The goal of the federal Supplemental Security Income (SSI) program is to provide assistance to elderly and disabled individuals who have limited financial resources. Supplemental Security Income is a means-tested welfare program funded by general federal revenues. Unlike the related Social Security Disability Insurance (SSDI) program, no work history is required to receive SSI benefits.

Although SSI was created with the elderly poor in mind, today the program mainly benefits nonelderly disabled adults and children. While the number of elderly beneficiaries has slightly decreased since the program began operating in 1974, the number of nonelderly disabled adults and children has increased substantially. Overall, the total number of SSI beneficiaries has grown from 4.8 million in 1990, to 6.6 million in 2000, to 8.3 million today.¹

As the number of beneficiaries has increased, so has spending on the program. Supplemental Security Income spending has risen from $33 billion in 2000 to an estimated $57 billion in 2013, which is a 70 percent increase. In real (after-inflation) dollars, the increase since 2000 has been 29 percent.

Policymakers have liberalized eligibility standards for SSI's benefits over the years, with the result that many people who are capable of working are making the choice to remain idle and receive benefits instead. Of particular concern is the growing number of children who are qualifying for SSI on the basis of a mental or behavioral disability. Many children who are capable of becoming productive working adults are being lured into long-term government dependency.

This essay describes the history of Supplemental Security Income, the current structure of the program, and the causes of rising program costs. One serious problem is that the disability determination process has become a complex administrative nightmare. The inherently subjective nature of the process is fostering abuses of the system at the expense of taxpayers.

Supplemental Security Income was created in the 1970s in an effort to consolidate existing state programs for the poor and make them more efficient. But rather than promoting efficiency and saving money, SSI has become another bloated federal welfare program that encourages government dependency and discourages individual initiative. This troubled experiment in federalizing welfare should be ended, and responsibility for assisting low-income elderly and disabled people returned to the states.
 

Brief History of SSI

The Social Security Act of 1935 authorized grants to the states for aid to the elderly poor and the blind. Amendments to the Social Security Act in 1950 added grants to the states to assist needy individuals who were permanently and totally disabled.² In 1969, President Nixon determined that this federal-state arrangement for providing assistance to the needy was too inefficient. In 1971 the Nixon administration proposed welfare reforms that included consolidating the state aid programs for the needy aged, blind, and disabled into one federal program.³

In 1972, the Supplemental Security Income program was created as part of a Social Security and welfare reform bill that President Nixon called "the single most significant piece of social legislation to be considered by the Congress in decades."⁴ It became effective January 1, 1974. Supplemental Security Income replaced federally-subsidized, state-administered aid programs for the aged, blind, and disabled with one program financed and administered by the Social Security Administration (SSA). The states were given the option to provide supplemental benefits.

Unlike the existing Social Security Disability Insurance program, a history of work was not required to receive benefits from SSI. To be eligible for SSI, an individual had to have limited income and be 65 years of age or more, blind, or possess a "physical or mental impairment that is expected to last or has lasted for 12 months or can be expected to result in death."⁵

Congress intended for the program to largely benefit the elderly poor, but the nonelderly disabled soon became the primary beneficiaries. Indeed, the number of aged individuals receiving SSI benefits has remained flat over the decades. Meanwhile, beginning in the late 1980s, the number of disabled working-age adults receiving SSI began a steady climb, and a similar ascent for disabled children soon followed.⁶

The increases in the number of disabled beneficiaries resulted from a sequence of events related to the disability determination process. In the late 1970s, the administration of Jimmy Carter successfully pursued legislation to rein in the growing cost of the Social Security Disability Insurance program, which uses the same disability determination process as SSI. For example, one provision required that state administrators reexamine "non-permanently" disabled beneficiaries at least once every three years to see if they were able to reenter the workforce.⁷ Prior to this requirement, little was done to remove able-bodied people from the disability rolls who should not be collecting benefits.

Following the Carter administration's lead, the incoming Ronald Reagan administration also focused on trimming the disability rolls. However, a political backlash erupted when newspapers began reporting "horror stories" about individuals who had their disability benefits terminated. Some members of Congress pounced on the stories, and Congress held dozens of hearings to highlight them as examples of supposedly mean-spirited policies.⁸

The backlash led to the Social Security Disability Benefits Reform Act of 1984, which effectively reversed the Carter reforms. The 1984 law required the SSA to develop new standards, which ultimately led to looser eligibility requirements. As one example, the new rules allowed people to gain disability benefits if they had numerous non-severe disabilities that, combined, reduced their work capacity, rather than having a single "severe" impairment.⁹ Economist David Autor noted of the 1984 changes, "A key consequence was that applicants with difficult-to-verify disorders such as muscle pain and mental disorders could more easily qualify for benefits."¹⁰

In 1990, the Supreme Court ruled in Sullivan vs. Zebley that the Social Security Administration must use the same SSI eligibility determination process for children that it uses for adults.¹¹ Specifically, a child who did not have a condition on the SSA's list of impairments would now have his or her ability to "function" used to determine whether a child's disability qualified for benefits. That meant decisions were based on subjective considerations, such as a child's ability to communicate and his or her social behavior. As part of the Supreme Court ruling, the SSA was compelled to contact 452,000 children who had been denied benefits since 1980 and inform them that they might now be eligible.¹² After a surge in enrollment following Zebley, Congress tightened eligibility in the 1996 welfare reform bill. However, the consequent reduction in SSI enrollment for children was fleeting and the rolls have been growing ever since.

The combined effect of the Zebley decision and the favorable consideration of mental health problems resulting from the 1984 law ultimately led to disabled children and adults comprising the majority of SSI beneficiaries. In 1980, the elderly poor represented 54 percent of total SSI beneficiaries; disabled children and nonelderly adults accounted for 4 percent and 42 percent, respectively. In 2011, the elderly poor represented only 25 percent of total SSI beneficiaries while disabled children and nonelderly adults accounted for 16 percent and 59 percent, respectively.¹³
 

Supplemental Security Income Basics

Supplemental Security Income is administered by the Social Security Administration, which has over 65,000 employees and over 1,300 offices across the nation.¹⁴ However, SSI is not part of the Social Security program, and SSI benefits are paid with general funds from the U.S. Treasury. Figure 1 shows that SSI spending has grown substantially since 2000, with a large jump in recent years.¹⁵

Total federal spending on SSI will be about $57 billion in 2013, which includes $3.7 billion for the program's administrative costs.¹⁶ An additional $3.3 billion will go toward state supplementary benefits in the 14 states and District of Columbia, where such benefits are administered by the SSA.¹⁷ In all, 44 states provide supplemental SSI benefits.¹⁸

There are currently 8.3 million Americans collecting SSI benefits.¹⁹ Of that total, 7.1 million are blind or disabled individuals and 1.2 million are nondisabled elderly individuals. The majority of recipients (59 percent) are age 18–64. Recipients under the age of 18 account for 16 percent and recipients 65 years of age and over account for 25 percent. The average monthly SSI benefit is $528.²⁰ Supplemental Security Income recipients are also "categorically eligible" for the Supplemental Nutrition Assistance Program (i.e., food stamps) if they live alone or if all members of the household are on SSI.²¹ That means that many SSI recipients automatically receive food stamps. In addition, SSI recipients are generally eligible for Medicaid.²² The average annual costs of Medicaid benefits for disabled adults and disabled children are $9,250 and $8,300, respectively.²³
 

Determining Eligibility for SSI Benefits

For individuals 65 years of age and older, eligibility for SSI is determined by the levels of income and financial assets. For children and individuals of working age, a determination of disability is required in addition to a determination of financial capabilities. Unlike Social Security Disability Insurance benefits, a history of work is not required to receive SSI benefits.

The SSI applicant's income determines both eligibility and the amount of the benefit. Income consists of both earned (e.g., wages from a job) and unearned (e.g., Social Security benefits, private pensions, veterans' benefits). However, many government benefits—such as food stamps and energy assistance—are excluded. The benefit amount is reduced by one dollar for every dollar of countable income. Currently, the maximum monthly benefit is $710 for individuals and $1,066 for couples.²⁴ It is adjusted annually for inflation. The asset limit is $2,000 for individuals and $3,000 for couples. However, a home, a car, and several other items are exempt.²⁵

To be considered "disabled" and be eligible for SSI, an individual must possess the "inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months."²⁶ For children applying for SSI, they have to show that they have a "marked or severe functional limitation" that will last at least 12 months.²⁷ However, the process of determining whether an applicant is sufficiently disabled to receive disability benefits is complex and often undermined by a subjective application of the rules.

A Social Security Administration office first determines if the applicant meets the income and asset requirements. If the applicant meets those requirements, a state Disability Determination Service (DDS) then follows a step-by-step process to determine whether the applicant's medical condition warrants benefits. At any step, the applicant can be denied benefits.

The DDS first decides whether the disability is severe enough to limit basic life activities. If the answer is yes, a determination is made as to whether the disability meets or is the equivalent of a condition in the SSA's "Listings of Impairments." If the answer is yes, the applicant qualifies for benefits. If the answer is no, the applicant may still qualify for benefits depending on his or her ability to perform work. First, the DDS determines whether the applicant can perform work from any previous occupations. If the answer is no, the DDS determines whether the applicant can perform any other work that exists in the national economy. If the answer is no again, the applicant qualifies for benefits.

The SSA first introduced Listings of Impairments in 1968 in order to expedite the claims process. There are 14 categories organized by major body systems. When subcategories are included, the list of impairments exceeds 100.²⁸ However, the share of initial claims allowed based on the listings has dropped from 93 percent in the early years to around 50 percent in the past decade.²⁹ Nowadays, the "Medical-Vocational Guidelines," used in the final evaluative step, are four times more likely to determine eligibility.³⁰ This is a grid developed by the SSA that contains more than 80 options that take into consideration factors such as age, education, and the ability to perform some level of work. "The Grids" allow for more subjective considerations when determining eligibility, which has resulted in people being declared "disabled" who are actually capable of performing work or who have a disabling condition that has a good chance of being temporary.³¹

Applicants who are approved become eligible to receive SSI benefits immediately. Supplemental Security Income benefits continue indefinitely unless the individual's income and assets exceed the maximum amounts allowed or the individual is no longer disabled. In 2011, less than 1 percent of disabled adult SSI recipients left the program because their disability had improved.³² About 7 percent left the program because their financial situation improved.³³ But most of the time, once someone goes on SSI, they stay on SSI over the long term.

Applicants who are denied benefits can appeal. Indeed, the appeals process has four levels, and at each level the individual receives another chance to convince a government official or judge to grant benefits. Thus, individuals with questionable claims of disability have up to five tries at receiving benefits, and they just have to succeed once.

The process can be very cumbersome and costly. A rejected applicant can first ask the SSA for a "reconsideration" of his or her claim from a different group of SSA officials. If rejected again, the applicant can request a hearing before an administrative law judge (ALJ). These hearings are biased in favor of applicants because they do not include a government representative to question the claim and represent taxpayer interests.³⁴ Meanwhile, the applicant in the great majority of cases uses the services of lawyers working on a contingency-fee basis.³⁵

If the ALJ denies the claim, the quest for federal benefits is still not over. The SSI applicant can request a review from the Social Security Appeals Council. If the council either denies the claim or decides against reviewing it, the applicant can then file a lawsuit in a federal district court. In 2011, over 14,000 new civil actions were filed.³⁶

In 2011, the SSA received 3 million claims for SSI benefits, up from 1.7 million in 2000. Only 9 percent of the applications for SSI came from individuals 65 years of age or older.³⁷ Of the claims processed by the SSA in 2011, 33 percent were awarded benefits.³⁸ In 2009, (the latest year of full comparable data), the allowance rate for a medical decision made at the initial level for SSI applicants was 35 percent.³⁹ However, the allowance rate for medical decisions made at the hearings level or higher for SSI applicants was 54 percent.⁴⁰
 

A Flawed System

A complex, subjective, and outdated disability determination process for SSI has created a breeding ground for awarding and continuing benefits to people who shouldn't be on the disability rolls. A major reason why SSI and SSDI are on the Government Accounting Office's (GAO) "High Risk" list for possible wasteful spending is because "these disability programs emphasize medical conditions in assessing an individual's work incapacity without adequate consideration of the work opportunities afforded by advances in medicine, technology, and job demands."⁴¹

According to the GAO, the list of impairments used to determine if an applicant has an eligible disability is outdated, and the SSA has been slow to revise it.⁴² Consider mental disorders, which have remarkably grown to become the largest impairment cited for awarding SSI disability benefits (60 percent).⁴³ In terms of initial and reconsidered claims allowed based on the SSA's medical listings, mental disorders are by far the largest category.⁴⁴ However, the GAO reports that "it has been at least 27 years since SSA finalized comprehensive revisions for … mental and neurological disorders."⁴⁵

The SSA's concept of "disability" is also outdated. Workplace accommodations and assistive devices can enable many of today's disabled people to function in a job, but the SSA "does not always consider them in its assessment of disability."⁴⁶ For example, the SSA says that assistive devices are incorporated into the medical listings once they become "standard in the medical community." But when asked if wheelchairs are considered standard in the medical community, and whether consideration is given to how individuals with wheelchairs might function in today's more white-collar economy, SSA officials gave the GAO "conflicting information."⁴⁷

The practical effect is that some—perhaps many—moderately disabled people capable of performing work, or at least taking steps in that direction, opt instead for a check from the government. Reflecting on SSI's creation, historian Edward Berkowitz noted that "linking [SSI] benefits to an inability to work mitigated against their efforts at rehabilitation and finding a job, which consigned them to a benevolent trap that, as the capabilities of people with handicaps increased, grew deeper and deeper."⁴⁸

The SSA also has a major problem with enforcement to make sure that current SSI recipients are still qualified for the program on the basis of both financial and health status. Depending on an individual's circumstances, every one to six years the SSA is supposed to determine if a beneficiary still meets the income and asset requirements. According to the GAO, the volume of overpayments made to SSI recipients who no longer should have qualified for benefits went from $3.8 billion in 2002 to $7.3 billion in 2011.⁴⁹ That is a huge increase and a very unfair burden to taxpayers.

During that period, the amount of "overpayment debt" recovered by the SSA improved, but the GAO says that the "SSA lacks comprehensive, timely information on SSI recipients' financial institution accounts and wages."⁵⁰ Less than one percent leave the SSI rolls each year because his or her income and assets exceeded the eligibility threshold.⁵¹ That is a suspiciously low number, suggesting that recipients are not being forthcoming to the government when they are no longer eligible for the program.

The frequency of checks made to determine if an SSI recipient is still disabled—Continuing Disability Reviews (CDR)—depends on how long a recipient is expected to be disabled and the recipient's age. Children are supposed to have a medical review when they turn 18 years of age and low-birth weight infants are supposed to be reviewed at age 1. Approximately half of infants who turn 1 are found to no longer be disabled. The figure is only one-third for children who turn 18, which means most will end up permanently on the SSI rolls.⁵² Less than 1 percent of disabled adults and other disabled children receive a CDR each year. Less than 5 percent of adults have their benefits stopped after a CDR (20 percent of other disabled children have their benefits terminated).⁵³ Regardless, increasing the number of CDRs performed would help weed out recipients who no longer deserve benefits.

The federal government faces huge and growing problems in administering disability programs because of the size and inherent complexity. In particular, there is a massive backlog problem for disability claims at the hearings level. Since 1977, the number of appeals to the ALJ level has tripled.⁵⁴ Claims awaiting a hearing before one of 1,400 ALJs grew from 12,000 cases in 1999 to 817,000 cases in 2012.⁵⁵ The Social Security Administration has effectively instituted quotas on judges to reduce the backlog. However, the Association of Administrative Law Judges says that because of the quotas, "many administrative law judges are pressured to grant more claims than they otherwise would, as it simply is faster and easier to grant claims than to deny them."⁵⁶

Because of the subjectivity and complexity involved in determining if a medical condition warrants disability benefits, outcomes at the appeals level show a high degree of variation. When the SSA inspector general (IG) examined the four impairments that are most frequently accepted for review at the appeals level, the IG found that the variation could be large even within the same city. The IG noted that "one hearing office in the Chicago Region had an allowance rate of 83 percent for cases with Disorders of Back, but another hearing office in the Chicago Region had an allowance rate of 45 percent for cases with the same impairment."⁵⁷

The differences are even larger for cases reviewed by an ALJ. The IG cited an example where one judge approved 97 percent of his cases that involved back disorders, while another judge only allowed 15 percent of his cases with that health problem.⁵⁸ Judges are largely independent and possess broad discretion to award or deny benefits. They are also hard to fire, which means an appointment can amount to a lifetime position.

A recent Senate oversight committee investigation reviewed 300 cases from one county in three different states. The investigation found that benefit award decisions made at the ALJ level were "fraught" with problems:

These problems ranged from basing decisions on evidence of questionable value, to citing insufficient evidence to support the decision made, misusing expert testimony, and holding perfunctory hearings. The result was a large number of poor quality decisions, raising questions about whether they were decided correctly.⁵⁹

Other findings from the investigation included:

• Some judges awarded benefits even though the claimant was able to work.⁶⁰
• The SSA discourages the introduction of evidence in support of a claim less than 10 days before a hearing. In one region, it is mandatory not to admit evidence that isn't received five days in advance. However, in some cases evidence was allowed by an ALJ as late as a few hours before the hearing.⁶¹
• When contradictory evidence was provided by different sources, both Department of Disability Services (DDS) officials and ALJs were more likely to cite the evidence more favorable to the claimant.⁶²

Judges who spoke to investigators pointed to the heavy workload and the fact that rules used to determine eligibility have become so complex. One result of judges trying to expeditiously complete case loads is high approval rates of disability claims of about 60 percent on average.⁶³ In 2011, 130 ALJs awarded benefits in 85 percent or more of the cases heard.⁶⁴ A judge in West Virginia awarded benefits in all but four of the 1,284 cases he tried in 2010.⁶⁵ Overall, the Wall Street Journal found that 1,334 judges made more awards than denials in 2011, while only 439 judges had a ratio the other way around.⁶⁶

The SSA has started performing "focused quality reviews" on random samples of decisions made by ALJs. A 2011 report found that more than one in five decisions contained errors.⁶⁷ Although an error does not automatically mean that disability benefits were incorrectly awarded, 82 percent of the decisions were remanded to the originating hearing office for further review because "the record was not sufficient to render a decision."⁶⁸

The complicated process for seeking disability benefits has become a boon to legal firms that specialize in disability claims. The vast majority of applicants who appeal a denial of benefits to the ALJ level have legal representation.⁶⁹ For some impairments—back disorders, for example—representation can exceed 90 percent.⁷⁰ These lawyers typically work on a contingency-fee basis, which means a large amount of taxpayer money ends up in the pockets of thousands of disability lawyers.

An applicant whose appeal is successful is awarded payments backdated to the claimed onset of the disability. The lawyer typically receives 25 percent, or up to $6,000 of this "back pay." While that amount may not be enticing to general law firms, firms specializing in disability claims can make millions of dollars based on a high volume of cases and knowing how to work the system. According to SSA data obtained by the Wall Street Journal, fees paid to lawyers and other representatives of disability applicants went from $425 million in 2001 to $1.4 billion in 2011.⁷¹ Legal firms are aware of which judges are more likely to award benefits and try to steer their clients accordingly.

The Wall Street Journal profiled the nation's largest "disability advocate," the firm Binder and Binder.⁷² The rise of the firm stems from a 2004 federal law that made it easier for nonlawyers to represent applicants. The motivation for this legal change was to nurture advocacy organizations that would help move applicants through the complicated process and thus reduce the backlog of claims. Binder and Binder quickly moved to hire cheaper nonlawyers and started advertising nationally. According to one former Binder case manager, the firm is "like a warehouse" whose employees' objective is to see "how much money they can make."⁷³ In 2010, the SSA paid Binder $88 million in fees. Binder and Binder has a reputation for withholding information that could damage a client's case, but the SSA's commissioner says that "we are not so much in the business of, quote unquote, monitoring law firms."⁷⁴
 

Children and SSI

In recent years, particular attention has focused on the growth in the number of children on SSI because of claimed mental or behavioral problems. SSI was originally intended to help families with children possessing a clear disability like cerebral palsy or Down syndrome. Following the aforementioned Zebley decision, disability benefits awarded to children with claimed mental and behavior disorders such as attention deficit hyperactivity disorder (ADHD) skyrocketed. In 1990, 8 percent of children receiving SSI benefits qualified on the basis of a mental problem; in 2011 the figure was 53 percent.⁷⁵ From 2000 to 2011, the number of children receiving SSI for a mental problem jumped from 543,000 to 861,000—an almost 60 percent increase.⁷⁶

In late 2010, the Boston Globe produced a series of reports on problems with the SSI program; in particular, the growth in benefits going to children under questionable circumstances.⁷⁷ The series, which received a national award for meritorious journalism the following year, led to a congressional hearing and a GAO investigation.⁷⁸

As the Globe explains, determining whether a child's problems are severe enough to warrant disability benefits is decidedly subjective:

On paper, the eligibility requirements are daunting. According to the most recent Social Security rules, passed in 1996, a child can be approved for mental disability benefits only if he or she has a "medically determinable impairment that results in marked and severe functional limitations.'' The impairment should be one that persists for at least a year or may result in death.

In some instances, a specific diagnosis for a severe condition — schizophrenia, for example — is a virtual and uncontroversial guarantee of benefits. But most diagnoses are not of that severity and SSI approval hinges on the highly subjective determination of whether a child's condition, or cluster of conditions, amounts to a "severe'' impairment.

Officials wade through piles of medical, clinical, pharmacy, and school records, some haphazardly or partially completed, to determine how a child functions in six designated "domains,'' such as how well he or she communicates, or gets along with peers, or can take care of his or her own basic needs. One "marked'' impairment is not enough for SSI approval, but a "severe'' impairment in one domain, or, alternatively, "marked'' impairments in two domains, is.

Officials may also rely on standardized neuropsychological and other tests or hire an independent medical expert to evaluate the child. Nevertheless, in many cases, diagnoses are based largely on a parent's account, and disability evaluators never meet the child face-to-face.

The GAO says that examiners "sometimes lack complete information to inform their decision making and identify potential threats to program integrity," which translates into a susceptibility for fraud and abuse.⁷⁹

The Globe found ample anecdotal evidence to support what appears to be common knowledge among educators and health professionals: many parents are seeking to get their child diagnosed with a mental or behavioral problem in the hopes of obtaining a prescription for psychotropic drugs, which they believe increases the chances of their children qualifying for SSI benefits. Although the evidence does not support the parents' belief that medication increases the odds of receiving benefits, the trend to have children "labeled" is very disconcerting.⁸⁰

The child qualifies for the check, but the parent effectively gets the money. Indeed, in an Alabama county with a high rate of people collecting federal disability benefits, residents told a reporter for National Public Radio that it's desirable to have a child who can "pull a check."⁸¹ Also alluring to the parent is the fact that a child who receives SSI automatically qualifies for Medicaid in 39 states and generally qualifies in the rest.⁸²

Medical professionals have reported feeling pressure to provide a diagnosis of disability, and will sometimes tailor a diagnosis to increase the child's odds of being awarded benefits. In addition, hospitals and health insurance companies are hiring for-profit "eligibility service providers" to help uninsured children obtain SSI because the children will then qualify for Medicaid coverage.⁸³ State agencies also contract with these companies because SSI is fully paid for by the federal government whereas the cost of paying for traditional cash welfare is partially a state responsibility.

Another disturbing problem is that SSI creates a disincentive for teenagers to work, and instead they learn to become dependent on a government check. As one teenager on SSI because of ADHD explained to the Globe, "If I work and I get a certain amount, then they'll take money away from my mom. She needs it. I don't want my mom's money to go down."⁸⁴ A psychiatrist who conducts disability evaluations for the SSA told the Globe that children who grow up on SSI "develop an identity as being disabled" and thus can become content with remain in the system.⁸⁵

The lack of Continuing Disability Reviews being conducted on children is surely contributing to this contentment. Despite the growth in children collecting SSI benefits, the number of CDRs dropped 70 percent from 2000 to 2011.⁸⁶ And the drop in CDRs for children who qualify for benefits because of mental-related disability dropped a staggering 80 percent over the same time period.⁸⁷ The SSA has a backlog of 435,000 children on SSI for a mental disability who are overdue for a CDR. Of that, almost half were overdue by at least 3 years.⁸⁸ Many of these children were diagnosed with conditions that were expected to improve. Appallingly, the GAO found nine recipients who were expected to improve that hadn't had CDR in at least 13 years."⁸⁹ The SSA acknowledged to the GAO that "that there are at least 200,000 children in the SSI program under the age of 18 for whom medical improvement is likely, but who have not had a CDR in the last 3 years.⁹⁰
 

Conclusion

The Supplemental Security Income program is reminiscent of the old cash welfare program, Aid to Families with Dependent Children (AFDC). That program was scrapped and replaced with the Temporary Assistance for Needy Families (TANF) program in 1996 after widespread agreement that AFDC was a failure. As an open-ended entitlement, AFDC encouraged long-term dependency and discouraged the poor from becoming self-sufficient.

Similar problems exist with SSI today. Once an individual goes on the SSI rolls, he or she is likely to remain there permanently. Of particular concern is the growing number of children collecting SSI benefits. Instead of pursuing work and developing job skills, these children will become young adults who aren't truly permanently disabled but are being conditioned to rely on a government check. That sets the stage for long-term dependence on taxpayers being passed on from generation to generation.

Some experts see the 1996 welfare reforms creating TANF as a model for SSI. Richard Burkhauser and Mary Daly, for example, contend that devolution of greater responsibility to the states—as is the case with TANF—could lead to preferable alternatives to the federal one-size-fits-all model:

[T]he SSI-disabled adults and SSI-disabled children programs closely resemble general welfare programs in the United States and, thus, can be changed using many of the same principles applied in moving from AFDC to TANF. This would mean moving jurisdiction of the SSI-disabled adults and children programs from the SSA to the states. Unlike the previous periods when SSI-like programs were in state hands, this devolution would, like TANF, hold states accountable to federal guidelines regarding outcomes of people with disabilities. Like TANF, these two SSI programs could be funded by block grants from the federal government, and states could be asked to comply with broad goals. At the same time, states would be allowed and encouraged to innovate and create work-based alternatives to long-term cash support for applicants with disabilities.⁹¹

While that might be a practical step in the right direction, a better reform would be to move full responsibility for funding and administering SSI to state governments. The federal government seems incapable of running welfare programs in a frugal manner with due regard to taxpayers' interests. The abysmally low rate of disability reviews is clear evidence that the federal government is simply not doing its job to protect the public purse by making sure that only the truly needy are collecting benefits. Further, the convoluted and increasingly subjective disability determination process has opened the door to exploitation by specialty law firms that have figured out how to work the system.

Devolution of the SSI program to the states would allow greater innovation by state policymakers with their low-income programs, who have stronger incentives to reduce taxpayer costs and maximize work incentives than do federal policymakers. Ideally, responsibility for caring for the needs of the indigent should rest with private charities, churches, and other voluntary organizations, but in the near term, devolution to the states would be a large step forward.