Article originally posted on Forbes. Read it with your Forbes subscription or below.

Lisa Rein, Alice Crites, and Jennifer Jenkins of The Washington Post have written an excellent exposé of Social Security's treatment of the disabled and poor, including its use of archaic job-availability lists to deny benefits to obviously terribly disabled people and its imposition of astronomical penalties on a range of people, many poor or disabled, for spending checks mistakenly sent them by Social Security — checks that were often unidentified as coming from Social Security or checks the recipients thought were their rightful benefits for the keeping. The reporters’ outstanding work has received the attention of members of the Senate who are now investigating. The Board of Editors of the Washington Post has also joined the chorus for reform.

But the Post is years late in writing about Social Security's horrific treatment of the public. Worse, they are missing the System’s far more egregious financial malfeasance — the huge fraud Social Security has committed and continues to commit against 13,000 plus widow(er)s who collectively have been swindled out of $130 million. These aren't my figures. They are those of Social Security's own Inspector General.

It’s hard to understand how the Post and other major media have missed Social Security’s pervasive misconduct. I and others have written about the problems for years. Here's my column from May 2022 entitled, Is Social Security the Biggest Perpetrator of Social Security Fraud? It links to a 2015 column exposing the widow(er) fraud. I wrote the column with the help of John McAdams, a Social Security whistle-blower working out of the System's Philadelphia office. I wrote a second column in 2018 when the Inspector General's report was released. (The IG was prompted/forced to investigate thanks to John's repeated letters to his superiors and, perhaps, my columns.) And I wrote a third column in 2020 about the widow(er)s fraud when John informed me that the Inspector General's report, which called on Social Security to end its malfeasance and compensate its victims, was being ignored.

The 2015 column appeared on PBSNewsHour’s website. The next two articles were published in Forbes. And the May article appeared in my fairly prominent Substack Newsletter. I also, together with my co-authors, wrote about the widow(er)s fraud in our NY Times best seller on Social Security, entitled, Get What's Yours.

I've covered Social Security's financial torture of an 81 year-old widow, its suing of a 6-year-old, its suing of children whose deceased parents were mistakenly overpaid, its mailing out manifestly incorrect benefit statements, its attempts at bribing people to forego accruing Delayed Retirement Credits and take their retirement benefits sooner than they should, and its clawback of $300,000 in disability benefits from a woman whose “crime” was receiving royalty on a book she wrote that Social Security told her, for ten years running, would not lower her disability benefits — because royalties aren’t earned income.

Unfortunately, this person spoke about her book at the local library and receive a few dollars of compensation. The resulting 1099 sent by the library to the IRS transformed all prior royalties into earned income, making her no longer eligible for a decade of previously received disability benefits. This is how the clawback became so massive. When she appealed, indicating that the royalties had ended, that she had no assets to repay the $300K, and that she would starve without her monthly disability check, the Administrative law judge denied her appeal on the basis of impoverishment. His ruling, which I read line by line, was based on her cable-TV plan, which he felt was too expensive for a poor person to afford.

In short, the Washington Post and, indeed, every other major news outlet, has either missed or ignored the agency’s behavior for years. As for the Post reporters, they have a lot more work to do if they wish to clarify the full extent of Social Security's misconduct, including the fact that none of its Commissioners have moved a finger to fix any of these issues.

The Commissioners were surely aware of my articles because I'm routinely in touch with senior staff at Social Security — staff who have done their best to deal with isolated abuses. Indeed, after the passage of the 2015 Amendments, Social Security was sending out such bad/incomprehensible “guidance” to its field offices, which I exposed in this 216 PBSNewsHour column, that the senior staff arranged a conference call with me to ask my advice on how to fix their instructions to their field offices.

Social Security is a system of arcane rules within arcane rules within arcane rules. Hence, each of us is incredibly well-versed in the system's minutia, we can easily face benefit clawbacks years after we start receiving checks or lose massive amounts of benefits because we file, or are filed, for the wrong benefits at the wrong time. Ask yourself why a book written to clarify the system's hundreds of thousands of rules about its 2728 rules in its Handbook about its 13 benefits became a best seller. It’s not because people are dying to read about rules.

In the case of the widow(er)s scam, Social Security simultaneously enrolls widow(er)s for both their retirement and widow(er)s benefit when doing so can only cost the claimants money, potentially hundreds of thousands of dollars. This scam is effected in the simplest manner possible — asking unknowing widow(er)s if they want to file for all available benefits. Once they say yes, they lose the ability to either a) take their widow(er)s benefit while letting their retirement benefit grow or b) take their retirement benefit while letting their widow(er)s benefit grow. Indeed, the decision to simultaneously file may not have been a choice. Benevolent, but uninformed, or malevolent, and knowledgable, Social Security staffers can jointly file widow(er)s without their knowledge.

Beyond the overt abuse, Social Security's website is replete with incomplete and misleading information. Its annual letters are just as bad. Here are two examples from the letter that I just received along with millions of other Social Security retirement-benefit recipients.

The letter says my Social Security retirement benefit will rise by 8.7 percent in 2023 because of a rise in the cost of living. It then specifies the dollar value of my new benefit. But my benefit should rise more than 8.7 percent due to The Recomputation of Earnings. Since I'm still working and earning above the maximum taxable amount, I'm definitely (check the math of the Average Indexed Monthly Earnings formula) raising my highest 35 years of covered earnings. This means my basic benefit, called my Primary Insurance Amount, should rise before the COLA is applied.

I will now need to check if Social Security is calculating the correct amount. Since my software company has a tool that correctly calculates benefits that are due, I can figure this out quickly. But whether the amount in the letter is correct or not (in which case, the additional benefit will likely come with a delay), the letter should explain that a further adjustment may be coming and that earning more may permit you to raise your benefit beyond the cost of living adjustment,

A far worse omission concerns work incentives. The letter says, If you are younger than full retirement age at any time in 2023, there is a limit to how much you can earn before we reduce your benefits. The letter proceeds to state that early Social Security retirement beneficiaries and, indeed, recipients of spousal, divorced spouse, widow(er), and divorced widow(er)s benefits, will lose $1 in benefits for every $2 they earn — through the year they turn full retirement age. During the period of that year when they have not yet reached full retirement age, the tax is 33 cents on the dollar. These taxes are levied on earnings above $21,240 and $56,520, respectively.

Take a, say, 63-year-old, furloughed during COVID who was forced to start Social Security and now is being recalled but believes she will be in a 50 percent higher marginal tax bracket due to this so-called Earnings Test. The reality, entirely omitted in the letter, is that any benefits lost due to the earnings test will be restored to those being "taxed" via an arcane provision called the Adjustment of the Reduction Factor (ARF). This actually more than compensates for the Earnings Test in the form of providing a permanently higher benefit starting at full retirement age.

So someone at 63 in a 35 percent federal and state tax marginal tax bracket will not, except for certain recipients who will start taking an alternative, dependent benefit at full retirement age, be placed in an 85 percent tax bracket by Social Security. It will remain at 35 percent (actually lower given that generosity of the ARF). By telling millions of early beneficiaries that it absolutely does not pay to work and completely omitting the ARF in the letter, Social Security is inducing a massive number of early beneficiaries to retire rather than return to work. Robert Pozen and I wrote an op-ed about this in 2015 the New York Times.

It’s hard to understand how reporters at the Post and the Times missed this column. But they did. So did both Board of Editors. So did every member of Congress. So did the then Secretary of Treasury, who is the Chair of the System’s Board of Trustees. And the list goes on. Neither Pozen nor I received any official or unofficial response to our op ed from anyone in the press let alone the government.

There are other terrible problems with Social Security, which the Post reporters should expose. As I wrote seven years ago for the NewsHour, Social Security’s benefit provisions are nominally sex-neutral, but, in practice, incredibly sexist. These provisions were written by men decades ago to penalize women who divorced their generally higher-earning husbands and to further penalize them if they remarried before age 60. It also arranged for the vast majority of then, far-lower-earning married women to face a much smaller incentive to work.

Yes, this column has turned into something of a self-referential rant. But it’s primarily meant as a roadmap to the Post’s team. They have a Pulitzer waiting if they keep up their investigative reporting. Let me close by suggesting they follow the truly big story — the Social Security Trustee’s systematic burying, for twenty years straight, the true size of the System’s unfunded liability. It’s now $61 trillion and counting! I’ve written about this routinely, most recently in The Hill in 2019 and in 2021. I’d be happy to explain this and the system’s other terrible problems to reporters, be they from the Post, the NY Times, or the Worscester Gazette. And we don’t need to meet in a garage.

One final point. I’m a huge supporter of Social Security’s legitimate objectives. It’s high time the System met them.

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Laurence Kotlikoff is a Boston University Economist, a NY Times Best Selling Author, President of maxifi.com, and Author of Money Magic.
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Economics Matters by Laurence Kotlikoff

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