Squeaky Car Dealers

Although some car dealers are not complaining about the delay in getting the cash in the Cash for Clunkers ($4C) program, others are whining like little kids whose parents changed their minds about letting them stay up late. It is hard to find sympathy these pouters because the program moved hundreds of thousands of cars out of their inventory and the delay is not a big burden. Furthermore, the dealers had the choice to take the “clunkers” as trade-ins for $4,500 and resell them. In many cases, the clunkers could have been resold for that amount or more.

Close to $3 billion was pumped into the U.S. car market by $4C, facilitating the sale of between half and three quarters of a million cars. This has to be a mega-Red Bull for the retail car business. My wife and I bought a car under $4C. We went to several showrooms to look at cars and everywhere the sales agents were talking about how high the demand was. Considering that many of the most popular car models would not qualify based on the difference in gas mileage between the trade-in and the new car, there must have been many ancillary sales, in addition to $4C deals. Dealers complain about the paperwork, but there will be forms to fill out any time government money is involved.

The effective date of $4C was July 1, 2009, but many dealers did not process any $4C deals until more than three weeks later. Less than 60 days after the first deals were consummated, many dealers are complaining that they have not been paid yet. The Obama administration is promising that the payments will be made by the end of this quarter, but even if dealers have to wait until the end of the year, they have little to complain about. This is not the price of the new car they are waiting for, it is just the trade-in on some of the deals they wrote in July and August.

Car vendors generally see their money within a few days, so they are spoiled. They are not used to waiting for money. However, they have much better access to credit and much bigger cushions than many people who have to wait for government money. When I was representing assigned appellate cases and being paid by the county, I often had to wait more than a year to get paid. Furthermore, the amount private defense attorneys were paid for representing indigent defendants was, and is, pitiful. Nursing homes are required to wait for Medicaid approval for residents who are eligible for the program. In Wayne County, here in Michigan, it is common for a Medicaid application to take more than a year before the worker is satisfied and the case is opened. If car dealers see their money this year, they have no legitimate complaint.

Finally, it must be remembered that many of the clunkers traded-in were not worthless. The car buyer just decided that he or she could not get more than the program would pay or did not want the bother of selling the clunker. In order to qualify for $4C, the trade-in had to have been registered to the car buyer and insured for at least a year and it must have been driven to the dealership. I could have sold the 1999 Blazer I traded in for $3,000 to $4,000. If I could have realized that much, I am sure a dealer could have done that well or better. Therefore, the dealer had a choice: He could have taken the car as a clunker, knowing he would have to wait awhile to get $3,500 or $4,500, depending on type of car purchased, or he could have given me that much as a straight trade-in and peddled the car at the auction or put it on a used-car lot. The fact that he took my Blazer under $4C was a business decision. To whine now that he has to wait too long to get paid is immature.

Vista is Misery; Will Seven be Heaven?

An Open Letter to President Obama and Congress:

For the past year and a half I have been plagued with computer problems due to Windows XP and Vista. I couldn’t get my new Gateway running Vista to operate properly. I had the OS re-installed three times. Finally, I abandoned it and replaced it with a Lenovo with XP. When the Lenovo’s XP OS started crashing to a blue screen, I had the hard drive wiped clean and the Vista Ultimate OS that came with the machine was installed. I found out that Vista Ultimate has a very limited range of view and is not the ultimate of anything good. This operating system has more faults than California’s geology and the defects are obvious at every stage of trying to work on my computer.

First I wait for the computer to boot up. This is an inordinately long process–five minutes or more. There is no reason for the boot-up to be so slow; I limit the programs running in the background to the absolute minimum and I do not use Instant Messenger or music-sharing programs. Furthermore, this is a very new computer–especially since the OS was installed less than a month ago. Sometimes it boots and freezes.

Once this turkey is launched and lurching skyward, I wait to see if the laptop connects to my wireless router. Sometimes it does; sometimes it doesn’t. Often, I have a 10- to 20-minute process of “diagnosing” and “repairing” the wireless network connections, switching the wireless modem off and then on.

Having survived the ordeal of booting up and logging in, my computer works pretty well, although one program or another will suddenly stop working properly or crash. This happens with Microsoft programs–Outlook, Internet Explorer, Excel–as well as non-Microsoft applications. Sometimes it seems as if I have been transported back in time to the days of Windows 3.1. I switched from Mozilla Thunderbird and Firefox, which I really like, to Outlook and Internet Explorer because it was suggested that Microsoft programs should work better with the Windows OS. I have not found that to be the case.

Fortunately, Windows Seven is just around the corner. As soon as that becomes available, I can upgrade and my problems will be over, I am told. Yeah. Sure. We are talking about the company that inflicted Windows ME, XP and Vista on us. We are also taking about the company that transformed its office suite from a set of straightforward menu-driven programs to ones with weird “ribbons” that are not even consistent within the suite. I have no confidence that Microsoft is getting it right this time.

I am not a Luddite. I love new technology that works and I know when something works. Windows 2000 Professional was a jewel of an operating system and a huge relief from Windows 3.x. However, I am really getting tired of Microsoft’s screwed-up operating systems and wonky program upgrades; especially since the company forces computer users to purchase the new versions through its PC monopoly.

I will soon have to abandon Windows 2000 Professional on my desktop and workstations because so many programs have been engineered not to run under it. For example, I had to purchase an XP machine in order to use Microsoft Money to do my banking. Microsoft cut off internet accessibility for Money 2006 and later versions require XP or Vista. This is oppressive and monopolistic market manipulation.

If Microsoft’s OS and programs worked properly, the situation would be tolerable, but they don’t. Over the last year and a half, it has been necessary to wipe my computer and re-install the OS and applications five times! This is not due to viruses; just crappy Microsoft XP and Vista. Each reinstall cost me a week of productivity. Conservatively speaking these OS problems cost me at least $5,000. Multiply that by the hundreds of thousands of Microsoft customers who have been suffering through similar problems and you get a figure that approaches the cost of the toxic assets crisis or the real estate mortgage bailouts.

Microsoft XP and Vista are causing severe economic losses and it is extremely unlikely that the introduction of Windows 7 will solve anything. This country cannot afford another screwed-up version of Windows.

I call on you, President Obama, and Congress to hold hearings and consider legislation to curb Microsoft’s abuses. The government cannot enforce a requirement that Microsoft create a reasonably trouble-free OS, but it can require Microsoft and other software producers to build in backward compatibility and to continue to support programs that work. I am a small business person and the cost burden of software upgrades and OS re-installs is crushing me. Microsoft won’t care a fig about its customer’s problems until Steve Ballmer, the CEO, sits in a caucus room and is asked by members of Congress why his products are costing America’s small business operators billions in lost productivity.

We Can’t Wait Until We Can Afford It

It looks as if health care reform is going to cost $1.6 trillion over the next ten years. If that is not enough to scare the pants off you, think about all of the government programs that run hugely over budget. However, this cost does not mean we should not implement a public health care plan that ensures that everyone–that is, everyone, EVERYONE, not just most people–has an adequate health care plan. This is something we need to do, as much as we needed to invade Afghanistan and Iraq. When something must be done, you start doing it.

How many families would get started if women waited until they could afford to raise children to get pregnant? Nobody, except the very rich, can afford to have children. Parents do not wait until they can afford children; they have children and stretch their means to raise them.

This is what the United States must do, now. We must implement a universal health care system and then go about finding the means to support it.

World’s Best Health Care System

It is really aggravating when people claim, without stating their basis, that the United States has the World’s Best Health Care System. In the first place, this is just cheerleading. No matter what school it is, the coach and the student council president will proclaim “We’re number one” at the Friday night pep rally. It doesn’t make any difference if the school is U.S.C. or Eastern West Virginia Polytechnical Institute, which hasn’t won a game in any sport since an opponent was disqualified during the Carter Administration. Depending on how the different countries’ health care is measured, the United States’ is undoubtedly better that Zimbabwe’s, but whether it is better than Sweden’s or Canada’s or France’s is less sure. Furthermore, the quality of the care is beside the point for 100 million uninsured and underinsured U.S. residents. They don’t get it.

Secondly, the United States does not have a “health care system.” We have a medical service industry. Then we have a health insurance industry that rations medical services based on insured status and rakes off 15 or 20 per cent. If we really had a system, one third of the nation would not lack adequate health care.

We need a public health care system like Medicare that everyone can buy into at a reasonable price. Medicare has been a wonderful success, despite all the criticism from the political right, the American Medical Association, and the health insurance industry. There are problems, but they are manageable and susceptible to reform.

Health insurance executives are whining that they cannot compete with a public health care system. What better argument could you find in favor of establishing it? They cannot compete because a public system would be fairer, more efficient, and less expensive than the private insurance industry. These executives are like muleskinners a century ago whining that the internal combustion engine will put them out of business. True, but is that a reason to outlaw gasoline?

We need an inexpensive public alternative to private health insurance. That it will hurt the insurance industry is no excuse for leaving 100 million Americans without adequate health insurance. A fair health care system is a fundamental part of the social infrastructure. It is time to fill that void in the United States.

Let Some People Go!

There was discussion on the radio today about reducing Michigan’s prisoner population—and no, it wasn’t Neo-Cons pushing wholesale capital punishment. It was the director of the Department of Corrections talking about early release for low-risk prisoners. I hope this idea gets some legs; reducing our prison population is way overdue.

We could save $150,000,000 per year by reducing the prison population by 20%, without compromising public safety. The parole board automatically denies consideration for parole for many classes of prisoner. Our incarceration rate is too high and climbing. The parole board routinely denies parole despite solid evidence that most first-offenders who are convicted of CSC, Murder 2, VCSA, and many other crimes have very low recidivism rates. A conscientious parole board would sort out the good risks from the bad ones, not refuse to consider anyone who was convicted of certain crimes. “Life means life” is not sound public policy it’s a political mantra. For more information visit sites such as:
http://www.justicepolicy.org/
http://www.capps-mi.org/
https://www.mackinac.org/article.aspx?ID=35

If we cut our prison population from 50,000 to 40,000, the savings would be $300,000,000 at $30,000 per prisoner. Pour half of that savings into prisoner re-entry programs and we would still save $150,000,000–and greatly improve the social fabric in our state.

Think about it: In 1984 Michigan had 15,000 prisoners and the population was 9.2 million. Today we have 50,000 Michigan prisoners and the population is 10.2 million. Do you feel three times as safe as you did in 1984? I think we could reduce the prison population by two thirds without compromising public safety, but let’s start with a modest 20%.

Unfortunately, our parole board members are gutless bureaucrats who refuse to do the job they were hired for and our legislators are knee-jerk jerks who can’t see beyond the next election. They are afraid to tell the public anything it does not want to hear.

I don’t have much hope that Michigan will adopt any sane corrections policies in my lifetime; but if you are educated far above average, and are capable of understanding what our government cannot, you might want to give this some thought.

John B. Payne, Attorney
Dearborn, Michigan; Pittsburgh, Pennsylvania
(800) 220 7200
FAX (313) 562 3340
©2008 John B. Payne, Attorney
www.law-business.com

Federal Dollars Should Benefit Citizens, Not Shareholders

According to January 18, 2009 New York Times, bankers see the federal TARP bailout money as a handout for the banks’ benefit. Just listen to John C. Hope III, the chairman of Whitney National Bank in New Orleans at the following URL:

http://tinyurl.com/8zvcfk

He sees the $300 million in government money his bank received as an insurance policy for the bank, not as an incentive to help citizens in trouble. “Make more loans?” Mr. Hope said. “We’re not going to change our business model or our credit policies to accommodate the needs of the public sector as they see it to have us make more loans.”

For Mr. Hope, the Whitney National Bank chairman, “the main motivation for TARP” was to safeguard his bank against the “possibility things couldget a lot worse,” not for any public purpose. The Whitney, he says, would continue making loans “that we would have made with or without TARP.”

“We see TARP as an insurance policy,” he said. “That when all this stuff is finally over, no matter how bad it gets, we’re going to be one of the remaining banks.”

Feathering the nests of wealthy bankers was not Congress’s goal in shelling out the first $350 billion of our tax dollars. It was to encourage the banks to help citizens stay in their homes and keep their jobs.

It is easy to understand why Mr. Hope lacks empathy for ordinary citizens. His annual compensation is over $2.3 million. As CEO of a large financial institution, his first obligation is to ensure its health. However, he takes on civic responsibilities when his bank accepts a huge grant of federal funds. He is obligated to use those funds for the public good. Drop Mr. Hope a line and tell him you hope he sees the light. His office address is:

Whitney National Bank
228 St. Charles Avenue
New Orleans, Louisiana 70130
(504) 586-7272

He is also listed at:

1832 Palmer Ave
New Orleans, Louisiana 70118
(504) 862-5772

After you drop the misnamed Mr. Hope a line, contact your Congressional delegation and the President. Let them know that you want federal funds to be used to help people in trouble, not to insure institutions that are doing well already.

MLK’s Dream

The 2008 general election forged new ground in U.S. politics.  However, it did not fulfill Rev. Martin Luther King’s dream that his children would “one day live in a nation where they will not be judged by the color of their skin but by the content of their character.”  Although the election of Barack Obama showed that at least in come cases we have moved beyond judging a person by his or her skin color, we have not arrived at the point at which we judge political candidates by the content of their character.

The scurrilous hatchet job based on religion Libby Dole, the incumbent U.S. Senator from North Carolina, attempted on Kay Hagan, her challenger, and the rumor-mongering about Obama’s connection to Islam are evidence of a concerted effort by the Christian Right and Center to impose a religious barrier against non-Christians being elected to public office.

Dole attacked Hagan as an atheist because she attended a fund-raiser sponsored by well-known liberals at the home of activists who advocate the separation of church and state.  Dole’s televison ad featured the image of Hagan and the voice of a woman — not her — saying “there is no God.”

“Elizabeth Dole is attacking my strong Christian faith,” Hagan said in a conference call with reporters.  She responded with her own ad portraying herself as a strong Christian who teaches Sunday School.

As appalling as Dole’s attack was, it is equally appalling that Hagan defended herself by clinging to the Cross, not by asserting that the qualifications for public office do not include belonging to the right religion, or any religion.  Hagan’s defense is as threatening to the separation of church and state as Dole’s original attack.  However necessary Hagan’s response may have been, based on the Bible-Belt mentality of her constituency, it is disappointing that she made no attempt to inform them that establishing a Christian theocracy is no more healthy or desirable than establishing an Islamic or Hindu theocracy, or adopting a governmental hostility to religion.

The Dole-Hagan affair was not the only disturbing development in the 2008 election cycle.  The so-called Saddleback Forum, really a religious vetting session inserted into the presidential campaign, made it apparent that both McCain and Obama were laying their religious convictions out for the electorate.  In this, they continued a trend set by the current President.
President Kennedy promised that his official actions would be based on his secular convictions, not his religious beliefs.  George W. Bush, however, solicited votes from the Christian right based on his claim to be Born-Again.  He made an implied commitment to run the country according to his interpretation of the Bible, rather than the U.S. Constitution.  That he was hugely successful in pulling votes by virtue of his “values,” despite the anti-family and belligerent biases of his policies, raises the question of whether government in the United States may one day be dominated by clerics, as in Iran.
The Saddleback Forum, in which the “presumptive candidates” for the two major parties presented themselves for examination by an Evangelist, is a terrifying turn away from secular government.  It is an acknowledgment by the candidates that the country is not merely Christian, but Evangelical.
Religious diversity has been one of this country’s strengths.  What happens to diversity when only Evangelicals can run for office with any likelihood of success?  It is not beyond the realm of possibility that qualification for public office may depend on approval by a Council of Clerics, as in Iran.  Approval by the religious establishment will never be an official qualification to run for office, but there may come a time when no candidate can mount a viable campaign without demonstrating his religious bona fides and the only way to do that is examination by religious authorities.
Thus, we have moved away from judging candidates by the color of their skin, but we have started judging them by the flavor and the fervor of their faith.  That falls far short of judging them by the content of their character.

John Payne, Attorney
Garrison LawHouse, PC
1800 Grindley Park Street, Suite 6
Dearborn, Michigan 48124
Come visit me at: http://www.law-business.com
313.563.4900/fax 313.562.3340

Pennsylvania Office:
9853 Old Perry Highway.
Wexford, PA 15090-9312
800.220.7200/fax 412.548.0022

© John B. Payne, 2008

Chainsaw Management

Too many employees in too many companies are quivering in their cubicles or at their workstations, waiting to face the HR hangman.  This is partly the result of slumping auto and home sales, but it is more the result of poor management.  Large corporations are no longer run by entrepreneurs.  They are run by bean-counting nebbishes who only have one answer to a reduction in business–layoffs.  The results of this human-resource belt-tightening are A) the employees who remain are stressed and overworked to the breaking point and B) the company’s skilled workforce is no longer available when business picks up again.  An entrepreneur should exploit the opportunity presented by excess employees, not shed them like dead batteries from an over-indulged child’s electronic toys.
Albert “Chainsaw Al” Dunlap is the mismanagement poster boy of Downsizers Syndrome.  He killed Sunbeam in 1996 by cutting payroll by 50%, closing 18 of 26 factories and simulating profits by “channel stuffing.”  Channel stuffing is over-producing merchandise and jamming the distribution network with the excess, then reporting the merchandise as sold.  Like a Ponzi scheme, this only works in the short term and it soon became apparent that Sunbeam was headed for the graveyard of failed companies.
Chainsaw Al is only an extreme example of the Little Johnny One Notes of corporate governance.  The current crop of CEOs seem hardwired to respond to any problem with pink slips.  The bigger the problem, the more pink slips get handed out.
Publicizing layoffs often results in an escalation of the stock price.  However, that is only a speedbump in the stock’s slide and seldom has a lasting effect.
In 1996, Robert Reich, then Secretary of Labor, said “I do think it’s unfortunate to view a company’s employees as costs of production rather than assets.”  A skilled workforce is the engine that powers the organization.  Chopping away parts of the engine in response to reduced demand for products or services is foolish.  A creative, entrepreneurial management team sees excess workers as an opportunity, not a problem.
I was the chair of the board of directors of a community mental health provider when its budget was cut by 25%.  This was a situation where layoffs would impair the organization’s ability to provide services, resulting in a vicious cycle of reduced budgets causing reduced delivery of services and reduced delivery of services causing further budget cuts.  Calling the employees together, I pledged that there would be no layoffs.  As it turned out, there were some unpaid leaves taken by managers and employees and there were a couple of “pay holidays,” but no one was laid off and we survived the cut-backs until our budget was restored.  What was crucial was that the organization made it clear, as soon as the budget restrictions became known, that it would stand by its employees.  This improved morale and gave the staff the determination to weather the crisis.
The budget dilemma faced by our non-profit was the opposite of that faced by home builders and car makers.  We were expected to maintain production despite budget cutbacks.  In the for-profit world, companies may find that they have too many workers for the production demand.
There are also those managers who want to lay off employees to show how tough and frugal they are; so they cut the number of staff without regard to productivity or merit.  These are managers who think that if 100 employees can get the job done, 90 should be able to handle it.  Then they decide that if 90 can do the work, 80 employees are enough.  They are like tax-cut maniacs for whom no tax cut is ever deep enough.
What would a canny manager do instead of cutbacks?  Put supernumerary employees to work in new areas and on new products.  A car company CEO should consider moving employees into green initiatives–working on hyper-efficient vehicles.  The latest gas crisis will not be the last and sooner or later, the U.S. public will decide that they don’t need 5,000-pound SUVs to commute to work or to drive to the bodega.  If the U.S. Big Three want to stay in the game, they should stop designing the cars that they think are the most profitable and start developing the cars that are adapted to the uses people put them to.
A company that produces products for the home-construction industry does not have to cut back, just because there is a slump in new housing starts.  The CEO should think outside the big box and use the excess production capacity to start new ventures.
Many of the laid-off employees walk off with a severance package equal to several months of salary and benefits.  Figuring that cost, added to the company’s investment in those workers, it becomes apparent that a huge amount of the company’s assets are walking out the door.  These employees could work on new products or services for up to a year, at no cost to the organization!
The stock market has lost half of its value in the past year.  So what?  The money is not gone, as I recently pointed out.  Depressed stock prices and tight credit make it difficult for corporations to raise capital.  This will lead 99 out of 100 CEOs to cut back operations and lay off employees.  However, one in 100, or maybe even one in 1,000, will see the opportunities in the current market.  Instead of cutting off the hands that produce the wealth of the nation, they will find ways to keep those hands busy.  Instead of bemoaning the trouble U.S. businesses are in, they will take over troubled businesses and turn them around.  This is still the Land of Opportunity and CEOs who see that will lead their companies to unguessable prosperity.

John B. Payne, Attorney

Dearborn, Michigan & Pittsburgh, Pennsylvania

(800) 220 7200

FAX (313) 562 3340

©2008 John B. Payne, Attorney

www.law-business.com

Money (That’s What I Want)

As the stock market gyrates wildly, the question of where the money goes when the market drops begs for an answer like a poorly disciplined puppy when dinner is served.  The figure that was mentioned in news broadcasts when the market dropped 777 points in a day was a trillion dollars.  If a trillion dollars went out of the market, where did it go?  The immediate assumption is that the country became a trillion dollars poorer when the market fell by that much.  But is that really what happened?

For an investor who buys and holds stock for a period of time, it seems that appreciation and depreciation come out of nowhere.  Let’s say that Rosco buys a share of Youngstown Universal Cotter Keys, Inc. for one dollar.  He holds the share of YUCK for a year and he gets $10 when he sells it.  As far as Rosco is concerned, he just received nine dollars for nothing.  Conversely, if Rudy bought that share from Rosco for $10 and it dropped to one, Rudy’s nine dollars just vanished like civil servants at quitting time.  What if Rosco had not sold his share of YUCK and it went from one to ten and back down again?  Were these virtual dollars with no more substance than idle musings?

The money is real and even if Rosco bought and sold his share of stock for the same price, the fact that it rose and then fell nine dollars means that there were real money flows that enriched some investors and impoverished others.  The money that the rise and fall of Rosco’s share of YUCK represents was real money that flowed into and out of the market, but was not gained or lost in the broader economy.

The first step to understanding how the money comes into and goes out of the stock market, is to consider that the rise and fall of the value of Rosco’s single share of stock is not an isolated event.  If shares of YUCK go $1.00 to $2.00, it is because tens or hundreds of  thousands of shares were traded and the final sales were for $2.00 at the end of the trading period.  However, for the sake of simplicity, consider the situation where YUCK is being sold one share at a time.

Everyone who bought for a dollar and sold for two took a dollar in profit out of the market.  If Rosco receives $2.00 from Rosie for a share of YUCK that he purchased for $1.00, Rosie puts two dollars into the market and Rosco takes two dollars out–his initial investment and a dollar of profit.  If Rosie then sells to Reginald for $3.00, he puts that much in and Rosie gets back her investment plus a dollar in profit.  Tracing a series of transactions up to the $10.00 price, then back to $1.00, it becomes obvious that the rise and fall of YUCK reflects the change in what investors are willing to pay for YUCK shares, but no money disappeared.  In this hyper -simplified economic picture, every dollar that went into the market came from an investor’s cash account and every dollar that came out went back into a cash account.  Therefore, all of the money that pours out of the stock market stays in the economy!

Expansion and contraction of the stock markets makes some poor investors rich and some rich investors poor, but the wealth of the country does not rise and fall with the stock markets.  It just gets relocated within the economy.

A portion of the change in share prices reflects real growth or lack of profitability of individual companies.  Investors have been scurrying away from U.S. auto manufacturers like dexedrine-dosed lemmings this year because they did not foresee rising gas prices–like, Who would have thought that the price of a limited resource would go up as supplies diminish?–and produce fuel-efficient vehicles.  However, the shares were high a few years ago because Ford, GM and Chrysler had a big line-up of popular gas-guzzlers that yielded high profits.  Some of the drop in U.S. auto stocks is therefore related to the companies’ market strength, but not all of it.

The price of YUCK shares may go up or down, based on YUCK’s profitability and financial health, but it may also go up or down based on investors’ perceptions of the cotter key industry specifically or the U.S. economy in general.  Although some change in the market indices will be reflective of the health of the corporate sector, wild swings, such as in the last few weeks, are not due to rapid variations in corporate financial viability.  If the Dow drops 6% today, is the U.S. business climate 5% colder today than it was yesterday?  As the Dow declined from 14,000 to 8,000, the country did not lose 42% of its value, or even 42% of the value of its businesses.  The Dow fell due to a dramatic mood swing in the investing public away from stocks.  That deflated stock values, but all that money is still out there in the U.S. economy.

Don’t panic!  Although there will be cutbacks and business failures, the money that left the stock market is still out there.  Sooner or later, investors will realize that they cannot make money on their money unless they put it where profits are being generated.  That’s the stock market; and when money starts flowing back into stock, the markets shall rise again.

John B. Payne, Attorney

Dearborn, Michigan & Pittsburgh, Pennsylvania

(800) 220 7200

FAX (313) 562 3340

©2008 John B. Payne, Attorney

www.law-business.com

Only 900-Day Wait for Social Security

In May 2007, Social Security Commissioner Michael J. Astrue announced plans to reduce the backlog of hearing requests. When he made that announcement there were 63,000 disabled individuals who had been waiting for over 1,000 days to get benefits. A further 138,000 had been waiting for over 900 days. That is over 200,000 individuals who had been living on air, like saprophytic plants, for more than two and a half years!

Since then, Social Security has made “significant progress” with a number of initiatives outlined in the Commissioner’s plan. He claims that aggressive new approaches include increasing efficiency, improving business practices and expanding use of automation. This progress included hiring 133 Administrative Law Judges for 64 locations, opening the National Hearing Center and reducing the number of aged cases.

“Opening the National Hearing Center” means that great numbers of applicants will no longer get to see an administrative law judge. They just get a video conference with a judge in Falls Church, Virginia.

Care to see the progress for yourself? The numbers speak for themselves. Read the semiannual report at:

http://www.ssa.gov/appeals/Backlog_Reports/Semiannual_Report%20FY%2008b.pdf

Everyone should take a look at this and write his, her, or its congressman, congresswoman, or congressother, and senator. This is pitiful. After crowing triumphantly about eliminating the 1,000-day cases last FY and reducing the 900-day cases from 135K to 50K by March, Mr. Astrue, throws in some meaningless graphs and bureaucratic nonsense to give the impression that he is bringing the situation under control. It is pure, unadulterated mendacity by misdirection.

SSA does not say anything about the mean or the median wait times, nor does it say whether those are declining. He does say that applications are up, so myopic concentration on only the oldest of the old cases will provide no improvement with new cases on the increase. Furthermore, it will be at least two more years before SSA cracks the two-year barrier. Is this acceptable? There is no mention of how all these old cases were finalized. There was a June political cartoon that showed a fat Burmese general allowing a civilian to die of starvation, then stating that the problem was solved because the civilian was no longer hungry. Is this the same thing? How many of these 900-day cases were “resolved” by the death of the applicant?

Finally, it will be observed that they claim to have eliminated 63,000 1,000-day cases last year and 80,000 of 138,000 900-day cases this year. If there were 63,000 1,000-day cases and 138,000 900-day cases, and this is a geometric progression, there may be as many as 500,000 800-day cases and Lord knows how many 700-day cases. So far they have been picking low-hanging fruit. It’s going to get a lot tougher to bring the numbers down as they go along.

This does not represent any real progress. Once again, more pressure needs to be brought to bear on this surly, bloated bureaucracy to determine eligibility for badly-needed benefits in a reasonable length of time. Would a one-year time limit be unreasonable? Ask a person who is unable to work due to a serious disability whether a year without income is a problem. If eligibility cannot be determined within a year, benefits should be granted on a temporary basis. Paying benefits to presumably eligible applicants is a lot lighter burden on the government than trying to live like an orchid on a piece of wood is for applicants.