Obama’s Social Security Disability policy busting Calif. general fund

September 28, 2012 - By admin

Sept. 28, 2012

By Wayne Lusvardi

Here’s the dirty secret of Gov. Jerry Brown’s Proposition 30 tax increase of $8.5 billion. Most of it would not go to education, as advertised. Instead, it indirectly would go to plugging a gaping budget hole created by the Obama Administration’s policy of taking people off unemployment rolls and putting them on permanent disability benefits. The Obama policy blew a $11.7 billion budget hole in California’s budget.

The Obama Administration’s loosened eligibility requirements for Social Security Disability have swelled the number of those on Medicaid in California.  It is Obama’s relaxed requirements for Social Security Disability — put into place by Obama Administration appointees and coupled with declining federal funds — that is busting the California general fund budget at this time.

Medicaid in California has grown $27.1 to $38.8 billion, an $11.7 billion increase over just the last five years.

From 2007 to 2011, state general fund revenues have gone from $102.9 billion to $92.5 billion, a $10.4 billion decline.

However, federal funds for California have gone from $56.2 billion to $78.7 billion over the same period, a $22.5 billion per year increase.

The total combined general fund and federal fund revenues have gone from $129.1 to $165.3 billion from 2007 to 2012, a $36.2 billion increase.  Federal funds have increased 25 percent over the last 5 years.

TABLE 1.

Trend in Medicaid & K-12 Funding 2007 to 2011 — Billions $ and Percent

2007 2008 2009  2010 2011 2012
Percent Medicaid of Fed. Funds $27.148.2%  $33.6
24.5%
$38.8
34.5%
$39.233.2% $38.849.3% N/A
Percent K-12 of Gen. Fund $27.827% $36.1
39.7%
$37.943.5% $36.139.5% $33.038.2% N/A
Gen. Fund Revenues $102.9 $90.9 $87.2 $91.5 $86.5 $92.5
Fed. FundRevenues $56.2 $73.0 $89.0 $84.7 $78.7 $72.8
Total Gen. & Fed. Fund Revenues $129.1 $163.9 $176.2 $176.2 $165.2 $165.3
Percent Medicaid of Gen.Fund & Fed. Funds $27.121% $33.620.5% $38.822% $39.222.25% $38.823.5% N/A
Source: California Department of Finance; http://siepr.stanford.edu/publicationsprofile/2455

Statistics for the number of recipients or amount of expenditures for SS Disability in California for 2012 are not available.  Nonetheless, the state budget for the 2012-13 fiscal year indicates a decline of $30.1 billion in federal funds and a $6.0 billion increase in the state general fund. The net effect on the combined general fund and federal funds is a $24.1 billion decline in total revenues for 2012-13 — see Table 2 below.

No Apparent Need for New Tax for K-12 Education

California population grew from 36,207,622 in 2007 to 37,691,912 in 2011.  This indicates 1,484,290 more people over the last four years, for an annual compound growth rate of less than 1 percent (0.8 percent) per year. Population was over-estimated by demographers by 1.2 million people during the last decade because they expected more people to move in and fewer to move out.

Hispanics represent the largest group of new arrivals.  The number of white children dropped 21 percent in the last 10 years.  As Dowell Myers, a demographer at the University of Southern California, has stated, slow growth will make it easier for state officials to plan in an era of budget deficits.

Concurrently, K-12 education funding increased $5.2 billion from 2007 to 2011.  The percentage of funding out of the general fund for K-12 education rose 18.7 percent.  But that is a statistical fluke due to the total dollars in the annual general fund budget declining by $16.4 billion from 2007 to 2011.

The number of children enrolled in K-12 public education declined over the last five years by nearly 1 percent (0.98 percent), or 61,265 children. It is not apparent that California needs a new tax for K-12 public schools that would equate to about a 9 percent increase in general fund revenues.

Brown’s Tax Increase Would Plug Rising Medicaid Costs

Brown’s 2012-13 state budget is predicated on an expected $8.5 billion in new taxes from Proposition 30 on the November ballot.  It now appears that most of Brown’s tax increase would really have to go toward plugging the increase in Medicaid costs due to Obama’s SS Disability policies.

Brown is claiming that 89 percent of Prop. 30’s funds would go to K-12 schools and 11 percent to community colleges.  But budget line items are fungible or interchangeable.  So by funding $8.5 billion to K-12 schools and community colleges, this frees up an equal amount of funds to be allocated elsewhere — such as to Medicaid.

But Prop. 30 could not be easily sold to the voters if they knew that the tax increase would indirectly go to funding Medicaid. So like in a pea shell game, Brown has switched, to public education rather than Medicaid, the public perception of what shell his $8.5 billion tax is under.

Loose SS Disability Rules Led to Rise in Recipients

The eligibility requirements for Social Security Disability may not be an official policy of the Obama Administration.  But Obama’s appointed program heads have interpreted its policies for nearly three years.  Relaxed eligibility rules have led to a large increase in SS Disability recipients.

According to Forbes.com, the Social Security Administration shifted to placing more weight on self-reported pain, loosened screening of mental illness, and now accepts evidence from the applicant’s own doctor.  Mental illness recipients grew from 16 percent in 1983 to 33 percent in 2010.  Back pain awards grew from 13 to 28 percent.  Over half of SS Disability recipients are considered mentally ill or have back pain.

In 2008, when Obama was elected, there were 7.2 million adults age 18 to 64 on Social Security disability.  By 2011, there were 8.7 million, for an increase of 1.5 million — reflecting a 20.8 percent jump.  Parking 1.5 million formerly employable people on SS Disability has lowered the official national and California unemployment rates. This is a strategy borrowed from former British Prime Minister Tony Blair when he came into office in 1997 to make the unemployment rate look better.

This tactic is helping the image of the Obama Administration by lowering the public perception of the unemployment rate.  But it is ending up busting California’s general fund budget. This fact has been quietly kept under the radar in California up to now.  Voters are more likely to vote for “school children” than those put on disability, with easily feigned mental illness and back pain to cover up a higher unemployment rate than is being shown.

A look at the California state general fund budget from 2007 to 2012 indicates that a $46.7 billion increase in federal funds has mostly plugged the rise in Medicaid costs from 2007 to 2011.  But in 2012-13, federal funds will decline by more than $30 billion.  This will make it difficult to fund an $11.7 billion increase in Medicaid costs resulting from the Obama administration’s shift of the unemployed to the Social Security permanent disability program.

Brown has ended up being a political water carrier for Obama’s policy to artificially reduce the unemployment rate by shifting people to permanent SS Disability, resulting a hole in California’s general fund budget.  The Obama administration should now be compelled to own up to a budget deficit they created and go to the well of the federal treasury rather than the California taxpayer to finance it.

Effect of Obama-Cal Policy on Swing State Elections

Voters in those key swing states in the upcoming national election need to know that it has been the Obama administration’s policies to reduce the perceived unemployment rate in California with an $11.7 billion per year increase in SS Disability payments. Swing states have been subsidizing California to the tune of $11.7 billion over the past 5 years for new lax SS Disability payments for mental illness and back pain may bear on the mental calculation that voters make for who shall be the next president.

TABLE 2:

Medicaid & K-12 Education as Share of State General Fund — 2007 to 2011

2007-08 2011-12 Change 2007 to 2012 2012-13 Change 2011 to 2012
General Fund $102.9 $86.5 - $16.4 $92.5 + $6.0
Federal Fund $56.2 $102.9 + $46.7 $72.8 - $30.1
Gen. & Fed. Funds Total $159.1 $189.4 + $30.3 $165.3 - $24.1
MEDICAID
*Dollars $27.1 $38.8 + $11.7 N/A N/A
K-12 EDUCATION
*Dollars $27.8 $33.0 + $5.2 N/A N/A
*Percent General Fund 27.0% 38.2% + 18.7% N/A N/A
Source: http://siepr.stanford.edu/publicationsprofile/2455

 

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Comments(36)
  1. Susan says:

    Great, more dirty secrets on the ballot, this time associated with Gov. Brown’s Prop. 30. So not only is California getting hosed, but when states in other parts of the U.S. find out they are getting hosed too through subsidizing California’s skullduggery I don’t think they are going to be too thrilled either.

  2. MiddleClassWorkerAttacked says:

    Prop 30 is just classic California.

    Raise taxes with scare tactics, then lie about where the money is going, while holding your job as a state employee hostage if you fail to vote yes. Guess what people, the pay cuts and layoffs are coming regardless so why bother giving any more of your hard earned money to California ?

  3. BobA says:

    MiddleClassWorker:

    Why bother? I sometimes ask the same question but I’m a cynic so I look at it this way: the welfare rolls in this state is growing and will reach a point where there will be more people on the dole than people with actual jobs. Once they become the majority, people on dole will figure out that they can vote themselves more of our money and we will be powerless to stop them.

    I think employers have already figured this out and are leaving the once golden state of California. I can also envision a time when politicians will enact a law making it illegal for businesses to leave the state of California without first filing an economic impact report and other legal justification paper work and then paying a fine once the paperwork is signed, notarized, filed and then approved after the proper waiting period.

  4. Rex the Wonder Dog! says:

    What really pisses me off about Prop 30 is the “temporary” claim, they know damn well it is not temporary. They have NO funding source to replace it and it will end up just like Props 1a-1g 2 years ago.

    Classic BS…………….

  5. lynne says:

    what a stupid article. Your only source for the assertion that Obama has loosened SSDI eligiblity is from a fear mongering libertarian nut. You claim that this is impacting medi-cal, but you fail to mention that an SSDI recipient is medicare eligible after 24 months. The feds pay 100% of SSDI, so it should improve California’s budget picture since these are people who would presumably be without income if not for SSDI. It is neither easy or quick to get on SSDI, and it’s pretty nearly impossible to ‘feign’ mental illness or back pain because Social Security requires an independent examination. What a bunch of hogwash, it sounds to me like your real goal is to get rid of all Social Security programs, but let me remind you, your ‘idol’ the famous meth addict Ayn Rand was on Social Security disability.

  6. Hondo says:

    As a slum lord I see the ssdi racket at work. This young man told me his welfare mom told him to act stupid at the tests and interviews. True story.
    The math shows that if you tax 100% of all the people who make more than 250 grand you still can’t balance Obama’s budget. The only way you can raise the kind of money Obama wants to spend is to tax ALL the money from all the people, which is communism.

  7. Ulysses Uhaul says:

    Why on earth do the usual demented keep dreaming….Prop #30 will win by five points!

    Been out and about lining up more trailers to move greedy producers out of here who are unwilling to share and invest in California.

    I wave bye bye! They pay real high too…

  8. Wayne Lusvardi says:

    Lynne:
    You ruin your argument by making personal attacks. That is the sign of someone who admits they have lost the argument.

    I am a former social worker, welfare eligibility worker, and helped a relative get SSI this past year.

    I am far from an “anti-government libertarian.” I have argued on this very website for safety net programs over funding luxury public goods out of the state budget.

    The source of my statement about relaxed eligibility standards for SS Disability is Forbes.com. Please take your issue up with them.

    To what do you attribute such a large increase in SS Disability recipients in 5 years?

    You offer nothing to refute my analysis of the state budget that there is no need for a 9% state budget tax increase for public schools (which have declining enrollment) but there is great pressure exerted on the state general fund budget in the last 5 years due to increase Medicaid recipients.

    Thank you for reading Calwatchdog

  9. Wayne Lusvardi says:

    Lynne
    Medicaid does not help the state budget situation. There is a matching requirement to get Federal funds that puts pressure on the state general fund budget.

  10. Wayne Lusvardi says:

    On average states pay 43 percent of Medicaid costs. See here:
    http://www.csmonitor.com/USA/2008/0815/p03s08-usgn.html

  11. Ted Steele, The Decider says:

    Best Post of the YEAR !!!

    lynne says:
    September 28, 2012 at 2:43 pm
    what a stupid article. Your only source for the assertion that Obama has loosened SSDI eligiblity is from a fear mongering libertarian nut.

  12. Ted Steele, The Decider says:

    seriously man—- how did all these whack jobs get into the Republican party??? Nixon and Reagan are spinning in the grave!!!

  13. JOE LUGO says:

    Any whack job in the republican party, is less whacky than a prez who is stupid enough to claim 57 states in the U S A,and is such a idiot that he can not even pronounce CORP he says only what he reads and to him corpse did not sound wrong, and any president knows even when reading that there are only 50 states i am an independent,we will throw that illiterate out, remember the 2010 elections?

  14. Ulysses Uhaul says:

    The goal is load up Medicaid and cover all the poor on the state’s dime.

    Your residents. You pay for them. Simple.

  15. Wayne Lusvardi says:

    Once again the source is Forbes.com – here’s the link again

    http://www.forbes.com/sites/paulroderickgregory/2012/06/04/add-disability-to-obamas-anti-jobs-policies/

    A tactic of the political left is just to demonize their opponents rather than make an argument because they don’t have an argument.

  16. Pam McDonald says:

    In our office (Family Practice Physician) we have seen a dramatic rise in the number of people who are filing for SSDI. SSDI requests medical records from us to verify their claim. The majority of these are newly unemployed, and in the past, would not have qualified for SSDI. This definitely is a problem for California right now – and it is growing rapidly.

  17. Rex the Wonder Dog! says:

    Why on earth do the usual demented keep dreaming….Prop #30 will win by five points!

    $100 Teddy-put up or shut up ;)

  18. Rex the Wonder Dog! says:

    In our office (Family Practice Physician) we have seen a dramatic rise in the number of people who are filing for SSDI. SSDI requests medical records from us to verify their claim. The majority of these are newly unemployed, and in the past, would not have qualified for SSDI. This definitely is a problem for California right now – and it is growing rapidly.

    Filing claims amd having claims approved are two diferent animals, are you claiming all these increased filing of claims are being granted????

  19. BobA says:

    JOE LUGO:

    I’m an independent conservative and I agree with you. I hope and pray that Americans have enough sense to throw the illiterate out or America is in for some desperate times ahead.

    Most Americans don’t seem to grasp the enormity of our national debt let alone the stat’s debt but they will when the feel the pain and hardships of what that portends for them. The same applies to Obamacare.

    How many peoples health insurance costs have actually gone up instead of down as Obama promised? How many of us know doctors who plan to leave the medical profession because of Obamacare? How many of us know people in the medical & insurance professions who have already lost their jobs because of Obamacare? I can name several people I personally know.

    And contrary to Nancy Pelosi’s belief, an unemployment check does not stimulate economic activity. Only someone who is a rich as Nancy Pelosi would even entertain such thoughts.

  20. ruth says:

    “Instead, it indirectly would go to …” How about, “it would indirectly” instead of your split infinitive?

  21. ruth says:

    I haven’t gotten through the first paragraph yet.
    “The Obama policy blew a $11.7 billion budget hole in California’s budget.”
    How about “AN $11.7 billion…”
    An eleven point seven billion …….. NOT, “a” $11.7.

    Wher’d ya go to da skool?

  22. Queeg says:

    Stale old pap!

  23. eatingdogfood says:

    Obama Is Going To Take Everyone Down !!!

  24. Queeg says:

    What a sick handle!

  25. Rex the Wonder Dog! says:

    It is a cool handle………what kind of dog food you eating EDF?? I like Alpo myself ;)

  26. The Africanized Swarm of Ted Steele System says:

    Oh Katy— I suspected you were a Beckian— how sad—– disillusionment——-

  27. The Africanized Swarm of Ted Steele System says:

    He saved us from a depression
    He killed Osama
    He killed 58 key Alqda leaders
    He gave us needed national health care
    He reformed Wall Street
    He saved the auto industry
    With Grace and style he survived and thrived amidst the largest and most ignorant prolonged racist rant against any US political figure in history.

    I love him Kates!

  28. Ulysses Uhaul says:

    Who is this new kook?

  29. CalWatchdog says:

    Sorry Teddy – it’s a different Katy – not me.

    Katy

  30. queeg says:

    Lets all start over and sort things out…who is who…and why are you who? Ah! Forget it….just insult the Poodle and all will be well…. and BobA who is moving to Wierton,West Virginia and refuses to use Ulysses’ moving services……

  31. Rex the Wonder Dog! says:

    Oh Katy— I suspected you were a Beckian— how sad—– disillusionment——-
    ==
    Teddy, are you a Ed-ian or Rachel Maddow-ian ;)

  32. eatingdogfood says:

    Keep Voting For Lying Thieving Low Life Backstabbing Bloodsucking Double Dealing Tax and Spend Liberal Democrats !!!

  33. Goddessoflubbock says:

    You need to get your facts straight. Social security is paid from SS taxes which are federal.

    SSI is NOT SS and is paid from the general fund. CA is one of the few states that gives extra money to SSI recipients.

  34. social security disability says:

    Hello Wayne, as a slum lord I see the SSDI racket at work. This young man told me his welfare mom told him to act stupid at the tests and interviews. The math shows that if you tax 100% of all the people who make more than 250 grand you still can’t balance Obama’s budget. The only way you can raise the kind of money Obama wants to spend is to tax ALL the money from all the people, which is communism.

  35. greg eakin says:

    well i hope and pray for obama help! It is hard here in North Carolina and I Have lost my job in 2008. Then the morgage company forclosed my beautifull home. I have lost every thing down to just about my underwear. I have lived homeless in tents and shelters since my incredible failure.I have worked a long term job with a local contractor as an Electrician.I survived for a little while from unemployment benifits and my early cash-in 401-k plan from my prior job.I have stayed encouged and trust in JESUS for help. But, there is no work avalible here in my home town kannapolis,concord,north carolina.

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