Supplemental Security Income: Let's Strengthen It and Make History!

Democrats will make history in their upcoming reconciliation legislation. The $3.5 trillion package will likely include landmark improvements in the health and wellbeing of the American people.

One of those landmark opportunities has gotten little notice. Supplemental Security Income ("SSI") was enacted in 1972 to provide basic income to the nation's poorest seniors, adults with disabilities, and children with disabilities. But SSI's benefits are inadequate, its eligibility rules are outdated and fundamentally flawed, and its requirements to maintain benefits are punitive and intrusive.

Rather than waste money on punitive administration, the same amount of money should be directed towards updating, simplifying and expanding benefits.

President Joe Biden ran on a platform of updating and improving SSI. The SSI Restoration Act of 2021, co-sponsored by around 20 percent of House Democrats and 40 percent of Senate Democrats, contains those reforms. A growing movement led by a number of champions in Congress is working tirelessly to have those important improvements included in the upcoming reconciliation package.

One of those improvements is to raise the benefit level to the poverty line. When Congress enacted SSI in 1972, it explained that its purpose was "to provide a positive assurance that the Nation's aged, blind, and disabled people would no longer have to subsist on below-poverty-level incomes." (Emphasis added.) Unfortunately, today's program does not come close to meeting that legislative goal.

The maximum federal SSI benefit is less than three-quarters of the federal poverty line. Disturbingly, the Census Bureau reports that 5.1 million people aged 65 or older in 2018 had incomes below that measure of federal poverty. When using the supplemental poverty measure--a more accurate, comprehensive measurement of poverty--that number of 5.1 million jumps to 7.2 million. The Census Bureau also reports that approximately one in four of those with a disability lives in poverty.

Moreover, married couples are penalized. Currently, married couples are limited to receiving a maximum of one and a half times the SSI benefit that individuals receive.

President Biden's proposed SSI improvements, which are included in the SSI Restoration Act, would raise the benefit level to the federal poverty line and eliminate the marriage penalty, which also simplifies administration. Under current law, couples that are not legally married under state law nevertheless are subject to the marriage penalty if SSA determines that they are presenting themselves to the community as married.

As meager as SSI benefits currently are, recipients must have virtually no resources to receive even that inadequate amount. Congress has explained that it allows SSI recipients to have some resources in recognition of the need to meet unexpected expenses that could not be covered by current income. The allowable resources are much too restricted, however, to satisfy Congress's intent that they cover the cost of emergencies. An individual's countable resources are limited to just $2,000 and a married couple's to just $3,000.

Those modest amounts are a cliff: They penalize savings harshly and totally. Exceeding the limit results not just in the loss of SSI cash benefits but also can result in the loss of Medicaid, housing assistance, and other essential benefits. Consequently, prudent recipients have to avoid getting close to the line. The limits also penalize marriage, because two single people are allowed to save $1,000 more than a married couple.

Congress increased the limits just once, in 1984, and the amount of the increase was minimal. Congress has not adjusted the limits at all in more than three decades. Consequently, the resource limits have eroded substantially in value.

President Biden campaigned on increasing those limits. The upcoming reconciliation package should keep that campaign promise by increasing those limits to at least $10,000 (for individuals) and $20,000 (for couples) and automatically adjust them thereafter so that they don't once again erode in value.

Another important change that President Biden has proposed involves the income limits. Like the resource limits, SSI's income limits are extremely stringent and outdated. They too should be increased as part of reconciliation.

So-called unearned income, including Social Security (despite the earned nature of those benefits), and groceries provided by family, reduces SSI benefits dollar for dollar. Only the first $20 is exempted from what is essentially a 100 percent tax of that income. The situation for earned income isn't much better: Every single dollar of earnings after the first $65 reduces SSI benefits by 50 cents.

The effective tax rate of 50 percent on earned income penalizes work. Many policymakers argue that increasing the marginal tax rate of those with incomes of over $250,000 to just 36 percent would be a serious work disincentive. Yet those same politicians are apparently fine with a 50 percent tax rate on the poorest people in our country! Because of the very low incomes of SSI recipients, the 50 percent rate is unlikely to discourage work, but it does substantially reduce the gain from any work they are able to engage in.

The income disregards of $20 and $65 before the application of the effective tax rates of 100 percent and 50 percent hardly soften the blow. They were what was included when SSI was enacted in 1972, and, in fact, are even older. An $85 per month income exclusion was in the predecessor program, Aid to the Blind, since 1960.

That $85 in 1960 has the same purchasing power that $784 has today! In contrast to our government's stark failure to increase the amount in more than six decades, that $85 was increased after just one decade, from the $50 disregard enacted in 1950.

Congress should drastically increase the $20 and $65 exclusions, as President Biden wants to do. At a minimum, Congress should increase them to $128 and $416 respectively and then automatically adjust them for inflation so they don't once again erode, as the SSI Restoration Act provides.

Nor should groceries and other assistance provided by family, friends, or neighbors, reduce benefits. Reducing benefits for so-called In-kind Support and Maintenance ("ISM") implicitly discourages this help. As a matter of morality, discouraging families and friends from helping those who are less fortunate is wrong.

These harsh, unfair rules require SSI recipients to report accepting food from a roommate, or from a parent treating them to dinner. The rules are complex to administer and even more complex for recipients to navigate, leading to the forced repayment of unintentional overpayments, after the monies had been innocently and understandably spent. Both President Biden's proposed reforms and the SSI Restoration Act would repeal these cruel, immoral provisions.

Eliminating the ISM rules has an important byproduct. It will dramatically simplify SSI administration, while also reducing errors and treating those receiving benefits with the privacy and respect all of us want for ourselves.

The ISM provisions require SSA to make detailed and intrusive inquiries into the lives of recipients, who may be required to describe in great detail how their households function and to furnish documentation. Landlords, housemates, and family members may be interrogated, as well.

Once the information is collected, the in-kind transfers must be converted to dollar amounts, requiring an extremely complicated set of calculations. Then, benefits are adjusted, another complicated task. Moreover, these complicated, time-consuming and intrusive determinations generally must be made repeatedly.

What is the resistance behind changing the ISM provisions and other punitive, intrusive rules? Throughout the history of American social welfare policy, there have been those who have seen some or all of those at the bottom of the income scale as "undeserving." Those who hold that judgmental view are overly attuned to possibilities of fraud, waste, and misuse.

The irony is that the current rules cost taxpayer dollars. Because of its complicated, punitive, intrusive rules, SSI is extremely expensive to administer. SSI accounts for just five percent of the benefits paid by the Social Security Administration; Social Security accounts for 95 percent. There are approximately eight times more Social Security beneficiaries than there are SSI recipients. Nevertheless, SSA spends almost as much to administer SSI as it does to administer Social Security

That high administrative cost has the much more significant intangible cost of robbing our fellow Americans of dignity, respect, and autonomy to make decisions regarding their own lives. Rather than waste money on punitive administration, the same amount of money should be directed towards updating, simplifying and expanding benefits.

Congress has the opportunity to make those important improvements as part of the upcoming Build Back Better reconciliation package. If Congress does that, historians will say, as President Franklin D. Roosevelt said when he signed Social Security into law, "If the Senate and the House of Representatives ... had done nothing more than pass this Social Security Act, the session would be regarded as historic for all time."