribute to Social Security will grow relatively smaller.

In 1950, there were 16 workers per beneficiary; in 1960, there were five workers per beneficiary; in 2010, the ratio was three workers to one beneficiary, and by 2025, there will be just 2.3 workers "paying in" per beneficiary, according to estimates compiled by the president's non-partisan fiscal commission.

For the first time this year, the Social Security fund will actually post a net deficit. The program is projected to collect $45 billion less in payroll taxes than it pays out in benefits, according to the Congressional Budget Office.

The program posted its first deficit last year for the first time since the 1980s. The CBO has estimated that the Social Security reserve will completely run out of funds by 2037.

With a government shutdown looming next week if Democrats and Republicans can't find common ground, Asture touted the White House's line, saying there would be dire consequences for new enrollees.

"For most existing benefits, checks will go out and they will not see an interruption of service," he said. "If you are a new applicant or have a change of address then we can't guarantee" timely processing.

He said most field offices would have to evaluate their hours and would be open on a partial basis.