[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]






                  PROMOTING OPPORTUNITY FOR DISABILITY
                        INSURANCE BENEFICIARIES

=======================================================================

                                HEARING

                               before the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              JULY 9, 2015

                               __________

                          Serial No. 114-FC07

                               __________

         Printed for the use of the Committee on Ways and Means




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                      COMMITTEE ON WAYS AND MEANS

                     PAUL RYAN, Wisconsin, Chairman

SAM JOHNSON, Texas                   SANDER M. LEVIN, Michigan
KEVIN BRADY, Texas                   CHARLES B. RANGEL, New York
DEVIN NUNES, California              JIM MCDERMOTT, Washington
PATRICK J. TIBERI, Ohio              JOHN LEWIS, Georgia
DAVID G. REICHERT, Washington        RICHARD E. NEAL, Massachusetts
CHARLES W. BOUSTANY, JR., Louisiana  XAVIER BECERRA, California
PETER J. ROSKAM, Illinois            LLOYD DOGGETT, Texas
TOM PRICE, Georgia                   MIKE THOMPSON, California
VERN BUCHANAN, Florida               JOHN B. LARSON, Connecticut
ADRIAN SMITH, Nebraska               EARL BLUMENAUER, Oregon
LYNN JENKINS, Kansas                 RON KIND, Wisconsin
ERIK PAULSEN, Minnesota              BILL PASCRELL, JR., New Jersey
KENNY MARCHANT, Texas                JOSEPH CROWLEY, New York
DIANE BLACK, Tennessee               DANNY DAVIS, Illinois
TOM REED, New York                   LINDA SANCHEZ, California
TODD YOUNG, Indiana
MIKE KELLY, Pennsylvania
JIM RENACCI, Ohio
PAT MEEHAN, Pennsylvania
KRISTI NOEM, South Dakota
GEORGE HOLDING, North Carolina
JASON SMITH, Missouri
ROBERT J. DOLD, Illinois

                       Joyce Myer, Staff Director

                  Janice Mays, Minority Chief Counsel









                            C O N T E N T S

                               __________
                                                                   Page

Advisory of July 9, 2015 announcing the hearing..................     2

                               WITNESSES

Jill Houghton, Executive Director, U.S. Business Leadership 
  Network........................................................    29
John Kregel, Ed.D., Professor, Special Education and Disability 
  Policy, Virginia Commonwealth University, Richmond, Virginia...    39
James Smith, Budget and Policy Manager, Division of Vocational 
  Rehabilitation, Vermont Agency of Human Services, Burlington, 
  Vermont........................................................    17
Paul N. Van de Water, Ph.D., Senior Fellow and Director of Policy 
  Futures, Center on Budget and Policy Priorities................    53
Mike Zelley, President, The Disability Network, Flint, Michigan..     6

                  QUESTIONS AND ANSWERS FOR THE RECORD

James Smith......................................................   100
John Kregel......................................................   105

                       SUBMISSIONS FOR THE RECORD

Consortium for Citizens with Disabilities, CCD...................   112
Employment Network Advocacy Coalition, ENAC......................   122
WorkFirst........................................................   129
National Council on Independent Living, NCIL.....................   136
National Employment Network Association, NENA....................   140

 
                  PROMOTING OPPORTUNITY FOR DISABILITY
                        INSURANCE BENEFICIARIES

                              ----------                              


                         THURSDAY, JULY 9, 2015

             U.S. House of Representatives,
                       Committee on Ways and Means,
                                                    Washington, DC.

    The Committee met, pursuant to notice, at 10:00 a.m. in 
Room 1100 Longworth House Office Building, the Honorable Paul 
Ryan [Chairman of the Committee] presiding.
    [The advisory announcing the hearing follows:]
    
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    Chairman RYAN. The Committee will come to order. I think we 
have most of our members present.
    This is our first, full-committee hearing on Social 
Security since 2008. Our goal here is to get ahead of the 
curve. As we all know, the Disability Insurance Trust Fund runs 
out of money next year. And that means, if we do nothing, under 
current law everybody on the program will see a 20 percent 
benefit cut.
    Now, Subcommittee Chair Sam Johnson, along with the ranking 
member, Mr. Becerra, have been working on solutions all year 
long. And a few months back, Mr. Johnson laid out four 
principles for reforming DI, all of which I fully endorse.
    First, no 20 percent cut. Stop that from happening. Not 
going to happen. Second, make sure all the benefits are paid on 
time. Third, make the program work better. Fourth, help people 
who can and want to work get back to work. This is the last 
point, the last point here I want to dwell on, because Chairman 
Johnson and his team have been looking at how to strengthen the 
DI program. And what they have found is the rules actually make 
it harder for people to work more.
    Here is the crux of it. If you make just one dollar more 
than you are allowed, you get kicked off the program. In other 
words, it is a lot safer to stay on the sidelines. It is no 
surprise, then, that only one half of one percent earn enough 
to get off the program. The program is way too complex. If you 
want to work--and 40 percent of recipients do--there are all 
sorts of rules and regulations you have to follow.


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    Chairman RYAN. To give you an idea, here is a chart on work 
incentives from the Social Security Administration. If looking 
at this makes your head hurt, then you are not the only one.
    We need to reboot our thinking here. Later this month we 
will celebrate the 25th anniversary of passing the Americans 
with Disabilities Act. And I agree that a disability should in 
no way diminish a person's right to fully participate in all 
aspects of our society. And that should be the spirit of DI. It 
will be there for you if you can't work. But if you want to 
work, we don't want to get in the way.
    We should recognize everybody has something to offer. 
Everybody can contribute. And we should encourage that. So I 
want to make clear to members on both sides of the dais that we 
are not here to cut DI. We are here to strengthen Disability 
Insurance. That is our mission.
    I also want to thank our witnesses for joining us here 
today. Every one of you here brings a unique perspective on 
Disability Insurance. And we are very interested in hearing 
your perspective. So I want to thank you again for taking the 
time to share your expertise.
    And I just want to say to our friends on the other side of 
the aisle we want your ideas, as well. We want to work 
together. We want to come up with a bipartisan solution. So 
let's get to it.
    And, with that, I want to recognize the ranking member for 
any opening statement that he would like to make.
    Mr. LEVIN. Thank you very much. Today's hearing is on work 
incentives for Americans who qualify for Social Security 
because of a severe disability, illness, or injury. Nine 
million Americans and two million of their spouses and children 
currently receive Social Security Disability Insurance.
    All Americans pay into SSDI--I want to emphasize that--so 
that one accident or one diagnosis doesn't mean a lifetime of 
poverty. In order to qualify for SSDI, disabled workers have to 
prove that their condition is so severe that it prevents them 
from working at a self-supporting level, and will last for more 
than a year. They must also provide evidence to the Social 
Security Administration that they have worked long enough to 
qualify for their benefits.
    On average, SSDI recipients worked hard, and paid into the 
program for 22 years--for 22 years--before receiving benefits. 
Despite the severity of their impairments, some of these 
Americans with disabilities continue to make efforts to work, 
and we should continue to support their efforts, while not 
harming those who cannot.
    Congress has created special benefit rules in Social 
Security called work incentives. These rules are designed to 
encourage work by giving individuals time to test whether they 
can work at a self-supporting level before their benefits end. 
Before Congress enacted these work incentive rules, many 
disabled Americans were afraid to even try to return to work, 
fearing they could lose their Social Security just for trying.
    In addition to these work incentives, Congress has also 
created a wide range of other programs designed to assist 
disabled Americans to work. The Ticket To Work program, enacted 
on a bipartisan basis in 1999, provides services to help Social 
Security beneficiaries understand the impact of work on their 
benefits, and get the employment support they need to be 
successful.
    The federal-state vocational rehabilitation program, which 
is not in our Committee's jurisdiction, helps people retrain 
for new work if they cannot do their old job. I hope there will 
now be displayed a chart. Let's see if modern technology works.

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    Mr. LEVIN. It does. As you can see, this is a chart on the 
return-to-work experience. Even with the support of services, 
vocational retraining, and special benefit rules, only about 15 
percent of beneficiaries have any earnings within 5 years of 
qualifying for Social Security. Many attempt to work, but are 
not able to sustain a job because of their impairment. Of those 
who do, most are only able to work part-time, or for very low 
pay, earning less than $750 a month. Under current law, those 
individuals are able to keep all of their earnings to help 
support themselves. As seen in this chart, a very small 
fraction--about four percent--mostly younger workers, are able 
to earn enough to work their way off of Social Security.
    So--and I emphasize this--as our Committee reviews the 
Social Security Disability Insurance program, and considers 
improvements, it is important that we know the full facts, and 
not rely on anecdotes. I would like to repeat that. It is 
important that we know the full facts, and not rely on 
anecdotes. We should do so with an understanding that all of us 
support combating fraud.
    Indeed, Mr. Becerra and Mr. Johnson have similar proposals, 
although a key difference is whether we provide the resources 
needed to make the proposals work. And we should do so, 
understanding the power of work. People want to work, both 
because of the earnings and the dignity that comes with having 
a job.
    So I just want to emphasize, as we proceed, we need to 
understand the facts, and understand who are the people, the 
vast majority of people, who are now on Social Security 
disability, and who have gone back to work. And, because of 
their disability, for how long they can work.
    Social Security Disability Insurance plays a vital role in 
the lives of millions. I hope we can work together to make sure 
that it continues to be there for all Americans. I yield back.
    Chairman RYAN. Thank you. I would like to invite the 
witnesses to paraphrase your remarks to conform with the five 
minutes. Your full written statement will be included as a part 
of the record.
    And, Mr. Zelley, why don't we start with you?

 STATEMENT OF MIKE ZELLEY, PRESIDENT, THE DISABILITY NETWORK, 
                        FLINT, MICHIGAN

    Mr. ZELLEY. Good morning, Chairman Ryan, and Ranking Member 
Levin from Michigan, as I am, and members of the Ways and Means 
Committee. I am honored to speak to you today regarding 
barriers to work actually caused by our Social Security 
Disability Insurance system, which I will call DI.
    I am the president of the Disability Network, a company 
that provides services and supports to thousands of people in 
Flint and Genesee County. I am also a paraplegic, use a 
wheelchair, who has benefitted from and been frustrated with 
disability insurance policies. My experience with DI began 36 
years ago, following an auto accident that took me out of the 
work force for several months, as I went through surgery and 
rehab at Craig Hospital in Denver. I was the senior vice 
president of a bank holding company at the time. And while at 
Craig I was encouraged to apply for DI benefits because I had a 
significant disability that could affect my ability to work. 
And, after all, like you, I paid for disability insurance 
coverage.
    So, even though I wanted to return to work, my company--and 
my company wanted me back, nothing was certain. So I was 
awarded DI, and received the benefit of about $800 a month, 
which is not a meaningful wage, with a family. I had seven 
children at the time.
    So, after months of rehab, I gradually returned to full-
time work. And when I informed Social Security that I was going 
back to work, they told me that I was beginning a trial work 
period, and, if successful, my DI benefits would stop. That 
didn't make much sense to me. The remarkable paradox was that 
Social Security strongly encouraged me to return to work right 
after I told them that I was injured seriously enough to affect 
my ability to return to work. It just didn't make sense.
    So, eventually, the DI check stopped coming, including an 
overpayment, which I paid back, and that is a whole other 
story. My career continued until I founded the Disability 
Network organization, where we believe the best way to lift 
people out of poverty and not be poor is gainful employment. 
People with disabilities need supports from organizations and 
companies like us, and DI policies that encourage employment 
and have an expectation of work.
    Why would we require people to pay for federal disability 
insurance to help them in the event of a disabling condition 
that affects their ability to work, and then penalize them if 
they do work and make a meaningful wage? When people with 
disabilities access the very benefit we require them to pay, we 
immediately take it away when they earn more than a so-called 
substantial gainful activity, SGA, about $1,000 a month, which 
is not substantial. Most people would call this a cliff, a 
poverty wage activity, rather than a substantial gainful 
activity, because it does not allow for a meaningful income.
    This is especially true when the cash benefit is commonly 
used for products and services related to our disability, like 
aids to daily living, or transportation, or personal assistant 
care. So I strongly encourage you to consider a proposal to 
ramp off the current wage cliff associated with SGA that 
prevents people from the American Dream of independence and 
freedom. Our policies discourage work, force people into 
spectator stands, watching the world go by, and we know life is 
not a spectator sport.
    We need people in the game, in the economy, working. All of 
our people. And, unfortunately, because of these DI policies, 
they are not even on our talent bench. A recent study--ACS from 
Cornell--showed that there are half-a-million working-age 
people with disabilities in Michigan who are not working. And 
yet 43 percent of them have a college education or degree. What 
is wrong with this picture?
    Leaders from across the nation you will hear today--like 
Randy Lewis from Walgreens; Rick Keyes from Meijer in Michigan; 
Jeannie Stone from Trijicon--are publicly stating that they 
want to hire not only people with disabilities, 20 percent. 
They have a quota of doing that. They see the talent, 
dependability, motivation, and proved workforce that occurs 
when people with disabilities are back in the workforce.
    It is hard to imagine a cost-neutral, simple way to change 
DI policies, and yet, at the same time, it is common sense that 
working people with DI will pay back a portion on that two-to-
one sliding scale, pay back the actual benefit they are 
receiving. So you have the opportunity to make a difference, to 
replace a fear-driven poverty-entrapping system with a simple 
ramp-off change. Don't let our intended safety net system 
continue to actually trap people in a poverty net, like a 
spider web, rather than help them bounce back to work, like a 
trampoline.
    So, thank you for this opportunity to appear before you 
today, and I look forward to any questions you may have.
    Chairman RYAN. Thank you. Thank you very much. Very well 
said. I appreciate your comments.
    [The prepared statement of Mr. Zelley follows:]
    
    
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    Chairman RYAN. Mr. Smith.

 STATEMENT OF JAMES SMITH, BUDGET AND POLICY MANAGER, DIVISION 
OF VOCATIONAL REHABILITATION, VERMONT AGENCY OF HUMAN SERVICES, 
                      BURLINGTON, VERMONT

    Mr. SMITH. Chairman Ryan, Ranking Member Levin, and Members 
of the Committee, thank you for this opportunity to talk to you 
about a major work disincentive built into the Social Security 
Disability Insurance, or SSDI, program. My name is James Smith, 
and I work for the Vermont Division of Vocational 
Rehabilitation.
    Over the years, my staff and I have talked with thousands 
of SSDI beneficiaries about returning to work. Based on our 
experience, the SSDI program rules do not make work pay. In 
fact, they do the opposite. They discourage work and encourage 
dependence. In particular, I am referring to the so-called SSDI 
cash cliff. The cash cliff works as follows. After a nine-month 
trial work period and a three-month grace period, if a 
beneficiary earns a single dollar over the so-called 
substantial gainful activity, or SGA level, $1,090 per month, 
that single dollar results in a complete loss of the SSDI cash 
benefit. It also could result in loss of eligibility for the 
program all together.
    In my written testimony I share Susan's story. Despite her 
severe mental illness and repeated hospitalizations, Susan 
worked with VR to try to go to work. At first she was careful 
to keep her earnings below the cash cliff level, because she 
received a benefit for herself and her dependent child. In 2014 
she was offered a supervisory role that would have put her 
earnings over the SGA cash cliff. She was thrilled to be 
recognized for her good work. However, she understood that 
taking the promotion would result in a net loss in her total 
income that she simply could not afford. She did not take the 
promotion, and is currently keeping her earnings below the cash 
cliff. She is only in her forties, and I suspect she will never 
leave the SSDI roles.
    The obvious alternative to the SSDI cash cliff is a gradual 
one-dollar-for-two-dollar earnings offset, just like the SSI 
program. A one-for-two offset would gradually reduce the SSDI 
benefit, as the beneficiary increases earnings. So the 
beneficiary is always better off, the more they work.
    There is research to support this approach. Data from a 
four-state pilot study, including Connecticut, Wisconsin, Utah, 
and my state, Vermont, provides clear evidence that an earnings 
offset for SSDI would result in increased earnings above SGA. 
Overall, the studies showed an offset led to a 25 percent 
increase in the number of beneficiaries working above the SGA, 
or cash cliff, amount.
    In my written testimony I share Donna's story to show what 
the offset meant to one beneficiary. Donna was diagnosed with 
stage three melanoma. Because of the severity of her illness, 
she was not expected to survive. Donna made multiple attempts 
to return to work through four separate reoccurrences of her 
illness. In 2013 she was able to access a one-for-two offset 
through the benefit offset national demonstration. The offset 
allowed Donna to work at a level that her health allowed, and 
keep a portion of her benefits. It also gave her extra income 
to help her children through college. Donna was recently 
offered a job with the Veterans Administration at a level that 
will help--that will zero out her SSDI benefit.
    So, how do we improve the SSDI work incentives for people 
like Donna and Susan, and be cost effective to the trust fund?
    First, implement a graduated one-dollar-for-two-dollar 
earnings offset to always make work pay.
    Second, start the offset at a threshold of less than the 
substantial gainful activity, or cash cliff level, to generate 
savings to the program. Right now, Social Security pays 100 
percent of a beneficiary's benefit, unless the beneficiary 
earns above the SGA threshold. Therefore, most work activity 
does not result in any savings for the program. Starting an 
offset at less than SGA would be more likely to generate 
savings to the program, just like the SSI program.
    Third, eliminate the trial work period. Right now, Social 
Security pays 100 percent of the benefit during the nine-month 
trial work period, regardless of how much a beneficiary is 
earning. With an offset, savings could be generated from the 
first month the beneficiary goes to work, just like the SSI 
program.
    Finally, allow beneficiaries' continued attachment to the 
SSDI program, regardless of how much they work, as long as they 
continue to be medically eligible. Disability can be unstable 
and unpredictable. Beneficiaries like Donna and Susan may have 
periods of time when they can work full time, and other periods 
of time when they may not be able to work at all. Continued 
attachment will give beneficiaries the security they need to 
try work without the fear of being completely cut off.
    So, in summary, the current SSDI work rules provide a 
powerful disincentive to work. In contrast, our proposed 
changes would support return to work by always making work pay, 
potentially save money by eliminating the trial work periods, 
and starting the offset in SGA, and provide security to 
beneficiaries who want to try to increase their work activity. 
Such an approach would provide people like Donna and Susan a 
change for a better life, despite the challenges of living with 
a severe disability.
    Thank you for giving me the opportunity to speak to you 
today.
    Chairman RYAN. Thank you.
    [The prepared statement of Mr. Smith follows:]
    
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    Chairman RYAN. Ms. Houghton. Did I pronounce it correctly?
    Ms. HOUGHTON. You did.
    Chairman RYAN. Thank you.

 STATEMENT OF JILL HOUGHTON, EXECUTIVE DIRECTOR, U.S. BUSINESS 
                       LEADERSHIP NETWORK

    Ms. HOUGHTON. Chairman Ryan, Ranking Member Levin, and 
Members of this Committee, thank you for the opportunity to 
provide testimony today. My name is Jill Houghton. I lead an 
organization called the U.S. Business Leadership Network. We 
are a national, non-partisan, business-to-business network 
focused on the premise that business responds to their peers, 
and can teach each other how to include people with 
disabilities across the business.
    We have more than 50 BLN affiliates across the nation. We 
represent more than 5,000 businesses. And I am here to tell you 
that countless companies across this nation are recognizing 
that there is a value to include people with disabilities, to--
in jobs, earn the same pay, work side by side, and be held to 
the same standards.
    My testimony is grounded in my professional experience 
working with these businesses who represent the demand side of 
the employment equation, as well as my personal experience. I 
am married to a gentleman with a spinal cord injury who is one 
of the people who worked his way off of the Social Security 
Disability Insurance program.
    In preparation for our--for my testimony, we reached out to 
our members. And here is what they had to say. One of the 
greatest challenges that they face is finding the qualified 
candidates with disabilities that can do the job with or 
without a combination. That is a really complicated matter.
    But if we dig through it, there are a couple things that 
come to mind. One, it is very hard for business to navigate 
government and all of the sea of non-profit organizations out 
there. But, secondly, it is also hard for them to understand 
that the Social Security Disability Insurance program 
eligibility requirements do not appear to be supportive of the 
individuals that want to remain employed or increase their 
hours worked.
    Now, while the SSDI program provides a very vital, 
important safety net to those with disabilities that meet the 
eligibility requirements, the complexity of the rules appear to 
cause some individuals who want to remain employed to reduce or 
limit their hours worked, to limit their earnings, and to, in 
some instances, quit their jobs. In fact, we hear regularly 
from mid-level managers that are really perplexed. They don't 
know how to help their employees.
    Now, while our members are not experts on the SSDI program, 
they would be the first to admit that there are significant 
obstacles that these beneficiaries face related to losing 
program eligibility, loss of health care benefits, and fear of 
overpayments. These type of challenges inhibit businesses' 
ability to recruit and hire people with disabilities. And this 
is a really large, growing problem, because many of these 
companies are federal contractors, and they are subject to the 
new Section 503 regulations that were issued by the U.S. 
Department of Labor, Office of Federal Contract Compliance 
Programs.
    Now, this new regulation basically encourages federal 
contractors to set a utilization goal, to set a goal that seven 
percent of their workforce across job groups be people with 
disabilities. And they have to hold themselves accountable. And 
if they don't meet this goal, then they have to show that they 
are going to fix this goal. And while this isn't a bad thing--
it is not a bad thing--and countless companies are trying to do 
better, we need Congress to make the SSDI program work better 
for the beneficiaries, and to promote opportunity for those who 
want to work. This, in turn, is going to help our members to 
hire people with disabilities.
    From an opportunity perspective, I would just like to call 
your attention to the fact that we created a Disability 
Equality Index, in partnership with the American Association of 
People with Disabilities. This is a benchmarking tool. It is an 
aspirational recognition tool that we are using to help 
corporate America advance their disability inclusion.
    We launched the first annual DEI, and 80 Fortune 1000 
companies participated. Nineteen of those companies that 
participated received 100. Now, 100 doesn't connotate 
perfection, but what it does demonstrate is that these 
companies are committed, and they want to do better. When a 
company puts their commitment out there, that speaks loud and 
clear to people with disabilities, that these are companies 
that want to recruit, want to hire, want to retain, want to 
advance employees with disabilities.
    We are getting ready to celebrate the 25th anniversary of 
the Americans With Disabilities Act. And my organization has 
launched a disability rights mobile museum that is traveling 
the nation. In fact, we were at the Pittsburgh Pirates field 
yesterday. We are going to be at the U.S. Chamber of Commerce 
on Friday, July 31st. We did this because business wants to 
work together. We want to raise awareness, and leverage the 
untapped potential of Americans with disabilities.
    We applaud your leadership, and we will look forward to 
working together.
    Chairman RYAN. Thank you very much.
    [The prepared statement of Ms. Houghton follows:]
    
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    Chairman RYAN. And Mr. Kregel.

 STATEMENT OF JOHN KREGEL, ED.D., PROFESSOR, SPECIAL EDUCATION 
   AND DISABILITY POLICY, VIRGINIA COMMONWEALTH UNIVERSITY, 
                       RICHMOND, VIRGINIA

    Mr. KREGEL. Chairman Ryan, Ranking Member Levin, and 
Members of the Committee, my name is John Kregel, and I am 
principal investigator of the Work Incentive Planning and 
Assistance National Training Center at Virginia Commonwealth 
University. Thank you for this opportunity to discuss ways in 
which the Social Security disability benefits program can work 
better to assist DI beneficiaries to obtain and maintain 
employment, improve their financial independence, and decrease 
their reliance on federal benefits.
    My testimony will address four major points. First, SSDI 
beneficiaries make employment decisions based on their personal 
financial situation, health, and other personal factors. 
Seventy percent of the beneficiaries are over the age of 50. 
Many report their health to be poor or very poor. An estimated 
28 percent live in poverty. Most have not worked for a long 
time. Yet many SSDI beneficiaries have long-term employment 
goals, and have recently taken the steps to reach those goals.
    Based on analyses of the National Beneficiaries Survey that 
identified work-oriented individuals, it is estimated that 1.5 
million DI beneficiaries have work goals or aspirations, and an 
additional 1.4 million beneficiaries have the same ambitions, 
and have taken steps toward achieving their goals in the past 
12 months. We should focus our efforts on helping these 
beneficiaries overcome the obstacles that currently make it 
difficult for them to pursue their employment goals.
    Second, we must keep in mind that virtually all DI 
beneficiaries are dealing with a major disruption in their 
lives, such as severe injury, debilitating illness, or 
progressive condition. They face many challenges when 
attempting to return to work, and need time to adjust to a new 
career. Extensive research over the past two decades has 
documented that beneficiaries repeatedly identify very specific 
barriers to employment that restrict their ability to pursue 
their vocational goals.
    Foremost among these barriers are fear of losing benefits, 
fear of overpayments, and lack of confidence in SSA's ability 
to accurately administer their DI payments. As a result, DI 
beneficiaries who are capable and desire employment are, far 
too often, choosing not to work, restricting their earnings so 
as not to jeopardize their entire DI payment, or leaving 
employment in the face of disruptive overpayments or benefit 
termination, all related to the all-or-nothing rules of the DI 
program.
    Third, working DI beneficiaries must comply with rules that 
are complex, difficult to understand, time-consuming, and, too 
often, result in unnecessary overpayments and unexpected 
benefit suspension. In my written testimony I included the 
chart referred to by Congressman Ryan in his opening remarks. 
The chart provides a very complete, accurate description of the 
DI return-to-work path. It is important to note that each of 
the steps requires significant processing by SSA, and may 
result in sometimes lengthy delays, and require time-consuming 
actions on the part of the beneficiary.
    For example, beneficiaries are required to continuously 
report earnings, including actually mailing paper copies of pay 
stubs, and submitting other records manually to SSA. Also, SSA 
processing of substantial gainful activity determination or 
work incentives, may sometimes take several months leaving 
beneficiaries uncertain as to their future income or potential 
overpayment. The current DI return-to-work process is not 
sufficiently automated, and often results in confusion and 
uncertainty on the part of the beneficiary.
    Fourth, future improvements to the DI program rules should 
eliminate the all-or-nothing aspect of a beneficiary's decision 
to return to work. Under current program rules, each 
beneficiary must decide if the personal or financial benefits 
of working will outweigh the potential risk of abrupt benefit 
suspension. Extensive research has been done to understand how 
individuals make financial decisions by examining the risks and 
rewards of their potential actions.
    We know that individuals who are not in good health, who 
are not employed, or who have fewer resources may be more risk-
averse than other individuals when making employment decisions. 
Research also shows that a person is more likely to choose what 
is certain or established over what is possible, even if the 
possible event would be a much better circumstance. 
Unfortunately, the perceived high-risk nature of their 
employment decision too often leaves beneficiaries 
unnecessarily restricting their earnings below the SGA level, 
referred to as ``parking under the cash cliff.''
    SSDI beneficiaries would benefit from a change in the DI 
program rules that would provide a gradual reduction in benefit 
payments as the individual advances in their career and avoids 
the abrupt total loss of payments after completion of the trial 
work period. This change would allow beneficiaries to pursue 
their employment goals, while moderating the high-risk choices 
that are inherent in the current program rules. Thank you, Mr. 
Chairman.
    Chairman RYAN. Thank you.
    [The prepared statement of Mr. Kregel follows:]
    
    
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    Chairman RYAN. Mr. Van de Water.

  STATEMENT OF PAUL N. VAN DE WATER, PH.D., SENIOR FELLOW AND 
    DIRECTOR OF POLICY FUTURES, CENTER ON BUDGET AND POLICY 
                           PRIORITIES

    Mr. VAN DE WATER. Thank you, Mr. Chairman, Congressman 
Levin, and Members of the Committee. I appreciate the 
invitation to appear before you this morning.
    Promoting opportunity for Social Security Disability 
Insurance beneficiaries, especially those trying to return to 
work, is an appropriately lofty goal. Policy-makers should 
continually seek new and better ways of helping people with 
serious impairments return to the workforce. But expectations 
should be realistic, and grounded in experience.
    Disability Insurance already provides many inducements for 
beneficiaries to work. Most important, beneficiaries can earn 
up to $1,090 a month, called substantial gainful activity, or 
SGA, indefinitely, and still collect benefits. For an average 
beneficiary, this would nearly double his or her income. 
Beneficiaries are also eligible for employment services and 
supports to help them return to work.
    DI's eligibility criteria are very stringent, however, and 
research consistently finds that most beneficiaries have 
limited work capacity. Only a minority ever work again, and 
just four percent are able to earn enough to work their way off 
the DI rolls.
    Social Security has undertaken many demonstration projects 
over the years to test new ways to encourage beneficiaries to 
return to work. But they have consistently shown limited 
results, or proved not to be cost-effective. Further efforts to 
promote work are, therefore, likely to have only a small 
payoff. In fact, some options could increase DI costs, harm 
vulnerable beneficiaries, increase payment errors, or even 
discourage work, rather than encourage it.
    One approach would eliminate DI's cash cliff, which several 
of the other witnesses have discussed this morning. Instead, 
this proposal would reduce benefits gradually by $1 for each 
$2, once earnings exceed a certain level. Applying this benefit 
offset, starting at the $1,090 SGA level, would indeed create 
an incentive for beneficiaries to earn more than that amount, 
but would also raise program costs.
    Starting the offset at a lower earnings level would reduce 
costs, but it would also create a work disincentive for 
beneficiaries with monthly earnings between the proposed 
threshold and $1,090. These beneficiaries would face an extra 
50 percent tax rate on their earnings in that range, thereby 
reducing their income and making work less attractive.
    For example, consider a typical DI beneficiary with a 
benefit of $1,200 a month. If he earns $800, his total monthly 
income would be $2,000, under the current rules. But if 
Congress passed a benefit offset that started at $300 in 
earnings, his benefit would drop by $250, 50 percent of his 
earnings above the threshold amount, and he would lose one-
eighth of his income.
    As a result, it is uncertain whether proposals such as a 
benefit offset would increase or decrease work overall. In 
addition, a benefit offset with a threshold below the current 
SGA level would shift income from poorer, sicker beneficiaries 
to those with higher earnings. In view of these concerns, any 
benefit offset proposal should be thoroughly tested and 
evaluated before it is implemented.
    It is worth testing some promising changes to DI through 
carefully structured demonstration projects, but those 
demonstrations won't yield quick answers. Congress should also 
consider other ways of rewarding work for people with 
impairments. Extending provisions of the Earned Income Tax 
Credit and Child Tax Credit that are now slated to expire after 
2017, and improving the EITC for childless workers, a proposal 
that is backed by both Chairman Ryan and President Obama, would 
boost the rewards for work for many low-wage workers with 
disabilities.
    First and foremost, however, Congress should take steps to 
assure sufficient financing for Disability Insurance, and 
thereby avert a 20 percent cut in benefits. The Congress should 
not expect to find a magic bullet that will simultaneously trim 
costs, make beneficiaries better off, and avert the need to 
replenish the DI trust fund in 2016 and beyond. Thank you.
    [The prepared statement of Mr. Van de Water follows:]
    
    
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    Chairman RYAN. Thank you. I would like to ask each of you a 
lot of questions, but I want to be mindful of everybody's time 
here.
    First, like the retirement trust fund, once the disability 
trust fund is exhausted, then the across-the-board cut comes. 
That comes, in this case, next year. And so, we have to prevent 
that from happening, and that is our goal, to prevent that from 
happening. That is point number one.
    Point number two, there is a lot of experience right here 
that we want to gain some insight from.
    So, Mr. Zelley, let me ask you. You went into this in your 
testimony, but go a little deeper, if you could, about the 
cliff. How, in your view, from just seeing it in people's 
lives, does the cliff affect a person's ability and willingness 
to work? What fear is associated with this? Do people plan and 
organize their lives around this cliff? Give me a sense of what 
this is like, what people are experiencing right now.
    Mr. ZELLEY. Well, I agree that the testimony--we heard 
about people want certainty in their lives. And the system we 
have is so complex, it gets in the way.
    The fear comes in two ways. Fear comes from people with 
disabilities, having gone through a traumatic experience, and 
also fear on business's side, in terms of ``I am going to say 
the wrong thing,'' or, ``My health care costs are going to go 
up,'' ``I will never be able to fire them because of this ADA 
thing,'' all of which are not true. You will hear businesses 
testify just the opposite of that.
    The fear comes as I am certain that I am going to get 
$1,000 a month, and if I get one dollar more, I will lose 
everything. I faced that, but the reason it wasn't a problem 
for me at the time is that I had a company who wanted to hire 
me back. I was fortunate that I wasn't a plumber, electrician. 
I had a skill that was valued, and I could return to that job, 
and the company wanted me back. So I was able to return, hit 
the floor running. And then the $800 a month went away. It 
would have been nice, because that helped with my disability-
related expenses.
    But again, Mr. Chairman, you are asking about the fear, and 
the fear is the cliff, more than anything. It is not a fear of 
going back to work. We all want the dignity of work. We all 
want the value of how--what is the second question people----
    Chairman RYAN. Well, we see the statistics. We see the 
economics. We see the tax rates, and things like this. But we 
want to get a sense of what a person is experiencing as they 
try to get themselves back to where they were in life, or where 
they want to get to. And that is--the cliff fear is what I am 
trying to get a sense of, and I think that is pretty helpful.
    Let me--since you talked about the complexity of it, let me 
just go to one person over. Mr. Smith, you ran the 
demonstration project in Vermont.
    Mr. SMITH. Yes.
    Chairman RYAN. And the results, from what your testimony 
says, a 25 percent increase in the number of beneficiaries who 
worked above the SGA amount, correct?
    Mr. SMITH. Yes, that was for all four states.
    Chairman RYAN. That is right, for all four states, 
including Wisconsin.
    Walk me through your belief, your impression, on whether we 
can scale this up, nationwide. Do you think Social Security can 
administer a benefit offset approach? That is question number 
one, meaning can we scale this up. Because the purpose of a 
demonstration project is to see if an idea works. And then, if 
it does, scale it up for the rest of the country. That is the 
whole purpose of it. So, can we do that?
    Number two, your recommendation. And some others have been 
recommending this. Why do you recommend starting a benefit 
offset at an amount lower than was tested at the four-state 
pilot? Other groups also recommend starting the benefit offset 
below the SGA level. Tell us why you proposed doing it that 
way.
    So, can we scale it up? And give us the rationale for your 
recommendation.
    Mr. SMITH. Sure. Yes. I believe that the Social Security 
Administration can certainly implement benefit offset. They 
already do so for the----
    Chairman RYAN. SSI, right.
    Mr. SMITH [continuing]. Program. And if you get rid of some 
of the--if you get rid of the complexity of the trial work 
period, the extended period of eligibility that is built into 
the SSDI program, and have a simple offset, it would be simpler 
to administer for Social Security. And Social Security has made 
that proposal under what they call the Work Incentives 
Simplification Project. So, yes, I believe Social Security 
could administer an offset.
    The second question. The reason why I and others have 
proposed an offset starting at less than SGA is that we 
recognize that if the offset started at SGA, that it would 
indeed increase cost to the program. And so, it's, in a sense, 
a real balance, from my perspective, in that we see from our 
experience, we see the cash cliff, and the fear of going off 
the program completely, and going into an overpayment as a far 
more powerful disincentive to work than a more graduated 
approach, a more predictable approach that folks can rely on.
    That is why--in addition to that, that is why I think 
continued attachment to the program, based--allowing folks to--
continued attachment to the program, no matter how much they 
work, would be a key balance to that.
    Chairman RYAN. Meaning if you have a good month and a bad 
month, you can go back----
    Mr. SMITH. Right. And so, my staff, who work with thousands 
of beneficiaries, could say to someone, ``Look, no matter what 
happens, the more you work, the better off you are going to 
be,'' and that would be wonderful.
    Chairman RYAN. Yes, that makes perfect sense, because, I 
mean, we have two issues here. We have got a fiscal problem, we 
have got bankruptcy coming, you know, insolvency, and we have 
got a messed up work disincentive. And so we have got to try 
and find a way of harmonizing those two objectives and fixing 
both those problems.
    I could go on and on. I don't want to, because I want to 
recognize we have a lot of Members who want to ask questions. 
So I would like to recognize Mr. Levin.
    Mr. LEVIN. Thank you. As you said, Mr. Chairman, there is 
agreement. We have to avoid the 20 percent cut. Also, we want 
to reduce complexity.
    But I want to get, if I might, to the nub of this. All of 
us want very much that those who are disabled and who are able 
to work, and want to, should be able to do so. There is much 
talk about the cliff. But the challenge is this. If you adopt a 
position of revenue neutrality, the danger is you are going to 
end the cliff by deepening the hole for those who are making 
much less as they work.
    So, Mr. Van de Water, your testimony talks to us about 
this. So, talk to us about how much most of the people who are 
disabled who are now working, how much they earn, and what the 
consequences might be if you set a level in terms of this new 
proposal. What happens to many people, disabled, who have 
returned to work?
    Mr. VAN DE WATER. Mr. Levin, the data that we have indicate 
quite clearly that, of the beneficiaries who work, most of them 
are earning amounts that are substantially below the so-called 
substantial gainful activity level that I and the other 
witnesses have been talking about. That is, there are very few 
beneficiaries who are earning near this $1,090-a-month cutoff.
    Now, the implication of that is that, the lower the 
threshold at which you start the benefit offset, the more 
people would be potentially disadvantaged. I have seen 
estimates that suggest, for example, if we wanted to have a 
benefit offset that was truly cost neutral, it would have to 
start at around $300 a month. So that would mean that for 
someone who was earning $500 a month, which would be more 
typical than someone earning, say, $1,000, that person would 
face losing part of his benefit. So, in that case, instituting 
a benefit offset would actually be a work disincentive for that 
person, rather than an incentive.
    So, in order to figure out whether the program, as a whole, 
and the proposal as a whole, was a work incentive, you would be 
balancing the benefits for some and the disadvantages for 
others.
    Mr. LEVIN. Let me ask. Who disagrees with that? Indeed, I 
think it is very clear, Mr. Smith, that CBO estimates that 
changing it the way it was done in the states that you discuss 
would increase the overall cost for SSDI.
    I mean we face a real challenge here, and a real dilemma. 
You go to an offset, and you are focusing on those who are 
making more than $1,090, and you are going to essentially, if 
you have revenue neutrality, reduce the amount that is being 
received by those who are disabled, which--they are earning 
$300, $400. They are not rich. And you end the cliff for those 
who are making more than $1,090 if you have a 1-2 proposal.
    So, everybody who is proposing that has to face up to this 
issue, and that is why the Chairman and I and Mr. Becerra and 
our good friend from Texas have said we need to look at the 
facts. Those who are disabled who are able to return to work 
should have an incentive to do that, not a disincentive, and to 
also make sure that the system gives them a decent standard of 
living.
    So, anybody who says, ``Let's have an offset, it has to be 
absolutely revenue neutral,'' is essentially, I think, having 
to deal with consequences for the individual lives of, I think 
numerically--we don't know exactly how many. The vast majority 
of people who are returning to work are earning much less than 
$1,090.
    I mean, Mr. Smith, that is true, isn't it?
    Mr. SMITH. Yes, that is true. Based on our experience in my 
state, we serve currently about 10 percent of the SSDI 
beneficiaries in the state. And my staff, we looked at it 
yesterday, over the last decade, have spoken to about 10,000 
beneficiaries, about half of whom were SSDI beneficiaries.
    And what we see clearly is that people are--if you look at 
this like an economist, and you are assuming that people are 
doing the math, and they understand the--exactly, you know, 
where the cliff is, the reality is--what we see is that folks 
are fearful. And so they actually suppress their earnings well 
below the SGA level, because they have heard a story from a 
friend or a neighbor who was suddenly cut off the program, and 
suddenly got a letter saying they had a $10,000 overpayment 
because of the all-or-nothing nature of the DI program.
    And that is the other issue, I think, that is critical to 
understand is that the all-or-nothing nature of the SSDI 
program creates large overpayments, because if you get it 
wrong--and it is very easy to get it wrong--it takes months for 
my staff to learn the SSDI----
    Mr. LEVIN. So I think we need a system so that overpayments 
are corrected more quickly. And many of us have been asking for 
more funding to carry out the program. And often, for years, 
that has been resisted. And there is under-funding, I think, of 
the personnel of the department. We have to adjust that. But we 
need to look at this not only as economists, but as the people 
who are disabled.
    Mr. SMITH. Yes.
    Mr. LEVIN. In most cases severely disabled. And where there 
is a desire to return to work, make sure that, as we worry 
about those who would be affected by the cliff, look at those 
who are not earning anywhere near where they would reach the 
cliff.
    And so, you have to make sure, when you are talking about 
offsetting, that you are not essentially setting off some 
consequences for a lot of people who have returned to work who 
can't make anything close to $1,000, and who, under a proposal, 
would have their monthly benefit reduced.
    I yield back.
    Chairman RYAN. I think this is a great conversation, and we 
want to continue. I want to turn to Mr. Johnson.
    But I think that what we are trying to get at here is the 
existence of the cliff, what does it do to the psychology of 
the person? And it is not something that we can look 
antiseptically as a statistical problem, like an economist. But 
what does it do to the nature of a person and their decision-
making? And that is what we are trying to get a hand on here.
    Mr. Johnson.
    Mr. JOHNSON. Thank you, Mr. Chairman. I appreciate you 
holding a hearing on promoting opportunity for those with 
disabilities. Mr. Chairman, I would say that we have a moral 
responsibility to help those with disabilities who can get back 
to work. And according to a recent survey, 40 percent of the 
beneficiaries said they were interested in working. Yet in 2013 
only one-half of one percent left the rolls. Bottom line, we 
can and must do better.
    Ms. Houghton, welcome. Good to see you again. As you may 
know, a few years ago I had the pleasure of touring the 
Walgreens Distribution Center in Waxahachie, near my district. 
And there, with the help of the Texas Department of Assistive 
and Rehabilitation Services, those with disabilities, including 
former disability beneficiaries, worked side by side with other 
workers, doing the same job for the same pay with the same 
performance. What I saw there was impressive, and spoke to the 
fact that a business can know the value of individuals with 
disabilities, and wants to make these folks be part of the 
team.
    Ms. Houghton, let me ask you, does your organization help 
companies who want to employ individuals with disabilities?
    Ms. HOUGHTON. Nice to see you, Congressman. And, 
absolutely, the answer is yes. We are at a tipping point. 
Business is--countless companies, large, medium, small, in all 
different sectors, are joining our organization. And the way 
that we help business is twofold. Most importantly, we connect 
them with each other. There is a lot that they can learn from 
Walgreens, from Procter and Gamble, from Microsoft, from IBM. 
They can teach each other best practices. And we become a 
bridge to the myriad of resources that are out there through 
strategic alliances that we have with different non-profits.
    Mr. JOHNSON. Well, I appreciate you seeking help from the 
business community overall. Is Walgreens a rare exception, or 
is someone else in the area doing the same thing?
    Ms. HOUGHTON. They used to be a rare exception, but not any 
more. There are numerous--I repeat, numerous--companies that 
see value, that see that disability is helping them drive their 
financial performance, and innovate and develop new products 
and services.
    Mr. JOHNSON. Thank you. Dr. Kregel, while we talk a lot 
today about how to help disability beneficiaries return to 
work, I am also concerned about those individuals that apply 
for benefits, are denied, and then try to return to work. At a 
local hearing office, it takes 435 days, on the average, for 
someone to receive a decision by a judge. That is well over a 
year, waiting on a decision, and valuable time spent out of the 
workforce.
    As you may know, I have got a bill to require Social 
Security to provide denied applicants with information on 
organizations that do provide employment support. What are your 
thoughts on that?
    Mr. KREGEL. We think that that would be a very helpful 
benefit to people who apply but do not get awarded benefits. 
Remember, well over half of the individuals who apply for 
Social Security do not get accepted at the disability 
determination level. The longer that they are out of engagement 
with the workforce, the longer they go unemployed, the more 
challenging it will be for them to return to work.
    So, as soon as they can receive help, that will give them 
the assistance that they really need in order to do this. So we 
would be very supportive of sending information to employment 
service providers and other organizations who could help those 
folks.
    Mr. JOHNSON. Yes, it--unfortunately, it seems to me that it 
is just too complicated for folks right now to do something 
about it. Some are able to work with benefit counselors, but 
what about those who aren't working with a benefit counselor? 
Would a website, as outlined in my Promoting Opportunity 
Through Informed Choice bill help at all?
    Mr. KREGEL. Yes, I think that all additional information, 
accurate, complete information that can be provided to 
beneficiaries, help them make the choices that they need to 
make. A lot of them, when they first are awarded benefits, they 
get a brochure about what will happen if you return to work, 
but they may go a lengthy period of time, they may be still 
dealing with their illness or their condition. When they think 
about working, it is hard to locate that brochure and move 
forward.
    There are resources available in the community that can 
help them do that. But, just as significantly, if they can 
search the web, if they can identify resources, all those tools 
are very, very valuable. They need to be specific to individual 
states, because the health care programs in states may vary 
considerably. But all tools will be useful to the 
beneficiaries.
    Chairman RYAN. Thank you.
    Mr. JOHNSON. Thank you.
    Thank you, Mr. Chairman.
    Chairman RYAN. Mr. Rangel.
    Mr. RANGEL. Thank you, Mr. Chairman. And let me really 
thank this panel. It has been a political process that the 
Majority picks most all of the members of the panel, and then 
the Minority selects one member. But the credibility and 
experience that all of you have, it is hard for me to see any 
sense of partisanship or politics in your roles, or the 
testimony which you have given.
    And I certainly hope that it would be possible to take 
advantage of this opportunity for you to see the issues that we 
are wrestling with, and know that we recognize that you deal 
with these issues far more than we do, every day, and sometimes 
lifetime career, and try to get together and help us with 
recommendations as to what we should be doing.
    And I hear Chairman Johnson talk about our moral 
responsibility, and I am certain that other people on his side 
of the aisle will be talking about the Federal Government's 
obligation to do something for people who work hard every day 
and, through no fault of their own, need a little help.
    I want to take advantage of this moment, because there are 
just some people in this Congress that, if the President of the 
United States says he wants it, they are going to be against 
it. There are other people who believe that the United States 
Government has no responsibility to our citizens in education 
or in health, but that should be a local issue.
    I think this hearing gives us an opportunity to see what we 
can agree on, and how we can use this to bring us together so 
the American people might have reason to believe that when 
there is a crisis, it is going to affect millions of people 
that Congress, and especially this historic Committee, can come 
together and deal with it.
    So, I hope you would consider outside of this hearing room 
getting together and giving to all of us the recommendations 
you have, especially to the politically challenging questions 
that we will be facing.
    In addition to that, I have been annoyed with my profession 
of lawyers, as I see their appeal on television. ``Do you 
believe you are entitled to the disability benefits? If you are 
working and still think you are entitled, come see us. We have 
doctors, we can examine you, there is no charge, there is no 
payment. You don't owe us anything if we get you on Social 
Security. So get on with your life and let us get you Social 
Security benefits.''
    I know all of you have heard about these. Do you have 
anything positive or negative to say about these advertisers 
that encourage people to get on disability?
    Mr. ZELLEY. I am not a lawyer, and I don't want to 
disparage lawyers----
    Mr. RANGEL. If you don't want to wrestle with the question, 
please don't take time of the five minutes. To me, it is clear 
cut. They do it for accidents, they do it for everything. They 
do it for one-third of the commission of any awards. And I know 
it is immoral, and I know it is probably legal. Now, if you 
don't want to say anything one way or the other, I can go to 
the bar and get attitudes. But you are professional, and they 
either help or hurt.
    How about you, Mr. Van de Water?
    Mr. VAN DE WATER. Well, I do, Congressman, believe that we 
are--this is something you are paying for, right? You are 
paying. And when you are working for this benefit, so----
    Mr. RANGEL. I am trying to really zero my question in on 
just one issue. And I am not going to repeat it, because I 
don't have the time. So why don't we pass? I apologize for 
being short.
    Mr. Smith, you have any views on this?
    Mr. SMITH. This is not an area that I----
    Mr. RANGEL. Okay. Ms. Houghton?
    Mr. SMITH [continuing]. Am expert in, but I--but we----
    Mr. RANGEL. Has anyone any views on the encouragement of 
people to get on Social Security disability, and they come into 
the law firm, and they will provide you with the necessary 
documents and they get paid for doing it if they are 
successful? If you don't, then just say that. If anyone has any 
views, I would appreciate it this time----
    Mr. KREGEL. Congressman Rangel.
    Mr. RANGEL. Yes, sir.
    Mr. KREGEL. I think that the Social Security Disability 
Determination Office does a very good, very accurate job.
    Mr. RANGEL. Of doing what?
    Mr. KREGEL. Of determining who is eligible for benefits and 
who isn't.
    Mr. RANGEL. But I was talking about----
    Mr. KREGEL. Goes to the level----
    Mr. RANGEL [continuing]. Paid advertisement on TV.
    Mr. KREGEL. Yes. It goes to the level, then, of an 
administrative law judge, and that is where the lawyers get 
involved. And that is where a decision--do you meet eligibility 
criteria----
    Mr. RANGEL. This is the problem that some of us had in 
Congress, and not rocking the boat, and I am surprised that 
this panel is affected the same way by powerful people that 
decide policy on health care, as well as disability. Thank you, 
Mr. Johnson.
    Mr. JOHNSON [presiding.] Thank you. The time of the 
gentleman has expired.
    Mr. Brady, you are recognized.
    Mr. BRADY. Thank you, Mr. Chairman. There is a lot of 
common ground in this hearing today. Both parties, I believe, 
want to help those who are truly disabled. We want to eliminate 
fraud in the system. There is too much robs from those who are 
truly disabled. And then we want to encourage those who want to 
go back to work to go back to work.
    The good news is our economy has changed. Fewer people are 
digging ditches. You know, other skills are needed in the 
workforce. The workforce has never been more accommodative, 
both from the new technologies that are remarkable, plus the 
changes businesses have made to encourage workers who are 
disabled to get back to work. So what a perfect time to look 
with 21st century fresh eyes on the disability program.
    Mr. Smith, you know, while Disability Insurance and the 
Supplemental Security Income program share many things, they 
are often very different in how they treat earnings. You gave a 
hypothetical example. I just want to sort of highlight that 
again.
    Let's say Dan Disability gets $1,100 a month. That is about 
average. Sally Supplemental--and, believe me, I already regret 
using those names, but we are going to stick with them--Sally 
Supplemental gets about $700 a month. Again, right with 
averages. So, they both get jobs of $1,200 a month, roughly 
minimum wage--but above substantial gainful activity. In this 
example, Dan Disability loses his entire disability benefit. So 
his income goes from $1,100 to $1,200 a month. Sally 
Supplemental, though, because there is a glidepath, gets an 
extra $650 a month. So she has nearly a $1,000 gain for going 
back to that first economic rung on the ladder back to work.
    So, $100 loss to get off disability and go back to work, 
nearly $1,000 gain to do the exact same thing, two people who 
sincerely want to get back into the workforce. In your 
experience, have you worked with individuals and disabilities 
who have faced that exact choice when they want to return to 
work?
    Mr. SMITH. Yes, all the time. And it is made sometimes more 
complicated because there is--I don't think--I forget the exact 
number. There is about 20 percent, 25 percent of beneficiaries 
receive both benefits at the same time, and so they have one 
work incentive for the SSI program, an offset, and then the 
cash cliff built into the DI program.
    But until I heard your question, I never really thought 
about the disparity in the example that you give. But, yes, 
indeed, the person on SSI would be financially better off 
taking the same job than the person on SSDI who would lose 
their entire check. So the person with SSI's net income would 
be greater in that example, which is not--which is--doesn't 
seem equitable to me.
    Mr. BRADY. And I use that example because I think those who 
are on disability who want to go back, the biggest decision 
they make is for that first job back, because they have to 
weigh what are the pros and cons of doing it. Once they get 
back on that first economic ladder, you know, they start 
building from there. And the way I see it, there is a huge 
incentive--or disincentive for those on disability to make that 
first leap back into the workforce, even at roughly a minimum 
wage job, because we just--that cash cliff is just--you just 
cut it off behind them, you know?
    And it seems to me the proposals we have heard today about 
eliminating the cash cliff, giving people incentives to go back 
to work, sort of have that safety net under them, so they are 
actually, A, encouraged to go back to work and to earn more 
money, stay in the workforce, continue to grow. It seems to me 
to be sort of the 21st century thinking that we need to bring 
back to disability.
    And so, Ms. Houghton, from your standpoint, does that make 
sense, that illuminating that cash cliff would encourage that 
first step back? And I am almost out of time.
    Ms. HOUGHTON. Yes. I am--we are certainly not experts, but 
it absolutely makes sense.
    Mr. BRADY. All right. Thank you, Chairman.
    Mr. JOHNSON. Thank you.
    Mr. McDermott, do you care to question?
    Mr. MCDERMOTT. Yes. Thank you, Mr. Chairman. I would take 
this hearing more seriously if, on the 7th of January 2015, the 
House had not passed a set of rules that set in place a 20 
percent cut on these SSDI folks. The Washington Post reported--
and their title is ``Social Security Disability Payments Will 
Be Cut By a Fifth if the Congress Does Not Act.'' So they have 
set in place the cut already. They have said you can't shift 
money from old age assistance to the SSDI program. So we are 
stuck. We have to act in this Committee.
    Now, we can't pass a transportation bill, we can't hardly 
pass an ESEA bill yesterday. We can't pass anything around 
here. And to think this is going to get through by 2016 is 
really believing in the Tooth Fairy, because you are talking 
about passing through two Houses of Congress, conference 
committee and everything, and we have to cut people off the 
program to have enough money to keep the benefit plan up.
    Now, Mr.--Dr. Van de Water, you have a Ph.D. in economics 
and all of that. Tell me. How many people will have to be cut 
off of disability benefits in order to have enough money that 
we can have the same benefit level for the ones who stay on?
    Mr. VAN DE WATER. Well, the short answer is that it is not 
possible in any reasonable way to assure sufficient financing 
for the disability insurance trust fund simply by cutting 
people off the rolls. Instead of----
    Mr. MCDERMOTT. What are the----
    Mr. VAN DE WATER. Instead of cutting the average benefit by 
20 percent, you could, theoretically, somehow remove 20 percent 
of the people from the benefit rolls. But, as I say, there is 
no practical way to do that between now and the end of next 
year, nor, I am sure, would anyone on this Committee, 
Republican or Democrat, have any interest in doing that.
    Mr. MCDERMOTT. So there is going to be a cut in benefits. 
Because, practically, it is not possible to do what--it is Q in 
the rules, in case anybody wants to look--it is the Social 
Security solvency rule that we passed that says you can't shift 
money. So we are stuck with this problem, right?
    Mr. VAN DE WATER. Well, the rule doesn't say that you have 
to achieve a balance solely by cutting benefits, but it does 
say you have to include some overall savings as part of a 
package.
    Mr. MCDERMOTT. Somebody who is on Social Security--I agree 
there are problems in this program. I could give anecdotes of 
people who wanted to go back to work. None of the testimony I 
have heard up here is unusual, because--the AIDS epidemic is a 
perfect example where people had a death sentence. They got an 
SSDI. Then came ARTs, and they are treated, and they could go 
back to work, but they would lose their health care. And if 
they had a relapse in their disease, they then would have a big 
problem getting back on to Medicare SSDI. So they didn't want 
to leave. So there is--I know there are problems.
    But the question is how many people do you think really can 
be taken off the rolls in order to get the savings necessary? I 
mean we are doing four percent now come off. That is about 
360,000 people out of 9 million. How many more people have to 
be somehow bumped off by these new rules that we are going to 
put together here in the Committee in the next 18 months?
    Mr. VAN DE WATER. Well, I think the likelihood of 
encouraging large numbers of people to leave the benefit rolls 
is fairly small. Mr. Smith discussed the experience with this 
benefit offset pilot demonstration. He talked about a 25 
percent increase in people earning more than substantial 
gainful activity. That is great, but that is 25 percent of a 
fairly small number. And that demonstration project as a 
whole--again, as Mr. Smith indicated--showed that adding a 
benefit offset starting at the $1,090 SGA threshold would add 
to program costs.
    Mr. MCDERMOTT. If somebody is on Social Security 
disability, they have $1,090 that they have earned, plus their 
benefit. What is their average benefit from SSDI?
    Mr. VAN DE WATER. The average benefit is a bit under $1,200 
a month.
    Mr. MCDERMOTT. A bit under?
    Mr. VAN DE WATER. Twelve hundred. It is $1,165 per month--
--
    Mr. MCDERMOTT. So that is $2,200 a month to live on. What 
is the poverty level for a person?
    Mr. VAN DE WATER. Oh, it is roughly at the poverty level. I 
don't know what the exact----
    Mr. MCDERMOTT. So we are talking about people at the 
poverty level.
    Mr. VAN DE WATER. Well, if that were their only source of 
income. Now, for single individuals, it is often the only 
source of income. For married beneficiaries, they may also have 
espousal earnings.
    Mr. MCDERMOTT. And that is not counted against their 
income.
    Mr. VAN DE WATER. No, DI is not income-tested.
    Mr. JOHNSON. The time of the gentleman has expired, thank 
you.
    Mr. Tiberi.
    Mr. TIBERI. Great testimony from all of the witnesses. 
Thank you so much. First slide, please.


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    Mr. TIBERI. Kind of to pick up on Mr. Brady's point, Dan DI 
here, the cliff that has been talked about that some of you 
actually have in your testimony, pretty darn clear at 1,090. 
Sally SSI, the offset approach.
    Next slide, please.
    
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    Mr. TIBERI. Oh, there you go, the offset approach with 
Sally SSI.
    Just a one-word answer, yes or no. Starting to my left, do 
you support us going to some sort of offset system for DI?
    Mr. ZELLEY. I am going to say yes, if that is what I am 
limited to. Lots of ways to skin a cat.
    Mr. TIBERI. Yes, agreed, agreed.
    Mr. ZELLEY. You could raise----
    Mr. TIBERI. I understand that. Just an offset system. I am 
not saying what type of offset system. Next?
    Mr. SMITH. Yes, I would support an offset.
    Mr. TIBERI. Thank you.
    Ms. HOUGHTON. Yes, it appears that people would be better 
off.
    Mr. KREGEL. Yes, Congressman.
    Mr. VAN DE WATER. It would depend upon the details of the 
proposal.
    Mr. TIBERI. So we all know, and you all know, that Social 
Security runs these systems. And the two programs share many 
things, but the work rules are obviously different, even aside 
from this approach to what happens to the beneficiary when they 
work. Aside from the offset in the SSI program, how earnings 
are counted, as you know, is very different, as well.
    Dr. Kregel, in the DI program earnings are counted when 
they are earned. In the SSI program they are counted when they 
are received. Can you tell us, from your experience, do 
beneficiaries know the difference? And what is the difference?
    Mr. KREGEL. Yes. This adds tremendous complexity, 
unnecessary complexity, to the calculations that individuals 
make and the administrative work that Social Security has to 
do.
    So, in the SSI program, as you mentioned, it is when you 
are paid. So it is easy to do documentation if you have to do 
things related to earnings or impairment-related work expenses, 
or that type of thing. SSDI counts in terms of when you did the 
work. And so there may be people who are paid throughout the 
year, but only work 10 months out of that year.
    Mr. TIBERI. So that change, if we change the DI work rules 
and earnings requirements to the SSI ones, that would be a 
simplification that would be helpful?
    Mr. KREGEL. That would greatly reduce the administrative 
burden, and it would definitely help concurrent beneficiaries, 
people both on SSI and SSDI, not to have to follow two sets of 
rules when they communicate with Social Security.
    Mr. TIBERI. Ms. Houghton, can you comment on that from your 
experience?
    Ms. HOUGHTON. That seems to make sense.
    Mr. TIBERI. Oh, very good. Mr. Smith?
    Mr. SMITH. Yes, I agree with Dr. Kregel.
    Mr. TIBERI. Mr. Zelley.
    Mr. ZELLEY. Yes.
    Mr. TIBERI. Sir?
    Mr. VAN DE WATER. I think that simplifying the work rules 
would, in general, be a good thing, yes.
    Mr. TIBERI. Wow, we are finding agreement. Except for the 
Tooth Fairy. I hope my daughters aren't watching; they would be 
very disappointed.
    So, in just another way that the DI program is complicated, 
Mr. Smith, you talked in your testimony about the disincentive 
for the beneficiary. Can you expand upon that, in terms of the 
comparison between the two programs?
    Mr. SMITH. Sure. So, from our experience, from the 
beneficiary's perspective, the SSI program is far more simple 
to explain, in terms of you have--if you earn above this level, 
your benefit will be adjusted $1 for $2. The SSDI program has a 
trial work period that can be non-consecutive, it has a grace 
period, it has an extended period of eligibility----
    Mr. TIBERI. So all those things--the point that I think you 
made----
    Mr. SMITH. Right.
    Mr. TIBERI [continuing]. Is all those things actually put 
fear into the beneficiary----
    Mr. SMITH. Right.
    Mr. TIBERI [continuing]. To fall well short of what they 
could actually earn. And so, going to some kind of benefit 
offset, as well as simplifying those rules, will give 
beneficiaries less stress. Is that what you are trying to tell 
us?
    Mr. SMITH. Yes, yes, that we--that my staff would be able 
to tell beneficiaries and--that would be able to--it would be 
simple enough that most beneficiaries would be able to 
understand, and would be much easier for the folks that support 
those beneficiaries to understand.
    Currently, the DI rules are terribly complex. I have to 
send my staff to training with Dr. Kregel's staff to understand 
the rules.
    Mr. TIBERI. Thank you.
    Mr. JOHNSON. The time of the gentleman has expired.
    Mr. Lewis, you are recognized.
    Mr. LEWIS. Thank you very much, Mr. Chairman. Let me thank 
each of the witnesses for being here today.
    Dr. Paul Van de Water, thank you so much for being here. 
Thank you for all of your learning. You know a great deal about 
this issue. Some of the witnesses have suggested that disabled 
workers receiving Social Security choose not to return to work. 
They have suggested that these workers may intentionally lower 
their earning so they won't lose Social Security benefits. I 
want you to tell Members of the Committee. Does the data 
support that theory?
    Mr. VAN DE WATER. Mr. Lewis, that is an excellent question. 
There have been a lot of studies over the years about precisely 
this issue. And I think the general conclusion is that, while 
there are certainly some beneficiaries for whom that is true, 
as I said in answer to a previous question, the fraction seems 
to be pretty small.
    In particular, some writers talk about something which, in 
the jargon, is known as ``parking.'' That is whether 
beneficiaries earn just below the $1,090-a-month level to avoid 
triggering loss of benefits. And the various studies have 
suggested the number of beneficiaries who engage in that sort 
of behavior is on the order of a few tenths of a percent. So it 
is a phenomenon, but it is not a very large one.
    Mr. LEWIS. Let me ask you. Why is it so difficult for 
individuals receiving disability Social Security benefit to 
return to work?
    Mr. VAN DE WATER. The reason is, as I and the other 
witnesses have indicated, that beneficiaries have very severe 
impairments, they tend to be older. Dr. Kregel mentioned that 
70 percent are age 50 or above. They tend to have very limited 
education. In many cases, not having completed high school. And 
all of these factors create great impediments to their ability 
to return to work.
    Mr. LEWIS. Is there some correlation between people who go 
out and do the hard, back-breaking work, and others who sort of 
desk work, people that work on the farms and the mills?
    Mr. VAN DE WATER. Oh, absolutely. The likelihood of a 
person, with a college education receiving disability insurance 
is much, much less than for someone who has only a high school 
education. And, in turn, that person's likelihood of receiving 
disability insurance is much, much less than for a person who 
has never completed high school. So there is a very close 
relationship between receipt of disability insurance and the 
person's education and training.
    Mr. LEWIS. Thank you very much.
    Mr. Chairman, I yield back.
    Mr. JOHNSON. Thank you. Appreciate that.
    Mr. Reichert, you are recognized.
    Mr. REICHERT. Thank you, Mr. Chairman, and thank the 
witnesses for your testimony and taking time from your busy 
schedule to be here. I really like the analogy used by Mr. 
Smith, the spider web versus the trampoline. I think that 
clearly illustrates a picture that everybody can attach 
themselves to and understand.
    I want to see if I can continue on with Mr. Tiberi's 
successful efforts in getting agreement. So the Chairman 
mentioned early in his comments that we don't want a 20 percent 
cut, we want the system to pay on time. We want the program to 
work better, and we want to help people get back to work. We 
want to strengthen the disability insurance program to protect 
those beneficiaries. Everyone agree with that, with those 
premises?
    Mr. ZELLEY. Absolutely.
    Mr. REICHERT. Okay, good. We are on--we are still on the 
positive side, then.
    So I want to ask Dr. Kregel a question that relates to one 
of those anecdotal stories. There is a disabled veteran in my 
district who has shared with us that, because of the 
complexities and confusing rules of SSDI work incentive 
programs, he went back to work, was hit with overpayments, and 
now he is struggling to pay those overpayments back. And he 
also understands and recognizes that he actually would have 
been better off, he would have had more money, if he had simply 
remained on disability and not gotten a part-time job.
    So, we know the Social Security Subcommittee has recently 
had a hearing on overpayments. How common is it to receive an 
overpayment, and what causes overpayments? Mr. Kregel.
    Mr. KREGEL. Congressman Reichert, it is very common for 
individuals to receive overpayments. If you look at the 
percentage of overpayments, SSA says that they make 99 percent 
of their payments on time and accurately. Well, 10 percent of 
the people on DI work. And so, if it is 10 percent, then it is 
10 percent of people who are on DI who may have an overpayment 
at some point in time.
    What happens then is it relates to another huge 
administrative issue, and that relates to reporting earnings--
the beneficiary has to report earnings to Social Security. If 
they do that accurately, and if Social Security immediately 
logs it in, then it should not result in an overpayment. 
However, it may take weeks or more for it to be logged in, and 
it may be logged in inaccurately, or the individual may not 
understand the rules. And so they don't report their earnings, 
and that is when you get overpayments of 40, 60, $70,000 that 
you may hear of.
    There are also overpayments in the SSDI system that has the 
gradual ramp-off, as individuals' work progresses. But these 
are smaller overpayments, that may be affected one month, and 
then recovered in the next month, and you don't have these 
traumatic tens of thousands of dollars of overpayments that 
some individuals receive.
    Mr. REICHERT. And, just out of curiosity, why does it take 
weeks to log in this information?
    Mr. KREGEL. I am sorry?
    Mr. REICHERT. Why does it take weeks? You said it sometimes 
takes weeks to log in the information provided.
    Mr. KREGEL. This has to do with the workload within the 
local offices, the priority that is given to this particular 
work. Remember, they are dealing with a paper process. To log 
it, you mail in your actual pay stubs, or copies of your pay 
stubs, and somebody manually logs that in. We are not using 
automation in the process that could be done that would really 
reduce the administrative burden and make these payments more 
accurate.
    Mr. REICHERT. All right. I have one other question. My 
father is on disability. I am the oldest of seven children, Mr. 
Zelley, so I can identify with this in a different way. My 
father was injured at work, and so I worry about the kids.
    So, the recipient loses his or her benefits, the injured 
parent. What about the kids' benefits? They also get benefits. 
Mr. Kregel, what happens to those benefits?
    Mr. KREGEL. Yes. If your benefits go into suspension 
because you have completed the trial work period and you go 
over substantial gainful activity, your benefit is suspended, 
and then the children's benefits are immediately suspended, as 
well. This is a very, very important issue that needs to be 
taken into account.
    Mr. REICHERT. I am sure it affects the person's decision as 
to whether to go back to work or not go back to work. Right?
    Mr. KREGEL. That is very true.
    Mr. REICHERT. And my time is expired. I was going to go to 
Mr. Zelley, but, Mr. Chairman, I yield back.
    Mr. JOHNSON. Thank you.
    Mr. Neal, you are recognized.
    Mr. NEAL. Thank you, Mr. Chairman. And thank the panelists. 
This has been very helpful, as we try to sort data and try to 
get information from those who are experts in the field. And I 
appreciate the conciliatory tone of the Members of the 
Committee today as we try to probe the issue.
    Would you agree that there has been an uptick or, some 
would argue, a surge in disability applications during the 
recession? You could just shake your heads, because I will 
pursue the questioning after that.
    Mr. VAN DE WATER. Yes, there is generally an uptick in 
applications during recessions. But the rate of awards goes 
down, so that the number of beneficiaries goes up only slightly 
during poor economic times.
    Mr. NEAL. The others agree that there was an uptick during 
the midst of the recession. And some of this is linked to the 
worker participation rates. Some would ascribe the problem to 
being--but it is hard, after Mr. Zelley testified that he had 
gone from gainful employment to a benefit of $9,600 a year, I 
don't think there was an incentive for him to say, ``I would 
like the $9,600,'' as opposed to what had been a pretty good 
career. And I think--and part of the atmosphere that we have 
been discussing this in, there has been the suggestion in some 
quarters that there had been more disability income 
applications because of the fact that it has been harder to 
find work.
    Do any of you want to comment on that?
    Mr. ZELLEY. I would comment that I don't believe that is 
true. I believe that we are following the population increase 
of Baby Boomers. We just heard testimony that says the actual 
awards are less. So, even if you are applying for it, so what? 
The actuality is that, no--I mean people, if acquire a 
disability, are looking for ways to get back to work. And 
Social Security is one way to ramp--it can be one way to ramp 
back on. It is just too complicated.
    So, I don't know if I answered your question----
    Mr. NEAL. Yes, that is perfect, as a matter of fact, yes.
    Any other panelists who would like to----
    Mr. SMITH. I just had one thing to add. I can't speak to 
the increase in the rolls, but I--as working within vocational 
rehabilitation, we serve folks both who receive SSDI and SSI 
and folks who don't. And it is clear to me that there are folks 
who are not currently on SSI or SSDI----
    Mr. NEAL. Can you speak up, please?
    Mr. SMITH. There are folks who are currently not on SSI or 
SSDI who would probably be eligible, but also, given some early 
intervention and some employment supports, may be able to delay 
or maybe never go on to the program if they are given the 
appropriate employment supports at that point.
    Mr. NEAL. And other--for the panelists, anybody who wants 
to offer an answer--if one gets back to the workforce and they 
give up their benefits, if the problem reoccurs, can they 
reclaim, or can they go back to disability, Social Security 
disability?
    Mr. ZELLEY. I can state that that actually happened to me.
    Mr. NEAL. Okay.
    Mr. ZELLEY. And I can testify to that. I was able to 
bounce--went from a job, off the job, SSDI came back right away 
with the health care insurance. Granted, it wasn't a lot of 
money in my case, but it did come back. So, yes, that occurs. 
And that trial work period starts right again. You bounce, you 
are back into it. And it is the same thing.
    I do want to comment that you have done this, you know, 
this 20 percent cut. Don't do that. You figured this out. I 
know it must be so complex, but you have done it on SSI, you 
have done it on early retirement. You guys can--men and women 
can figure this out.
    And because people are depending upon you to figure it out, 
just let--get out of the way and let us go back to work. I mean 
that is really what we are trying to get across to you today, 
is that there are barriers in the system that prevent us who 
want to go to work going to work. And I see thousands of people 
with disabilities. That is who I am speaking about. I am not a 
math major. You have got very talented math folks, and--but it 
must be very frustrating when you got CBO that says you can't 
count tax income, you can't count new taxes, or you can't count 
the fact that you are going to be paying SSDI when you are 
receiving it. Makes no sense.
    So you have tough jobs. I admire you for what you are 
doing. But please figure this out.
    Mr. NEAL. I think the metaphor you used was the correct one 
in your testimony, Mr. Zelley, when you suggested the 
trampoline effect. Thank you.
    Thank you, Mr. Chairman.
    Mr. JOHNSON. Thank you.
    Mr. Boustany, you are recognized.
    Mr. BOUSTANY. Thank you, Mr. Chairman. And I want to thank 
you all for your testimony. It has been very helpful.
    I chair the Human Resources Subcommittee of this Committee, 
and we have been looking at work incentives across a number of 
programs, and whether they are actually working or not. And it 
was kind of interesting. My colleague, Mr. Tiberi, just a 
moment ago highlighted the more gradual cliff with the SSI 
program versus what we see with the DI program. And it seems to 
make a difference.
    I mean some numbers I have, SSI recipients have worked less 
experience than DI recipients, but an average of 5 percent 
leave SSI rolls each year, due to income from work or other 
sources, which is about 10 times higher than what we see with 
the DI recipients. But even then, five percent is still a 
pretty low rate.
    And as we look at work incentives, there are many, many 
different organizations across the spectrum that work in this 
space. And so, Dr. Kregel, I want to ask you, do you think the 
current work incentives and policies designed to help these 
low-income individuals and individuals with disabilities, do 
they successfully promote work? And are we actually measuring 
outcomes with all this?
    Mr. KREGEL. Congressman, I think that the work incentives 
within the SSI program do help. Basically, these individuals, 
many of them, have minimal employment histories, in contrast to 
the DI population. And so, starting out, starting a career, 
working for the first time, the offset that they receive helps 
them get comfortable with work, and they can move their way 
forward.
    But that is just part of the picture. There are also parts 
of the service system that other witnesses have referred to, 
vocational rehabilitation and all of those kind of things, and 
employers that are involved in the process, as well.
    So, in combination with the work incentives, there needs to 
be support for those individuals to put them in contact with 
the employers who stand ready to do that. One of the primary 
agencies for that is vocational rehabilitation, who has a 
responsibility for doing that.
    Mr. BOUSTANY. Is there more than we can do to help 
streamline this approach, make it more effective?
    Mr. KREGEL. Within the SSI program I think that there are a 
couple of things that could be done readily. The first one 
would be to try to do a better job of linking the SSI 
beneficiaries to employment. There is the Ticket to Work 
program, but there is also maybe other opportunities that you 
could look at, so that people are aware of the services and the 
supports that are out there.
    And then, looking at the other array of benefits that the 
SSI population may look at, as well, because, as they work, 
they have to worry about are they jeopardizing their food 
stamps, their children's health programs, and those kinds of 
things. So it is also the interaction of benefits at the SSI 
level.
    Mr. BOUSTANY. I appreciate that. And our Subommittee has 
been looking at some of these cross-jurisdictional programs to 
try to understand the interactions, so that we can, hopefully, 
better design programs that help people in need.
    But if you could step back for a minute and start from 
scratch, how would you design a system that actually provides 
employment assistance? I mean if you could just kind of rewrite 
things from the beginning, how would you do that?
    Mr. KREGEL. Everybody has two reasons to go to work. One, 
they want to work, work is meaningful in their lives. And then 
the second thing that hasn't been talked about is these people 
are in poverty. And some of them are making choices between 
food and medications, really, on a monthly basis. They are 
really living at a subsistence level. Seventy percent of the 
SSI folks are working below the federal poverty level, have 
income below the federal poverty level.
    So those folks need the same kinds of supports that other 
individuals in poverty need in order to get that done. Child 
care. They are more likely to have children. Transportation. 
They may have to do specialized transportation because of needs 
for certain kinds of support that they effectively need. So, 
looking at those kinds of things that surround the individual, 
we hear stories weekly about people who are working, their 
truck broke down, they went to a payday loan person, they got 
their truck repaired, they can go back to work, they have been 
paying $50 a month on their $600 principal, and they still have 
a $600 principal. So it is all these things that surround the 
individual, in addition to their own work ability.
    Mr. BOUSTANY. And, ultimately, we do have to measure 
results, outcomes, what is really working and what isn't, as 
you know, because, as you look at all these different programs, 
we need to see which programs are really effective and actually 
moving people onto the work rolls versus those that aren't.
    Mr. KREGEL. Yes.
    Mr. BOUSTANY. Well, I appreciate that, thank you. I yield 
back.
    Mr. JOHNSON. Thank you. Mr. Becerra, you are recognized.
    Mr. BECERRA. Thank you, Mr. Chairman. And thank you all for 
your testimony.
    And I think, actually, Mr. Zelley, I think you are right. 
We can come up with a solution. And I think, especially for 
someone who, like you, figured out a way to get himself/herself 
back into a position where you could be gainfully employed, I 
think, ultimately, that is what we want to do.
    And when we--when our previous leaders had the vision to 
come up with a program like Social Security, it was essentially 
for that, because most people want to pick themselves back up. 
So I thank you for everything you are trying to do to help us 
get there.
    I just want to make sure I clarify a couple of things. 
Because we talk about this stuff because we know we talk SSDI--
we talk the lingo all the time, but most Americans probably 
wonder what the heck we are talking about. SSDI is not SSI that 
some people hear about. SSI is Supplemental Security Income, 
which is an income for low-income Americans that you get, not 
because you worked and paid into it, but because you are low-
income. SSDI, disability insurance, Social Security Disability 
Insurance, is not welfare. Welfare you get whether you worked 
or not, and it is because you are in a difficult circumstance.
    SSDI goes only to Americans who, as Mr. Zelley pointed out 
in his testimony, you worked. Not only did you work, but you 
paid taxes into Social Security to be able to get those 
benefits. So, every time you work, and you see that paycheck, 
you see that deduction, it goes for Social Security. It is for 
your potential retirement, or your potential, like Mr. Zelley, 
to become disabled. Or, unfortunately, for some, if they die, 
it is for your survivors. That is the purpose of Social 
Security, that three-pronged system, right? And folks should be 
very clear. We are not talking about some welfare program. No, 
you paid into it, right?
    At the same time, I think we have to be clear. All of us, 
as Americans who have been paying into the Social Security 
system, have provided the system more money than it needs right 
now to pay out all benefits, to the tune of close to $3 
trillion, which we have right now in the trust fund. And that 
is to help Americans, whether they are getting ready to retire 
or, by some misfortunate, become disabled. They can get those 
benefits.
    This so-called 20 percent cut, it is not a cut that is 
required in law, or a fait accompli. It is only because, 20 
years ago, when the formula was created by Congress on how to 
distribute the Social Security dollars that we contribute to 
our taxes into the pots of money for retirement, disability, or 
for our survivors was off. Twenty years ago, would we have 
known exactly--actually, they actually knew that they were only 
providing about twenty years' worth of funding for DI out of 
the pot of money that Americans are contributing.
    But that doesn't mean that we should cut disability 
insurance for Mr. Zelley or folks who had disability insurance, 
simply because we didn't put the right amount into each pot 20 
years ago. We have got the money, Americans have paid for it. 
So this 20 percent cut is fictitious, if we want to be serious 
about Americans who have earned this. And, again, remembering 
that most Americans who are on disability, SSDI, worked for 
over 20 years, paying into the system.
    Having said all that, let's also make sure that we get rid 
of another confusion. There are about 30 million Americans, 
working Americans, who are disabled. Not all of them qualify 
for SSDI. Only the most severely disabled do. That is why only 
around 9 million of those close to 30 million actually receive 
Social Security Disability Insurance.
    So the population we are talking about is not all disabled 
Americans, it is those with the severest of impairments. And 
the folks that we are talking about specifically today aren't 
just disability insurance beneficiaries, it is those who are 
trying to go to work, because so many of them have no 
opportunity to go to work. In fact, there is a study that shows 
that close to one in five Social Security Disability Insurance 
beneficiaries die within five years of qualifying for the 
benefit. That is how disabled they are.
    Okay, so now we are talking about this universe of those 
who really want to work. I think there is universal agreement 
here. If we could help them get to work, if we could provide 
incentive, let's do it.
    But I think Mr. Tiberi's chart was very illustrative. If I 
looked at that chart correctly, this offset, to me, is 
troubling. Because I look at this chart, and, for those who 
want to work and start working, if you start doing an offset so 
that you lose $1 in benefit, disability benefit, for every $2 
you earn in work, just about everybody that earns less than 
$1,100 is going to lose, come out a loser, at the end of the 
day.
    So, I ask a question to anyone who will wish to answer. Are 
we in this to create an incentive program that creates winners 
and losers, where the less-able to work are punished to try to 
help those who can work?
    Mr. JOHNSON. The time of the gentleman has expired.
    Mr. BECERRA. I don't know if anyone--Mr. Chairman, if I 
could just try to get a quick response from anyone, and----
    Mr. JOHNSON. We will give you two seconds.
    [Laughter.]
    Mr. BECERRA. A yes or no is----
    Mr. ZELLEY. I would just--I would add that we are not--for 
goodness sakes, do not penalize people, of course not. That is 
not the intent. We should be incentivizing.
    I would add--I know it is not going to be a popular 
statement, but the Ticket to Work--and I know it is affecting 
90,000 people or so--in many ways, they are taken to nowhere, 
because we are incentivizing VR agencies, rather than 
incentivizing the individual. If I go back to work, let me keep 
the money. Why are you giving it to somebody else to help me 
get back to work? Businesses want the connection, businesses 
want me to work. I have skills and talent to work. Only 85 
percent--or 15 percent of people are born with a disability who 
have--the rest of us have education and work skills and 
experience. Just incentivize us to go to work.
    And so, I know this is complex with this offset. It is not 
intended--and I don't think you are hearing it is intended--to 
hurt people. It is all about this doing it cost neutral. If you 
will let me work, believe me, you are going to be getting more 
revenue and more income from me. So, Congressman, I am hopeful 
that it isn't interpreted that way.
    Mr. BECERRA. Okay. Others?
    Mr. JOHNSON. Thank you. The time of the gentleman has 
expired.
    Mr. BECERRA. Thank you all very much.
    Mr. JOHNSON. Mr. Price, you are recognized.
    Mr. PRICE. Thank you, Mr. Chairman, and I want to thank you 
for holding this hearing. This has been fascinating.
    And, Mr. Zelley, I am struck by your passion, and I 
appreciate it. And I want to pick up on what you have just said 
in response to the previous question, and that is--you telling 
me that some of this money gets sidelined, doesn't go to the 
worker?
    Mr. ZELLEY. I am sorry, sir?
    Mr. PRICE. You are--what you just said is, ``Let us go to 
work, but let us keep the money.'' Where is--but you mentioned 
that the money is going elsewhere.
    Mr. ZELLEY. What I was talking about is the Ticket to 
Work----
    Mr. PRICE. Yes?
    Mr. ZELLEY [continuing]. Actually incentivizes a rehab 
company that helps me go to work, because Social Security 
rewards them. They take my Social Security benefit and give it 
to them to put me to work. And I am saying stop that. Let me 
keep it. I am the one that is going to work. And so, reward me, 
or incentivize me for going to work.
    So, again, I know that is controversial, because there are 
people using the ticket, it is helping some people. I just 
think we are pointing it the wrong way.
    Mr. PRICE. Yes, yes. No, I appreciate that. Look, as I say, 
this has been fascinating, to hear the testimony. I am a 
physician. I was an orthopedic surgeon. So I have done 
hundreds, if not thousands, of disability evaluations. And one 
thing that I was struck with when I was in practice, in medical 
practice, is that the program is static. It says that if you 
have got this disease, or if you got this problem, or you got 
this disability, that that is it, that you are punished to 
consider going back into the program, for fear that you might 
lose the disability insurance or the payment.
    Mr. Smith, have you had any experience with that in the 
programs that you have run? Is that a real fear? I know it is a 
fear that many of my patients described.
    Mr. SMITH. Absolutely. And I--and it was clear from one of 
the--for example, some of the folks that we had in the benefit 
offset who did, for a period of time, have a gradual ramp-down, 
when the pilot ended and the ramp-down went away, we estimated 
about half of those folks then reduced their earnings to--
because of their fear of being--losing eligibility for the 
program. So, yes, I think it is very powerful.
    I also want to point out I might mention the Ticket to Work 
program. And I am chuckling, because I am one of those voc 
rehab providers that gets paid under the Ticket to Work 
program. But the Ticket to Work program is based on VR agencies 
and employment networks paid if a person zeroes out their cash 
benefit. And it presents--for me, it presents a conflict of 
interest, because I am sitting in front of a beneficiary, and 
under the current rules, I get paid if he or she works 
themselves off of benefits. But there are definitely situations 
when that is clearly not in that person's financial best 
interests.
    So, obviously, my staff and my program give people the 
correct information to make sure that they are not harmed, and 
if they do choose to go off the program, it is--that they are 
fully informed. But there is a clear conflict of interest for 
us in that, you know, we essentially could be paid for 
something that is not in the individuals----
    Mr. PRICE. Provides a disincentive, yes. I want to touch 
with you, Mr. Smith, a little more, though, because I am struck 
by the experience that you have with an alternative program, 
this benefits offset and the real-life examples that you can 
provide, and have provided, about how that incentivizes 
individuals to get back to work when they want to, because the 
four percent number doesn't seem like it--you have got 40 
percent of the folks out there saying that they want to work, 
and we got less than 1 percent of the folks who are actually 
working.
    So do you have statistics or a comparison of this benefits 
offset program that you have--the pilot that you have 
experience with?
    Mr. SMITH. It wouldn't speak--our pilot was a small, short-
term pilot, so it wouldn't provide data on how many people 
could potentially, on a nationwide level, participate in the 
program.
    What we--what I do know is that, in my state, like, 10 
percent of the SSDI population is engaged in our program, which 
means they have raised their hands and said, ``Yes, I want to 
go to work.'' And, obviously, there are many other people who 
don't need--who don't want VR services who are probably also 
trying to return to work.
    So, I am a bit more optimistic, perhaps, than others on the 
potential that folks can return to work and work at higher 
levels.
    Mr. PRICE. Great. I appreciate it.
    Thank you, Mr. Chairman.
    Mr. JOHNSON. Thank you.
    Mr. Doggett, you are----
    Mr. DOGGETT. Thank you very much, Mr. Chairman. I suppose 
it is encouraging that this hearing began with Chairman Ryan 
telling us not to worry about the prospects of a 20 percent, 
across-the-board benefit cut for disability recipients next 
year. I see only one major problem with that, and that is that 
a partisan rule was adopted at the beginning of this Congress 
to prohibit the Congress from resolving this issue, as we have 
11 times before, and that is to recognize, as Mr. Becerra said, 
that this fund distinction is artificial, and that one way of 
solving the problem, independent of our discussion of work this 
morning, is to do a fund transfer. And that rule says that you 
have to solve this 20 percent cut by either raising taxes--and 
we know they are committed to not raising taxes--or finding 
some other way to cut the amount of money being spent on 
disability payments in order to make up for the 20 percent.
    So, the real--the complete statement should be there won't 
be a 20 percent benefit cut, because we are planning to find 
some other way to cut disability payments to make up for what 
would be necessary to avoid a 20 percent payment cut. Beyond 
that point, this morning's hearing begins to look, in a more 
sophisticated way, like the standard Republican stump speech, 
that the only thing that is wrong is that people, poor people, 
don't work hard enough, and that bureaucrats get in the way 
with red tape and unnecessary regulations.
    Dr. Van de Water, I want to ask you about the type of 
people, first, who are getting disability. As Mr. Becerra 
pointed out, it is not all the disabled people in the country, 
it is only someone that a judge has determined has a mental or 
physical impairment which prohibits them from performing 
substantial gainful activity at any job in the national 
economy. Is that basically the standard that applies before 
someone begins receiving a disability check?
    Mr. VAN DE WATER. Yes, that is the standard that----
    Mr. DOGGETT. And, in fact, as far as men who receive 
disability checks, some of them are in such bad condition that 
I believe it is about one in five of them actually die within 
five years of getting their first check.
    Mr. VAN DE WATER. Yes. The death rate for disability 
insurance beneficiaries is much, much higher than----
    Mr. DOGGETT. I very much believe in work, and I appreciate 
the testimony that has been given here this morning. I think we 
need to provide incentives for people to work, and remove any 
disincentives that exist. But in terms of whether we can just 
have disabled poor people work their way out of this 20 percent 
cut and solve the problem that way, if you actually provide 
more incentives like this 2-for-1 payment instead of an 
absolute cliff, doesn't it end up costing more for the system, 
and not less?
    Mr. VAN DE WATER. That is exactly right.
    Mr. DOGGETT. And so the--you mentioned that is true of 
administrative costs and otherwise.
    So, I guess really, the question is do those who believe in 
work--and I certainly do--are they willing to pay more out of 
the disability trust fund to encourage work, to incentivize 
work, rather than to pay less? And I don't see any indication 
that they are willing to do that. In fact, they are talking 
about cuts that would be very severe--if you offset everything 
you do about incentivizing work, won't you actually reduce 
benefits to many more people than you help? Won't you hurt more 
people than you help?
    Mr. VAN DE WATER. Well, you are absolutely right, Mr. 
Doggett, that providing work incentives, obviously, is what we 
are all talking about here this morning. But trying to do that 
and also save money at the same time is very difficult.
    You have heard the problems involved if one started a 
benefit offset at less than $1,090 a month substantial gainful 
activity level. You heard a story one of the other witnesses 
told about the problems created by the Ticket to Work and its 
effort to save money in the process of encouraging 
beneficiaries to return to work. And, actually, we failed when 
Mr. Tiberi was asking us about work incentive simplification. 
One of the things which----
    Mr. DOGGETT. Let me just interrupt you as the time goes 
down to say is there enough red tape, change in work rules, and 
more work that people could do, if incentivized, that can--
would be enough to make up for this 20 percent cut that is 
about to take place?
    Mr. VAN DE WATER. No, by no means.
    Mr. DOGGETT. Not even close, is it?
    Mr. VAN DE WATER. No.
    Mr. DOGGETT. Thank you.
    Mr. JOHNSON. Thank you, Mr. Doggett. Mr. Smith, you are 
recognized.
    Mr. SMITH OF NEBRASKA. Thank you, Mr. Chairman. And thank 
you to our witnesses, for sharing your expertise and insight 
today. I know I hear from constituents who find the program's 
work incentives difficult to understand and, actually, who have 
unexpectedly had their benefits turned off because they crossed 
the earnings threshold without realizing it.
    You know, just frustration in so many ways, and especially 
looking at the forward timeline of the solvency concerns, we 
have waited a long time. And it appears there will be no way to 
actually keep DI solvent, as you know, without transferring 
funds into the program, most likely from the Old-Age and 
Survivor's trust fund. Without reform, we will reach the point 
of insolvency again, and not just with DI, but with the old age 
trust fund, and with Medicare, and many concerns across the 
board there.
    Ms. Houghton, in your testimony you note that, while 
businesses aren't experts on DI, the obstacles individuals can 
face can cause them to reduce their hours, limit their 
earnings, quit their job, or not try to return to work at all. 
Do you think a benefit offset would make it easier for people 
to try to work more hours, increase their earnings, or take a 
promotion?
    Ms. HOUGHTON. Absolutely. You know, I think that, right 
now, the way the rules are, you have to be a rocket scientist 
to figure out how to make work pay.
    Mr. SMITH OF NEBRASKA. That is very interesting. And 
speaking to the complexity--and I know my colleagues have just 
kind of pointed to the various channels that are pursued 
because of the complexity, and, really, I would hope we could 
avoid the complexity and the expenses associated with that.
    So, with that, I yield back. Thank you, Mr. Chairman.
    Mr. JOHNSON. Thank you.
    Ms. Jenkins, you are recognized.
    Ms. JENKINS. Thank you, Mr. Chairman. Thank you for holding 
this hearing. And I want to thank the panel for the great 
discussion this morning. Special thanks to Ms. Houghton. It is 
always great to see a native Kansan, a KU alum, and a former 
Bob Dole intern, before us. It has been nice to find a little 
common ground with our colleagues on the other side of the 
aisle this morning, as well.
    I have long been an advocate for mental health, and service 
to help those who deal with mental illness. And I noted in Mr. 
Kregel's testimony that almost half of the younger 
beneficiaries--which, to me, means under 50--have mental 
impairments. This is compared to roughly 30 percent of all 
beneficiaries. Since these folks are facing a lifetime of 
challenges, it really is important to focus on helping them 
return to work.
    So, Mr. Smith, it seems your pilot program had some 
findings in this area. And I just am curious, working to see, 
with those suffering with mental illness, what you feel their 
likelihood of returning to work is, and what we can do as 
policy-makers to help that happen.
    Mr. SMITH. Sure. There is a very well-researched approach 
to supporting folks with psychiatric disabilities return to 
work called the IPS, or Individual Placement and Support model 
out of the New Hampshire Psychiatric Research Center, next door 
to us in Vermont. And I think Bob Drake has been--that program 
has been studied in a Social Security demonstration. And while 
I am not familiar with that demonstration, I did talk to Bob 
Drake, who ran it for Dartmouth. And he said the IPS approach 
clearly helps people, and multiple random assignment studies 
have shown it can get younger folks with psychiatric 
disabilities back to work.
    But he found that they ran up against--once folks started 
to really get their feet wet, and start moving towards 
employment, they ran into the cash cliff. And so the findings 
ended up not sort of saving Social Security funds, because they 
were running into this--the cash cliff.
    So, yes, I--and this is, again, why I am somewhat more 
optimistic about the potential of folks, especially younger 
folks with psychiatric disabilities, to--if they are given time 
and given the right incentives to get themselves to a position 
where they can earn, they can increase their earnings and have 
a better life.
    Ms. JENKINS. Okay, great. Thanks, I yield back.
    Mr. JOHNSON. Thank you.
    Mr. Larson, you are recognized.
    Mr. LARSON. Thank you, Mr. Chairman. And, again, I want to 
thank the chair and Mr. Levin for this hearing. I especially 
want to thank our witnesses for your outstanding testimony and 
your passion and commitment, as well.
    I find myself associating with the remarks of Mr. Zelley, 
especially as it relates to our responsibility. I think your 
frustration is shared by Members on both sides of the aisle 
here. And I know, based on the honor that the Members of this 
Committee bring to this effort, that there is a path forward, 
and we just simply have to find it.
    I am going to yield a portion of my time. Mr. Becerra 
didn't get an answer on the question that he posed at the end 
of his statement. And then, after you answer, I will just have 
a suggestion. But I deeply appreciate the--both what the 
Committee is doing in this respect, in trying to resolve this 
issue, both in the short term and long term.
    But, Mr. Becerra, I will yield to you to finish your 
question that you had asked.
    Mr. BECERRA. I thank Mr. Larson for yielding. And let me 
just pose it again quickly, because I don't want to use up any 
more time than necessary.
    So, if you do the offsets, if you start to--at a lower 
level, to remove some of the disability insurance benefit for 
money earned--so, in the case of this example given, if you 
lose $1 of your disability insurance earned benefit for every 
$2 you make in wages, and you start it early, instead of at 
$1,090, which is the full disability benefit, you start it 
early, you've got a whole bunch of folks at that early stage, 
up to $1,000 or so, who are getting cut, their benefit. Even if 
they get--have a chance to earn money, many of them are not 
able to earn that much, but they still get the cut.
    And so, my question was, are we interested in creating 
losers in this? Are we interested in punishing people as we try 
to create an incentive to let those who can, as Mr. Zelley was 
able to, earn more money? And so, are we looking to punish 
those who don't have the ability to earn more money?
    Mr. ZELLEY. I am not in favor of whacking somebody's 
benefits. But I think there is a perception issue that I would 
like to address, if I may, Congressman, and that is that when 
you see that international symbol--and we see it when we park. 
You have got it here, at Congress. We have it at businesses, we 
have it in our life. We see that international symbol. I wear 
one that shows somebody carrying a briefcase, meaning that 
people with disabilities can work.
    When we see that, that there is this stereotyping--you talk 
about mental illness, specifically--when you see that, you 
think, well, what is that? That is someone who needs help, 
needs a parking spot, a medical problem, needs public--lacks 
education, not working, is a drain on our society. There, but 
for the grace of God go I. Or, do we see past that wheelchair, 
past the eyeglass, and see a person who is dependable, as 
businesses have found out, dependable and motivated and loyal? 
And healthy. They are not sick. I don't need to be healed. I am 
working. I have education, talent. See that, and see that 
there, with the grace of God, go I.
    So, my point is we have this tendency to think that 
everybody is really poor. Well, they are poor in a system that 
doesn't work well. That is the reason they are poor. The 
expectation should be higher, starting early, starting very 
early, with parents. And even at the low teenage years, that, 
yes, there is an expectation of work, and that, yes, you will 
be part of our society and community, and we have a support 
system that will bring you on that journey.
    Mr. BECERRA. And, Mr. Zelley, I don't--this is Mr. Larson's 
time, so if I could just ask if anyone else wishes to comment 
on this, I open it up to you very quickly, because I know Mr. 
Larson probably has other questions.
    Mr. KREGEL. Congressman Becerra, I really agree that this 
is an insurance policy. And if we start the offset below the 
current SGA level, we are effectively cutting the insurance 
payments for a certain group of individuals.
    At the same time, we have to recognize that we are talking 
about people at the subsistence level, at the poverty level. 
And a reduction in insurance benefits, as they make up for 
that, by increasing their earnings may, for some individuals, 
be a path to greater self-sufficiency. So it is a delicate 
balance, but your point is well taken.
    Mr. BECERRA. Thank you.
    Mr. JOHNSON. The time of the gentleman has expired.
    Mr. Paulsen.
    Mr. PAULSEN. I just want to start by thanking the Chairman 
for holding this hearing. This has been some really outstanding 
testimony, based on the wealth of experience that all of you 
have offered here.
    And it is interesting because, you know, our constituents 
back home, I mean, they expect us, as leaders in Washington, to 
get some things done. And this Social Security Disability 
Insurance program is the perfect opportunity for Congress to 
step in, make progress, come together, and make some real 
changes that are actually going to really, truly help people. 
And this is about making sure that those that do rely on that 
critical income safety net, they are not going to be put in 
jeopardy, right, from drastic benefit cuts, but also giving 
those tools and resources that are going to allow those who 
wish to return to work the opportunity to do so.
    And, unfortunately, as we have heard--and we have heard 
other stories from back home, but also from the testimony--the 
SSDI programs become so complex that even those who want to 
return to work, they have difficulty in navigating that huge 
web of rules and regulations. The beneficiaries become so 
overwhelmed or nervous about losing their benefits due to the 
overwork--due to overwork that they may actually stop looking 
for a job.
    And, Ms. Houghton, you mentioned actually, you know, you 
have to be a rocket scientist, right, to kind of figure your 
way through this. And businesses clearly want to hire and 
promote the best person for the job. And, Ms. Houghton, you 
have--I mean this is your area of expertise. You work with all 
these different employers. And we have heard today that, for 
those that are receiving DI benefits, it is not that simple, 
just to say yes to a new job, yes to the next promotion, yes 
for more hours. It is not that simple.
    Now, what about employers? How do employers navigate these 
rules? And if the program was simpler for employers also, do 
you think that employers could be more effective at providing 
opportunity for individuals with disabilities?
    Ms. HOUGHTON. Yes. I mean absolutely, Congressman. 
Employers don't know how to navigate these rules any better 
than their employees know how to navigate these rules. And so, 
as a result, they are either losing talent, or not having 
access to talent.
    If these rules--you know, I think it is clear that 
everybody wants to make this program work better, and wants to 
help people be able to become employed. And if we could 
simplify the rules so that you didn't have to be a rocket 
scientist, that would absolutely help individuals and, 
ultimately, help business, who wants to hire or retain these 
beneficiaries.
    Mr. PAULSEN. All right. Well, clearly, I think the ground 
work is laid here, based on a lot of the comments and testimony 
on a bipartisan basis. So I really want to thank you again for 
all the testimony we have had today.
    And, with that, Mr. Chairman, I will just yield back.
    Mr. JOHNSON. Thank you for your questions.
    Mrs. Black, you are recognized.
    Mrs. BLACK. Thank you, Mr. Chairman. And, again, I want to 
thank the panel for being here, and this most interesting 
conversation today. I want to thank the Chairman for holding 
this hearing.
    When I first came here to Congress in 2010, I was on the 
Human Resources Subcommittee, and that was my first time in 
understanding about the disability trust fund going defunct in 
2016. And so I have been anxious about this now for five years, 
and I am glad we are finally getting a hearing.
    One of the things that I did was to try to better 
understand this system. Because, as this chart shows, this is 
very complicated. You all know that. I think the audience and 
those at home--that are home watching need to see this chart, 
as well, to understand how complicated it is. And, because of 
that, what I did is I said I am going to act as if I am 
applying for services, and I am going to start at the beginning 
and work my way all the way through. And it was very, very 
enlightening.
    And we have talked a lot about the cash cliff here, which 
is a very important piece of this, and one of the barriers to 
getting people back to work. But as I was going through the 
process, one of the things I heard from the workers that I was 
so impressed with, those who I met with and the workers that 
were really trying to help the beneficiary get everything that 
they needed, at the same time to help them get back to work, 
was the whole issue of the lack of services there for those 
who, as has already been said in the testimonies that we have--
let me see here, 70 percent of those that are applying are 50 
years or older with a limited education and a limited amount of 
work experience to translate from whatever they were doing into 
something new. And there was a lot of frustration there, even 
though there are voc rehab programs, in getting someone from 
where they are back into the workforce, because the human 
capital is a big piece of that.
    And that is something that I did here, is that people who 
are not able to get back to work then go into depression, and 
there is a lot of things that occur as a result of them not 
being able to feel like they are self-sufficient, that they are 
worthy. And so, that really worried me. And that is a component 
I don't think we speak enough about.
    Mr. Kregel, I found it interesting in your testimony, and I 
highlighted this, a lack of training and support services are 
frequently cited by beneficiaries as a major obstacle to 
employment, training, and education to launch a new career, or 
need specialized employment services, have achieved mixed 
results.
    Can you help me to, from your perspective, on what can we 
do better to help somebody to be able to transition, especially 
those that are at the lower income with lower education, to get 
them back into that workforce?
    Mr. KREGEL. In addition to the individuals who say, ``An 
obstacle to my employment is the work incentives,'' and those 
kinds of things, they also say things like, ``There are no jobs 
in my community that I can do.'' They also say, ``There is no 
one to help me get a job. Employers don't think that I can do a 
job for them,'' and those kinds of things.
    And so, the issue is to get connections between those 
individuals and the business sector, which is very 
accommodating and very willing to hire these individuals. So, 
for low-income individuals who have significant health 
problems, it is a particularly daunting task. But the idea is 
there are people out there, employers, who are not the problem, 
who will accept you if we can enable folks to make that 
connection with them.
    So, the recruitment is just as important as the retention 
work that employers do to keep people who have had injuries or 
illnesses on the job retain--stay in employment.
    Mrs. BLACK. And, Ms. Houghton, that is where I want to say 
thank you for the work that you are doing, because I know in 
your testimony you said there are challenges finding the 
talent, and navigating the governmental system for these 
employers is very difficult. I am very excited about what you 
are doing, but can you help me in how we might be able to help 
you do a better job in getting these employers to where they 
need to be to get folks that are hired in the right places?
    Ms. HOUGHTON. You know, I--obviously, we have got a lot of 
work to do. But if ever there was a time, it is now. And we 
need these systems. We need the education system, we need the 
vocational rehabilitation system. We need the workforce system 
to help people with disabilities focus on what they can do and 
how they can do it, so that, as they interface with business, 
folks aren't talking about what they can't do, but they are 
talking about what they can do, and how they can get the job 
done.
    Mrs. BLACK. Thank you. That is very helpful, and I would 
really like to be able to stay in touch with you to see how we 
might actually be able to do that in some form. Not necessarily 
in a bill, but working with those existing forces that we have 
currently, and beefing those up, and making those better.
    Thank you, Mr. Chairman, and I yield back the balance of my 
time.
    Mr. JOHNSON. Thank you. Mr. Davis, do you care to question?
    Mr. DAVIS. Thank you very much, Mr. Chairman. And I ask 
unanimous consent to have entered into the record an article 
from the Washington Post printed on January 7, 2015.
    Mr. JOHNSON. So ordered.
    [The information follows:]
    
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    Mr. DAVIS. Thank you very much, and I want to thank you for 
the hearing. I certainly want to thank all of the witnesses for 
their participation in this very serious, sanguine, rational, 
what I call logical discussion of a way to look at trying to be 
of benefit and help some of the most vulnerable members of our 
society.
    And so, I relish the fact that we have talked about the 
Social Security Disability Insurance, realizing that there are 
no simple solutions to very complex issues and very complex 
problems. But, at the end of the day, I think we have to 
remember that, no matter what happens, these are individuals 
who have worked for their disability insurance. It is, indeed, 
insurance and not a means-tested program. These workers paid 
for their benefit over decades of hard work, and they have 
earned their Social Security benefits.
    In Illinois alone, we have 289,730 DI recipients; 18,601 in 
my district alone. The monthly average payment for a disabled 
worker in Illinois covers less than half the actual amount they 
earned before disability. And, if you consider the fact that 
rent for a one-bedroom apartment in Chicago is $1,752 a month, 
anyone on DI can hardly make a living.
    I agree that we must do everything that we possibly can to 
get as many of these individuals back into the workforce with 
meaningful jobs. But, at the same time, we cannot neglect the 
needs of the majority of recipients who have worked hard to pay 
into the trust fund all their lives. Cutting the benefit amount 
or altering program eligibility would take away already scarce 
resources of many vulnerable Americans.
    Dr. Van de Water, I would like to ask you this one 
question. Considering the fact that, since 2011, Social 
Security has received an average of $1 billion a year less than 
it needed to administer its programs, even though the number of 
Americans collecting earned Social Security benefits has grown 
by 7.5 million, could SSA administer a benefit offset program 
accurately within its current congressionally-provided benefit? 
And how have the budget shortages affected SSA's ability to 
administer the current work incentives that already exist?
    Mr. VAN DE WATER. Mr. Davis, as another witness has 
indicated, I think that the Social Security Administration is 
quite capable of administering a benefit offset, but that if 
the funding is short, as you point out, that will provide a 
practical impediment to doing the job well.
    One of the themes I think that has emerged from this 
morning's hearing is that there are a number of ways to 
encourage disability insurance beneficiaries to work. But many, 
if not all of them, are going to cost money, whether that is 
administering a benefit offset, whether it is doing additional 
continuing disability reviews, whether it is providing work 
simplification of the sort that Mr. Tiberi was asking about, 
all of these things require either program money or 
administrative money. And the attempt to achieve these goals 
and reduce program spending at the same time is an overly 
constrained problem. But the shortage of funding is key.
    Mr. DAVIS. Thank you very much. So the bottom line is you 
can't get blood out of a turnip. Thank you, Mr. Chairman.
    Chairman RYAN [presiding]. Thank you.
    Mr. DAVIS. And again, thank you all for being here.
    Chairman RYAN. Thank you, Mr. Davis.
    Mr. Renacci.
    Mr. RENACCI. Thank you, Mr. Chairman, and thank you for 
holding this hearing. I want to thank the witnesses.
    I have been sitting here, listening to all the testimony. 
And I realize there is no silver bullet to fix this shortfall 
that we are going to have next year, and I don't think this 
hearing was about finding that silver bullet to fix the 
shortfall next year. I do think the hearing, though, was about 
promoting opportunity for Disability Insurance beneficiaries.
    And so, keeping with that theme, I think back of a couple 
constituents in my district. And I always try and go back and 
think of constituents in my district, and how we can change 
things for those constituents. So there are some constituents 
out there that I know that would like to work. They are on 
Disability Insurance. They see a very difficult system to get 
into, but they deserve to get into it, and they have gotten 
into it, and now they are fearful they are going to lose it. In 
fact, I ran into one of them the other day and said, ``If you 
see the complicated form I got to report back on, I am not sure 
if I make the wrong election or say the wrong thing I am going 
to lose everything.''
    But these are also people who would like to work, too. So--
and I agree, I am hearing some things that--you know, if you 
change the payout system--in fact, Mr. Zelley, you even 
mentioned let them keep all their DI payments. Well, it is an 
interesting concept, because, you know, if people could do 
that, and still work, there probably is an incentive. But, 
again, it doesn't fix the system. But I think the goal here was 
really promoting opportunities.
    So--and the other thing--and when you say that--and I am 
not saying that is the answer--I was sitting here thinking the 
more that they are able to make, the more wages they are able 
to make, the more Social Security they pay, actually, back in 
on those wages. So there is some benefit to that.
    But the other thing I keep hearing today is the system 
doesn't work well, it is too complex, it is overwhelming. And 
that is actually what I am hearing from my constituents that I 
know are on the system, as well, those that want to work. Now, 
again, there are some that it would be very difficult to get 
back into the job market, but there are some that can.
    So, what I am trying to do after all of this is figure out 
what can we do differently. What can the system do differently? 
Because, Mr. Kregel, I heard you say, you know, that many 
people just feel there are no jobs in the community. And that 
is a problem, because there are jobs in the community. I know, 
when I was a business owner for 28 years before I came here, I 
hired many people that were disabled, and put them to work. And 
there were job opportunities for them. They weren't able to 
maybe lift, or they weren't able to fix a car in the automobile 
dealership, but they were able to sit at the desk and greet 
people, and they did a great job.
    But the question is, so now I am disabled, I get on the 
system, and it is a complicated system, and I am scared I am 
going to lose the dollars I am getting. So what can we do 
within the system to fix the system? That is really what I am 
looking for, so that that individual can have, maybe, an 
opportunity for work. Mr. Kregel, you have any thoughts there?
    Mr. KREGEL. I think that one of the advantages of the 
offset that hasn't been mentioned is that people who are afraid 
to work at that level presently--I think that there are people 
who are not working, and they just hear this stuff about, ``I 
am going to lose my benefits. If I work at all I am going to 
lose my benefits,'' and all of the information or inaccurate 
information that they receive.
    So, with the offset, it will enable people who are not 
working at the present time--and I would anticipate it would 
increase the percentage of DI beneficiaries who would actually 
attempt work and go to work, because we create this huge fear 
for folks at the present time. And then we have to automate the 
system. The form that you are talking about, the work activity 
report, the Form 821, there is another one we haven't talked 
about for self-employed individuals, all of those things just 
create tremendous burden, and really, fear on the part of 
individuals, ``If I say the wrong thing, I am going to lose my 
check. If I lose my check, I can't take care of my basic 
shelter and food.''
    And so, those kinds of choices that people are forced to 
make right now, those are the things that have to be changed, 
if we can.
    Mr. RENACCI. Could it be as simple as a follow-up from the 
Social Security Administration, saying, ``Hey, have you been 
looking for work,'' or, ``Is there something we can help you 
with?'' That seems like a very simple change that I am not sure 
if we are doing.
    Mr. Zelley, do you have any thoughts on that?
    Mr. ZELLEY. Well, if you are talking about encouraging 
people to work, absolutely. And, you know, there is this word, 
``bureaucracy,'' and we all get afraid of it. But it is in our 
lives, and so let's take advantage of it. Let's absolutely 
encourage people, as you are applying for disability, that 
there are alternatives.
    And the two-for-one ratio, I think it is--I am all in on 
this, you are hearing from the panel that this is a good thing, 
because you are not penalized for going to work. That is what 
we want.
    The other thing I will just say that--if I may, 
Congressman, that when I was first injured, and I am laying in 
intensive care with bolts in my head on a striker frame, 
thinking, you know, we depend on our faith and family and 
friends to get us through, and just--my life was over. What can 
I do? I have these children I can't provide for. And my 
brother-in-law, Gene Hamilton, brought in a fellow in a 
wheelchair, a friend of his, the same level of injuries I had, 
and he started talking about life in a wheelchair. And come to 
find out he was a stockbroker, making a lot of money. And I 
thought to myself--it was an epiphany.
    Well, if he can do it, if he can have a career, if he can 
make money, I can do it. And so that just changed everything, 
that pure support. There are organizations called Center for 
Independent Living, they are made up of, governed by, led by 
people with disabilities who are working. And I encourage you 
to support that Social Security engage with them early on, 
early on, as people apply. Because when you see somebody else, 
and you get that peer support, it is a bridge to work. It is a 
``Yes, I can.''
    So, I don't know if I have answered your question----
    Mr. RENACCI. No, you did, thank you. And I want to thank 
all of the--all the witnesses. And that is what I am talking 
about. We got to make sure--when I go back to those 
constituents, they just complain about the forms, and they 
never say to me, ``Hey, it would be great if somebody would 
show me how to get back to work, or give me that''--as you 
said, that inspiration, that here is an opportunity----
    Chairman RYAN. Thank you.
    Mr. RENACCI. So thank you. I yield back.
    Chairman RYAN. Mr. Reed.
    Mr. REED. Thank you, Mr. Chairman.
    And, Mr. Zelley, you just summed it up. That was the best 
testimony of the day, your story right there. That is what we 
are trying to do on this side of the aisle, is to promote that 
work ethic, that opportunity that you sought and you achieved 
and you recognized in your peer. So I applaud you in your 
story. I truly and honestly do.
    And before I ask my question of Mr. Kregel, I want to just 
note for the record what I heard from my colleagues on the 
other side--Mr. McDermott--about the fact that we are not going 
to be able to solve this problem because of a rule change, and 
that we should do what has been the status quo in Washington, 
D.C. for 11 times and multiple times over the decade, it is 
just transfer money for the retirees into the disability trust 
fund, and that will solve this problem. It doesn't solve the 
problem. It takes what is a $270 billion problem today that we 
are facing in 2016 with the disability trust fund, kicks it 
down to 2031 or 2033, and couples it with a $3.7 trillion 
problem.
    And so, if my colleagues on the other side of the aisle 
think we can't solve a $270 billion problem within the next 18 
months, how in the hell are we going to solve a $3.7 trillion 
problem just 16 years down the road? That is asinine. That is 
stupidity. And I came here in 2010 to change the status quo, 
and I am standing here seizing this opportunity in the 
disability trust fund to implement reforms that are going to 
help people. And your story inspires me to continue in that 
effort, Mr. Zelley, and I appreciate it.
    We had a chance on the Subcommittee, the Social Security 
Subcommittee, to have the Social Security Administration come 
before us. And during that questioning, I pulled up the Red 
Book and I gave it to the Social Security Administration who 
writes it. And I said, you know, ``This book says it is written 
in plain English language.'' That is the goal of the book, 
right, when you read the introduction. And I just flipped open 
the page. And I am looking at the smiles of the witnesses. You 
have read this book, right? This is D.C.-speak like I wouldn't 
believe. This is not plain English. My favorite: ``The EPE 
begins the month after the TWP ends. If you are not working 
that month, the first 36 months of EPE is--then you got to deal 
with the SGA then. Then the EPE is different than the EPX or 
the EXR.'' That is not plain English to me, ladies and 
gentlemen.
    So, Mr. Kregel, you are contracted by the Social Security 
Administration to teach counselors how to help people with the 
work incentive program. How long does that program take?
    Mr. KREGEL. We would say in our training program, between 
training and testing and ongoing support, it takes about a year 
to get to a basic level of competence.
    Mr. REED. So one year to train a professional to help a 
beneficiary to figure out the Social Security work incentive 
program is essentially what I heard from your testimony. Is 
that accurate?
    Mr. KREGEL. Yes, to help beneficiaries, right, yes.
    Mr. REED. To help a beneficiary counselor who is going to 
help a beneficiary.
    Mr. KREGEL. Right.
    Mr. REED. So it takes one year to teach them this program. 
And so, our beneficiaries, who don't have the benefit of that 
training, who don't have that level of professionalism when 
they deal with this situation, they are expected to know what 
this work incentive is on their own, because of a Red Book 
given to them by the Social Security Administration. That is 
generally the position of the Administration?
    Mr. KREGEL. That is where the state of the art is right 
now.
    Mr. REED. Yes. See, that is the problem. So, when I read 
your testimony I was so impressed with--and we saw common 
ground. Mr. Tiberi's question led to common ground, that we 
need to simplify this program, we need to simplify the work 
incentive program.
    So, let's take it one step further, Mr. Kregel. You are 
clearly an expert in this area. What are the top three things 
we can do to simplify this work incentive program, from your 
perspective and your experience?
    Mr. KREGEL. Well, I think that the first thing is to always 
make work pay. You are never going to go wrong betting on the 
willingness and the ability of individuals with disabilities 
who want to pursue their work goals. They want to work, like 
everybody else. They have their own personal lives, and they 
really need to do it.
    So, what we want to do is make sure that--people who can't 
go to work, we want to help them. People who want to work, we 
want to be focused on doing everything that we possibly can to 
assist those individuals.
    The second thing that we really need to do is reduce the 
burden on the beneficiary at various points in time. If you 
look at this particular chart, each one of these squares can be 
expanded into another couple charts, in terms of what happens 
in this instance, and what happens in this instance. What 
happens that we haven't talked about, if you are self-employed, 
and you run your own business. So, reducing burden of 
individuals who want to go back to work, to get past this 
mailing stuff, and doing it in a way that simplifies it from 
their perspective, would really, really be helpful.
    And then we have to get to accurate information. So the 
ability of the local field offices and the service providers 
and VR and other places to actually provide the right 
information, or make sure they follow up and make sure the 
individual understands that information, so that people aren't 
making wrong decisions based on what they think is the right 
information but is erroneous information, And it ends up 
causing major turmoil in their life, as a result of an 
overpayment.
    Mr. REED. I appreciate those suggestions. And what I hear 
is proactive, get into it early, educate individuals, and then 
stand with those individuals as they go back to work.
    Mr. KREGEL. Correct.
    Mr. REED. Thank you. With that, I yield back.
    Chairman RYAN. Fantastic. Thank you very much. I thought 
this was a very insightful hearing, and I hope that we can move 
in a bipartisan way. I heard some partisan comments. Hopefully 
that is not what is to come, because I think you can see that 
we have a deep interest in avoiding this problem, this 20 
percent cut, and making work pay, and making this law work like 
we all want it to work.
    So I want to thank each of you for bringing your fantastic 
testimony. It was very enlightening.
    This hearing stands adjourned.
    [Whereupon, at 12:36 p.m., the Committee was adjourned.]

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