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Rescuing Social Security: Governance and Administration

Copyright © 2004, 2005 by David E. Ross

Today, the Social Security Administration (SSA) is governed by a Board of Trustees with six members. One member is the Commissioner of Social Security, the chief executive of the SSA. Three other members are the Secretary of the Treasury, Secretary of Health and Human Services, and Secretary of Labor, members of the President's cabinet. The two remaining members are appointed by the President and confirmed by the Senate. All serve at the pleasure of the President, who can (for example) remove and appoint new cabinet secretaries at will.

The kinds of decisions the Board of Trustees would have to make under this reform — involving taxes, actuarial assumptions, and investments — requires that it be removed completely from politics. As required by the Constitution, trustees would still be appointed by the President and confirmed by the Senate. However, the Board would consist of seven members who have no other government positions. They would serve fixed, 14-year staggered terms. A one-term President could not appoint a majority of the Board; a two-term President could finally appoint a majority only towards the end of his second term. Note that the Commissioner of Social Security would not be a member of the Board; governance would be thus separated from administration.

The Commissioner and first-level subordinates would be employed at the will of the Board of Trustees, not appointed by the President. All other employees would be employed through civil service, which is intended to isolate government employment from government politics. What is important is that the investment managers and actuaries be civil service employees whose decisions would be based on professional standards and not politics.

The following news report clearly indicates the necessity of removing political influence from the operation of the SSA.

Social Security Enlisted to Push Its Own Revision

Over the objections of many of its own employees, the Social Security Administration is gearing up for a major effort to publicize the financial problems of Social Security and to convince the public that private accounts are needed as part of any solution. The agency's plans are set forth in internal documents, including a "tactical plan" for communications and marketing of the idea that Social Security faces dire financial problems requiring immediate action.

Social Security officials say the agency is carrying out its mission to educate the public, including more than 47 million beneficiaries, and to support President Bush's agenda. But agency employees have complained to Social Security officials that they are being conscripted into a political battle over the future of the program. They question the accuracy of recent statements by the agency, and they say that money from the Social Security trust fund should not be used for such advocacy. "Trust fund dollars should not be used to promote a political agenda," said Dana C. Duggins, a vice president of the Social Security Council of the American Federation of Government Employees, which represents more than 50,000 of the agency's 64,000 workers and has opposed private accounts.

Deborah C. Fredericksen of Minneapolis, who has worked for the Social Security Administration for 31 years, said, "Many employees believe that the president and this agency are using scare tactics to promote private accounts."

Source: New York Times

15 January 2005

To separate further the SSA from political pressures, its operating and administrative costs would be funded from the revenues — taxes and investment earnings — of the program and not from Congressional appropriations. This would be equivalent to the way the Federal Reserve System is funded today.

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