[Pages S6627-S6631]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. COBURN:
S. 3003. A bill to protect the Social Security Disability Insurance
program and provide other support for working disabled Americans, and
for other purposes; to the Committee on Finance.
Mr. COBURN. Mr. President, as a father, grandfather, and doctor,
there are few issues that are more important to me than making sure
Social Security benefits are protected for both current and future
generations. While both the Social Security Disability Insurance
program and the Social Security Insurance program will be exhausted
during my kids' lifetime, the disability program's finances are
particularly dire.
Since 2005, the disability trust fund has paid out more in benefits
each year than taxpayers pay back in. Last year alone the shortfall was
$32 billion. As a result, the trust fund will run out of money by 2016,
after which the Social Security Administration, the ``Agency,'' will
only be able to pay 81 percent of disability benefits to the 11 million
Americans currently dependent on them. This outcome is unacceptable.
Faced with the impending insolvency of the disability program,
politicians have debated the principal causes of the trust fund's
rapidly expanding shortfall. Some argue the program does not need
reform, believing that the increase in the disability rolls is due to
factors beyond our control. Citing aging baby-boomers and the rise of
women in the workplace, opponents of reform argue that dramatically
rising disability spending was and is unavoidable.
That is simply wrong. Since 1989, the percentage of working-age
Americans receiving disability benefits has more than doubled, while
the percentage of Americans reporting a work limitation has remained
fairly stable. A paper published by the Center for American Progress
and the Brookings Institution noted that even among middle-aged men,
the fraction receiving disability benefits has risen by 45 percent
since 1988.
A significant driver of the program's increased cost is fraud, waste,
and abuse. Over the past 4 years, the U.S. Senate Committee on Homeland
Security and Governmental Affairs, the ``committee'', and the U.S.
Senate Permanent Subcommittee on Investigations, the ``subcommittee''
have conducted several bipartisan investigations into aspects of the
Agency's disability programs and uncovered significant problems with
the program that Congress and the Agency need to correct.
In 2012, the subcommittee looked at a random sample of 300 disability
cases and found that one-quarter of the decisions made by the Agency
were not supported by the medical record. Much of this was the result
of the Agency's poor supervision of its 1,500 Administrative Law Judges
``ALJs''. This was not just the subcommittee's judgment; the Agency
agreed. After conducting its own study, SSA similarly found that 23
percent of ALJ decisions nationally were not supported by the record.
In 2013, the Committee issued a report showing how the disability
programs could be gamed by attorneys, doctors, and ALJs. The report
detailed how attorney Eric C. Conn, ALJ David
[[Page S6628]]
Daugherty, and several doctors conspired to manufacture fraudulent
medical evidence to award benefits. Mr. Conn got rich and also paid a
few doctors millions of dollars to sign fraudulent medical evidence,
which Judge Daugherty then used to approve claims without a hearing.
The result of their plan was millions in potentially fraudulent
disability awards. Mr. Conn became the third highest-paid disability
attorney in the country, and we found a number of large, unexplained
cash deposits in Judge Daugherty's bank accounts that were not reported
on his taxes or his public disclosures.
Both reports highlighted how the Agency's push to reduce the hearings
backlog came with significant costs: the Agency paid little regard to
the quality of decisions being made by ALJs, and focused only on
encouraging ALJs to decide as many cases as possible.
The Agency's Office of Inspector General recently issued a report
estimating that a group of high-approving judges granted at least $2
billion in improper benefits. As a result, the Agency will pay out
another $273 million in improper benefits each year.
This is only a sample of the work the Committee and Subcommittee have
done in the last few years, and it does not crack the surface of the
excellent work done by the Agency's Office of Inspector General,
including uncovering huge fraud schemes in New York and Puerto Rico.
The program's antiquated, subjective, and ambiguous rules make it
easier for lawyers, doctors and claimants to game the system.
Changes in program criteria used to determine eligibility for
benefits has made determinations less objective. Researchers at the
National Bureau of Economic Research attributed 53 percent of growth
for men and 38 percent of growth for women not to age, workforce
participation, or economic factors, but to weakened eligibility
criteria.
Since changes by Congress in 1984, the Social Security Administration
no longer makes benefit decisions based strictly on medical evidence,
but instead determines whether vocational factors such as age,
education, and skills prevent an individual from working ``any job in
the national economy,'' a standard that should be hard to meet. But the
number of applicants approved based on this standard has more than
doubled.
Eligibility criteria are not the only rules that can be gamed. Most
recently, I examined how some claimant representatives systematically
withhold medical evidence from the Agency to help their clients win
benefits and engage in other misconduct to pad their pockets and clog
the disability program.
What I found is a program that offers backward incentives for
everyone from the applicant and representatives to the beneficiaries.
Because the program accepts applicants only after they quit their job,
and provides them with rehabilitation services only after they start
receiving benefits, applicants must leave their job and often go years
before they receive services they need. Because beneficiaries will lose
their benefits if they make too much money, there are discouraged from
working to their abilities. Because the program rewards representatives
only if they win, and awards greater fees the longer the case sits,
representatives hide bad evidence, delay decisions, and provide poor
representation to disabled Americans.
For most Americans, disability benefits should not continue
indefinitely for their lifetime. Yet only one-half of 1 percent of
individuals on disability rolls leave because they have returned to
work and earned over the amount allowable by the Agency.
Additionally, scholars believe 23 percent of applicants are on the
margin of program entry--that is, whether they are awarded benefits
depends on who reviews their case. Accordingly, there is a relatively
high percentage of beneficiaries that can work, but choose not to,
either because they do not want to lose their benefits, both monetary
and Medicare, or because they need supports that are not currently
offered to them.
Our Federal laws, including the Americans with Disabilities Act and
dozens of Federal work programs, are designed to assist disabled
Americans in leading integrated, self-sufficient lives. Yet we have
failed to target and coordinate the resources they need before they
have to leave their jobs. The Social Security Advisory Board, SSAB
attributes Ticket to Work's low success rate to the fact that
intervention ``comes too late in the process--after the individual's
connection to employment has been severed and frequently after the
individual has undergone a lengthy process of proving inability to
work.''
According to the SSAB, ``focusing all of the return-to-work efforts
inside the structure of the disability program seems to be too late for
many individuals. In order for the intervention to be effective, it
needs to occur before the individual comes to SSA, before he applies
for SSDI or SSI, and before the attachment to the workforce is lost.''
The SSAB has advocated for comprehensive front-end services, arguing
they are ``a real chance to access tailored services that can enhance
return to work efforts.''
When the trust fund is exhausted in 2016, many Members of Congress
will say we just need to move funds from the Social Security retirement
program
Let me be clear: this is not a solution; it is a Band-Aid, a
temporary fix that takes money away from seniors and will eventually
hurt taxpayers when both funds go broke in 2033.
I hope there will be a rigorous debate in the next year about how we
can better serve disabled Americans with a program that gives them the
resources they need to work to the extent they are able and protects
benefits for those who are forced to rely on them. The disability
program is an important safety net, but it does not serve the disabled
or the taxpayers to treat it like an early retirement program or long-
term unemployment.
This is a conversation that will take place after I have left the
Senate. Accordingly, after 4 years of research, investigations, and
thoughtful meetings with other interested, engaged parties, today I am
offering a bill I believe can be used as a blueprint to shore up the
fund before its exhaustion in 2016, fix systemic problems with the
program, and provide targeted resources for the millions of disabled
Americans who want to work to the best of their abilities.
The Protecting Social Security Disability Act of 2014 was drafted
with three goals in mind: first, to make systemic changes to the
program that preserve it for future generations; second, to ensure
benefits are adequate and quickly available for those who need them by
adding program integrity measures that root out fraud, waste and abuse;
and third, to provide resources and incentives to those disabled
Americans who want to work and have the ability to do so.
Mr. President, I ask unanimous consent that the section-by-section
summary of the bill be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
II. Section-by-Section Summary of the Bill
Title: To protect the Social Security Disability Insurance
program and provide other support for working disabled
Americans, and for other purposes.
Short Title: Protecting Social Security Disability Act of
2014
Title I--Ensuring the Long-Term Solvency of the Disability Insurance
Trust Fund
Sec. 101. Application of actuarial reduction for disabled
beneficiaries who attain early retirement age.
Requires that disabled worker beneficiaries be converted to
retired worker status at the Earliest Eligibility Age.
Any individuals who are categorized as Medical Improvement
Not Expected (see below) are exempt.
Sec. 102. Reviews and time-limiting of disability benefits.
Disability Classifications. Mandates that all beneficiaries
be classified as follows when they are admitted on to the
rolls:
Medical Improvement Expected (MIE, improvement within 1-2
years);
Medical Improvement Likely (MIL, improvement within 3-5
years);
Medical Improvement Possible (MIP, improvement not likely
to be within 5 years, but improvement is possible); and
Medical Improvement Not Expected (MINE, there is no known
effective treatment). Age may not be used as a factor to
categorize someone in the MINE category who otherwise would
not be.
Continuing Disability Reviews.
MILs and MIPs will have mandatory full medical continuing
disability reviews during
[[Page S6629]]
the 5th year and 7th year of benefits, respectively.
Any individual may be subject to an earlier review if the
Commissioner of Social Security has reason to believe the
individual is not under a disability, but such a review
cannot be initiated on the basis of income earned under
Section 301 (below).
Reviews under this paragraph are in addition to, and do not
substitute for, other reviews required by the Social Security
Act.
The standard of review will be the same as conducted for an
initial determination, rather than the medical improvement
standard, except that any income the individual is now
earning under Section 301 (below) will not be considered.
Time-limiting Disability Benefits for MIE Individuals.
Benefits will be time-limited to 3 years for MIEs.
MIEs may file a timely reapplication for benefits during
the last twelve to fourteen months of their benefit period.
Notwithstanding the above, a reapplication may be deemed
timely if the individual can show good cause for failure to
submit during the period described above and it is submitted
no later than 6 months before the end of the termination
month applicable.
There will be no waiting period for benefits/Medicare if an
individual's timely reapplication is approved.
If an initial decision has not been made on a timely
reapplication when the individual's benefit term ends, the
individual's benefits will continue until an initial
determination is made.
If an final decision has not been made on a timely
reapplication when the individual's benefit term ends, and
the individual requests a hearing to review an unfavorable
initial decision, the individual may request to have benefits
extended until a hearing decision is made. If the individual
is determined not to be disabled, any benefits paid after
benefit term has ceased will be considered overpayments.
A previous award of benefits shall have no bearing on the
reapplication, and the continuing disability review rules do
not apply.
Sec. 103. Adjustment of age criteria for social security
disability insurance medical-vocational guidelines.
Age cannot be considered as a factor using the grids for
any individual aged less than the Normal Retirement Age minus
12 years. This means every time the Normal Retirement Age is
increased, so too will the age for disability purposes.
SSA must consider the share and ages of individuals
currently participating in the labor force and the number and
types of jobs available in the current economy when
considering vocational factors.
Starting in two years, and every year thereafter, SSA must
keep a current jobs list so examiners are considering the
current economy when determining whether an individual can
work any job in the national economy.
Sec. 104. Mandatory collection of negotiated civil monetary
penalties.
Mandates SSA collect the penalties negotiated by the
Inspector General in cases of fraud by beneficiaries.
Sec. 105. Required electronic filing of wage withholding
returns.
Requires that all W-2s be submitted electronically but
provides a hardship exemption for small businesses with 25
employees or less for the first five years, and then moving
to 5 employees or less after that.
Title II--Program Integrity: Reforming Standards and Procedures for
Disability Hearings, Medical Evidence, and Claimant Representatives
Sec. 201. Elimination of reconsideration review level for an
initial adverse determination of an application for
disability insurance benefits.
Removes the reconsideration review in the remaining states
that still have it so cases can move quickly to a hearing
before an ALJ.
Sec. 202. Deadline for submission of medical evidence;
exclusion of certain medical evidence.
Closing the Record. Prevents SSA from considering evidence
submitted less than 5 days before a hearing with an ALJ and
provides a ``good cause'' standard for failing to meet that
deadline that is the same as used in federal court. In no
case can evidence be submitted if it was obtained after the
ALJ's decision or submitted 1 year after an ALJ's decision.
Applicants, their representative, or a disability hearing
attorney (defined in section 203 below) may request that a
hearing be postponed to complete the record for no more than
30 days if it is made at least 7 days prior to the hearing
date and if the party shows good cause.
Exclusion of Medical Evidence. Makes it clear that
claimants and their representatives must submit all known,
relevant medical evidence to SSA, whether the evidence is
favorable or unfavorable, and requires that claimants certify
to the ALJ at a hearing that they have done so. Evidence may
not be considered otherwise. There is an exception for
attorney-client privileged communications. It also provides
clear civil and criminal penalties for the failure to follow
these rules.
Prohibits SSA from considering evidence furnished by a
physician who is not licensed, has been sanctioned, or is
under investigation for ethical misconduct.
Sec. 203. Non-adversarial disability hearing attorneys.
Creates a disability hearing attorney position to develop
the record, represent the government in hearings where the
claimant has representation, recommend on the record
decisions where clearly warranted, and to refer cases to the
Appeals Council if they disagree with the ALJ's grant of
benefits.
Requires the Agency to properly vet and train the staff.
Sec. 204. Procedural rules for hearings.
Requires SSA to create and publish procedural rules for
hearings.
Allows ALJs to impose certain fines and other sanctions for
failure to follow these rules.
Sec. 205. Prohibits attorneys who have relinquished a license
to practice in the face of an ethics investigation from
serving as a claimant representative.
Any representative seeking payment for their services has
an affirmative burden of certifying to SSA they meet the
rules.
Attorneys must certify to SSA they have never been
disbarred or suspended from any court or relinquished a
license to practice in the face of a misconduct
investigation.
Sec. 206. Applying judicial code of conduct to administrative
law judges.
This makes ALJs subject to the Judicial Code of Conduct.
Sec. 207. Evaluating medical evidence.
Removes the controlling weight standard given to opinion
evidence provided by treating physicians.
For any healthcare providers filling out a Residual
Functional Capacity form, the claimant has to provide them
with a Medical Consultant Acknowledgement Form (created by
SSA) that discloses how medical evidence will be used by SSA,
instructions on filling out RFC forms, and information on the
legal and ethical obligations of a practitioner providing
such an assessment. The practitioner must sign and certify
they read and understand the contents of the form and include
it with the RFC or the evidence cannot be considered by SSA.
This also provides penalties for forging the certification.
Allows ALJs to request and use Symptom Validity Tests and
social media and requires SSA provide training on how to
weigh such evidence.
Sec. 208. Reforming fees paid to attorneys and other claimant
representatives.
Representatives must account for work performed on a case
even if there is a valid fee agreement.
SSA can no longer reimburse representatives for travel
expenses.
The IG must perform annual reviews of the highest-earning
claimant representatives that look for repetitive language in
their evidence, any licensing problems, and whether there is
a disproportionate number of the representatives' cases being
determined by a particular ALJ.
Representatives cannot receive fees from the Equal Access
to Justice Act for: (1) hearings before an ALJ; and (2) if
they submitted new evidence after the hearing.
Sec. 209. Strengthening the administrative law judge quality
review process.
The Division of Quality shall conduct an annual review on a
sample of cases by ``outlier'' ALJs (those with 85% or higher
approvals and 700 or more cases that year) and report to SSA
on its findings.
Any cases determined to be granted in error must have a
continuing disability review within six months.
Sec. 210. Permitting data matching by the Inspector General
of the Social Security Administration.
Exempts Inspectors General from the applicable Computer
Matching and Privacy Protection Act of 1988 restrictions,
which mandate cumbersome rules to approve agreements with
other agencies to share records for investigations.
Sec. 211. Accounting for Social Security Program Integrity
Spending.
Amounts made available for program integrity spending shall
be in a separate account within the federal budget and funded
in a separate account in the appropriations bill.
Sec. 212. Use of the National Directory of New Hires.
Mandates that SSA consult the National Directory of New
Hires when determining whether an individual is making above
the substantial gainful activity limits.
Title III--Providing Support For Working, Disabled Americans
Sec. 301. Encouraging work through the Work Incentive Benefit
System
Removes Ticket to Work.
Implements the Work Incentive Benefit Program created by
Dr. Jagadeesh Gokhale, member of the Social Security Advisory
Board. The program incentivizes disability beneficiaries to
go back to work to the extent they are able by allowing them
to keep more of what they earn while receiving diminished
benefits. The program is different from the Benefit Offset
National Demonstration (BOND) in that it uses a sliding scale
(similar to the Earned Income Tax Credit) to encourage
beneficiaries to maximize their earnings.
[[Page S6630]]
Puts in place a reimbursement structure for state
vocational rehabilitation agencies that shares the savings
accrued when a beneficiary returns to work under the Work
Incentive Benefit Program and thus receives a lower benefit.
The share of these savings state VR agencies are entitled to
will increase based on the severity of the disability, to
ensure VR agencies are targeting those who need the most
help.
Sec. 302. Early-intervention demonstration project and study.
Requires SSA to implement two projects to:
Identify disability applicants who have not yet entered the
program but who are highly likely to be approved, yet who
would have some work capacity if given the appropriate
supports. Directs the Commissioner to provide targeted
vocational rehabilitation, as well as the possibility of
health benefits and cash stipends, to selected individuals
who voluntarily suspend their disability application in
exchange for these supports; and
Study the feasibility of incentives for employers to
provide private disability insurance and other support
services by reimbursing a portion of payroll taxes when
employers can reduce their disability rates (voluntary
experience rating).
______
By Mr. CARDIN:
S. 3005. A bill to amend the Internal Revenue Code of 1986 to provide
for a progressive consumption tax and to reform the income tax, and for
other purposes; to the Committee on Finance.
Mr. CARDIN. Mr. President, I am pleased to introduce the Progressive
Consumption Tax Act of 2014.
We need a tax code that is fair for American employers and fair for
American families. We need a tax code that makes our U.S.-based
businesses more competitive. Finally, we need a tax code that allows us
to responsibly and reliably collect reasonable revenues.
I applaud the contributions of my colleagues in both the Senate and
the House for their efforts in also trying to achieve these goals in
tax reform. However, I am adding this bill to the tax reform debate,
because I think we need to seriously reconsider the framework for that
debate.
Today, we seem to be stuck on 1986-style tax reform--lower the income
tax rate, and broaden the base by eliminating tax preferences.
The 1986 reform was a tremendous effort. But, I would argue that that
reform lasted less than one year before Congress began tinkering with
our income taxes once again. Since then, innumerable changes have made
our tax code more and more complicated and, for many taxpayers, less
and less fair.
Another issue with reform efforts focusing on our current tax system
is this--the extent to which we rely on income taxes is very out of
step with the rest of the world.
Compared to other countries that are in the OECD--developed countries
with advanced economies, countries that we want to be competitive
with--all taxes as a percentage of GDP in the United States are low.
But, the U.S. is not a low income tax country. Our income tax
revenues as a percentage of GDP are higher than the OECD countries. As
many of my colleagues have pointed out, we have some of the highest
statutory income tax rates in the world.
What accounts for the difference is that all OECD countries except
the U.S. have a consumption tax. In fact, about 150 countries now have
a consumption tax, many of which were enacted decades ago.
Unlike the U.S., these countries can tax imports and subsidize
exports by rebating their consumption taxes for exports--without
violating current World Trade Organization, WTO, rules. As important,
these countries can sustain reductions in their corporate income tax
rates, because they have an alternative and more pro-growth revenue
source--a consumption tax.
The Progressive Consumption Tax Act puts this country on a level
playing field by providing for a broad-based progressive consumption
tax, or PCT, at a rate of 10 percent. The PCT would generate revenue by
taxing goods and services, rather than income.
This is not simply an add-on tax. The revenues generated by the Act
would be used to eliminate an income tax liability for a significant
number of households. Those who do still have an income tax liability
would see a much simplified income tax with their marginal rates
reduced--the top marginal individual income tax rate, applying to
taxable income over $500,000 for joint filers, would be 28 percent. The
current top marginal rate, applying to taxable income over
approximately $450,000 for joint filers, is 39.6 percent.
The act would also slice our corporate rate by more than half, to 17
percent.
Finally, the act would provide rebates to lower- and moderate-income
families to counteract heir consumption tax burden and to replace
essential support programs like the Earned Income Tax Credit and Child
Tax Credit. Like the EITC and CTC, Individuals and families who do not
have an income tax liability would still be able to receive these
rebates.
A key part of the act is progressivity. By eliminating an income tax
liability for a significant number of households and providing rebates,
the Act is meant to be at least as progressive as the current system.
The act is also meant to responsibly produce reasonable revenues. I
know that some have concerns that the act would just provide a new
lever for the government to raise funds. That is why the act contains a
revenue ``circuit breaker'' mechanism that returns excess PCT revenues
to taxpayers if a certain threshold is met.
Overall, the Progressive Consumption Tax Act has many advantages
compared to our current reform efforts.
First, it encourages saving. Under current law, families and
individuals are taxed on income, which includes savings. Under the act,
most households would be exempt from the income tax, and thus would be
able to save tax free.
The act enhances U.S. economic competitiveness. The U.S. corporate
income tax rate would be lowered to 17 percent, encouraging
multinational corporations to locate here, not abroad. OECD countries
currently attracting U.S. multinationals often impose higher
consumption or corporate tax rates than those envisioned by the act.
For instance, this year, we heard of many companies that were
considering relocating to the U.K. That country's corporate income tax
rate is 21 percent and its general consumption tax rate is 20 percent.
Under the Act, the U.S. corporate tax rate would become 17 percent and
the consumption tax rate would be only 10 percent.
In fact, if the Progressive Consumption Tax Act became law, every top
statutory rate in the United States--our individual income tax rate,
our corporate tax rate, our consumption tax rate--would be at least
five percentage points lower than the OECD average.
The act encourages economic growth. In study that examined 35 years
of data on 21 OECD countries, consumption taxes were found to be more
growth-friendly than both personal income taxes and corporate income
taxes. Corporate income taxes, especially, appear to have the most
negative effect on GDP per capita. Growth-oriented tax reform should
move away from income tax revenues and towards consumption tax
revenues, as the act does.
The act also enhances U.S. trade competitiveness. Countries with
consumption taxes can adjust their taxes at the border by rebating
exports. That means that these countries can agree to reduced tariffs
under trade agreements, can still tax imports with their consumption
taxes, and can export their own goods without a full tax load. Because
the PCT is border-adjusted, the U.S. would be able to maintain export
and import tax parity in the same way as these other countries.
The act reduces income tax compliance costs. Most households would
not have an income tax liability under the act--although they would
need to provide key pieces of information to the IRS in order to obtain
their rebates.
Finally, the act protects low- and middle-income families from an
unfair tax burden. Through the income tax exemption and rebate feature,
the Progressive Consumption Tax Act aims to ensure that this new tax
system is at least as progressive as the current income tax system.
When my colleagues and others talk to me about comprehensive,
responsible, pro-growth tax reform, this to me is what we need to do.
That's why I am pleased to introduce Progressive Consumption Tax Act
in this Congress. The Act is meant as an opening for serious discussion
on this type of reform. We can't just stand by, fight the same tax
reform fights we did
[[Page S6631]]
nearly 30 years ago, and in the meantime watch American jobs move
overseas and our income tax system become further riddled with
loopholes. I hope we will stand for what is right in our tax code, and
enact the type of reform that allows our country to have among the
lowest tax rates in the industrialized world, and the fairest system
for all Americans.
____________________