Social Security is ‘lying’ claims economist who reveals government clawed back $304,000 from woman which left her broke

ONE of America’s leading economists has attacked the Social Security Administration, warning the agency is hurting people it is set up to help.

Larry Kotlikoff, a Professor of Economics at Boston University and a Fellow of the American Academy of Arts and Sciences, has criticized the government for its attempt to claw back money from overpayments.

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Kotlikoff accused the agency of going after the nation’s most vulnerable people, warning it is “putting people on the street” and has “adopted a culture which “is screwing people to the Nth degree.”

“It takes people years to get onto disability payments, and these clawbacks are putting people onto the street,” Kotlikoff exclusively told The U.S. Sun.

“It is unconscionable.”

Social Security overpayments occur for a range of reasons, including agency error, beneficiary fraud, and agency failure to properly record earned income by beneficiaries, which can lead to retroactively stopping benefits years later.

Overpayments by the agency are the subject of growing public scrutiny, with experts warning the SSA’s push to claw back funds is crippling vulnerable Americans and their families.

According to an SSA report released in August by the Inspector General, the agency made nearly $72 billion in improper payments between 2015 and 2022, or about $9 billion each year. 

Social Security Acting Commissioner Kilolo Kijakazi told a congressional hearing in October last year that the agency sends about one million people overpayment notices annually.

However, there is also increasing concern about the program’s financial sustainability.

According to its annual report by the Social Security Board of Trustees, the program is projected to run out of money in 2035 due to the nation’s aging population reducing the amount of overall payroll tax used to fund the program.

The agency provides benefits to almost 64 million Americans, with nearly 90% of those aged 65 and over receiving monthly payments.

Policymakers will need to act to balance the program’s costs and revenues, or retirees and the vulnerable risk only receiving 83% of their full benefits.

BIDEN’S SOCIAL SECURITY SHAKE-UP

Releasing data to defend itself, the Social Security Administration said less than 1% of all payments are overpayments.

The Biden Administration last December also appointed former Baltimore Mayor Martin O’Malley as the new Social Security Commissioner.

He has been tasked with handling a litany of issues, including overpayments, delays in processing times, and claims of poor customer service.

Kotlikoff is calling on the government to review whether its push to claw back money from people is violating “equity and good conscience,” which underpins the Social Security system as a whole.

“We have a government which is to be feared, and Social Security is not to be trusted,” Kotlikoff told The U.S. Sun.

Kotlikoff is a New York Times best-selling author who was named one of The Economist’s 25 most influential economists in 2014.

FORMER SSA EMPLOYEE HITS OUT

The criticism comes after Social Security expert and former SSA employee Avram Sacks told The U.S. Sun that the Social Security Administration’s overpayments are now the worst they’ve ever been and warned the errors are damaging Americans and their families.

Sacks is a nationally acclaimed expert on Social Security who now defends people who have been unknowingly overpaid money, often thousands of dollars.

Sacks said many of the people impacted by these payment “clawbacks” cannot afford to pay them back, and many have limited savings. 

“A VERY NASTY BUSINESS”

Kotlikoff, who has written a book called Social Security Horror Stories detailing some of the problems, said the worst case he has ever come across is a woman who was paralyzed in a wheelchair after she was hurt in an industrial accident and was forced to pay back $304,000 ten years after she received the funds.

The woman had earned money writing children’s books and was paid to speak at a public library about her work.

Each year, Kotlikoff said the woman asked the SSA whether she could earn money from giving talks about her books while receiving disability benefits, and claims the government said she was entitled to considering they initially classified the earnings as royalty income which is permitted.

However, ten years later, the SSA came after her for earning the money.

The woman appealed the case in court, but the judge rejected her case.

Kotlikoff said the judge took issue with her having “an expensive cable plan” and argued in his judgment that the woman could “not be poor” considering her television subscription.

Think of the cruelty of this

Laurence KotlikoffBoston University Professor of Economics

“This is a system which is short on money, and they have adopted a culture now which has changed, and it’s now to screw people to the Nth degree.

“It used to bend over backwards to give people every penny, and now it’s the opposite.

“It’s a very nasty business.”

Kotlikoff argued the system is now “screwing” people it was designed to help.

He said the SSA was also deliberately telling the public “wrong things or incomplete things on a routine basis” that is “learning to make terrible decisions.”

Experts have blamed some of the overpayment issues on a lack of transparency in the system, with recipients unable to decipher the rules surrounding receiving the payments and other income tests. 

Kotlikoff called on the government to simplify the system, and help recipients better understand how it works.

The U.S. Sun approached the Social Security Administration for comment.