As Savings Disappear, Social Security is Also Under Threat

A two-pronged attack on Americans' financial security

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Many Americans are watching their retirement savings melt away because of President Trump’s disastrous trade policies. In normal downturns, they could at least reassure themselves that Social Security would always be there. The program was created during the Great Depression precisely because it was clear that the market would not provide for retirees. But Social Security is also under attack. Think of it as a two-pronged assault on Americans’ financial stability.

President Trump’s nominee for Social Security Commissioner, Frank Bisignano, was grilled in his Senate hearing about the chaos amidst the cuts to the agency’s staffing and services. Republican Senator Steve Daines (MT) described how his staffer was repeatedly disconnected when calling the help line only to end up on hold for over an hour “listening to D-grade elevator music…[Y]ou can’t make this up.”

While the Senators were mostly concerned about customer service, Bisignano seemed more focused on payment errors. “The objective,” he said, “is fraud, waste, and abuse.” He is not alone. In fact, it’s a consistent pattern across the Trump Administration.

For example, Secretary of Commerce Howard Lutnick had this to say: “Let’s say Social Security didn’t send out their checks this month—my mother-in-law, who’s 94, she wouldn’t call and complain. She’d just think something got messed up and, and she’ll get it next month…[T]he easiest way to find the fraudster is to stop payments and listen because whoever screams is the one stealing.”

Lutnick, a billionaire, is out of touch. The program makes up over 40 percent of older adult’s income, with 1 in 7 relying on the benefits for more than 90 percent of their income. They can’t afford to not complain. And they should be very worried about what is happening with the program.

The fixation on fraud is also out of step with reality. Payment errors of 0.3 percent, after corrections, are rare. Yet Trump’s administration officials have repeatedly alleged wide scale fraud, including Elon Musk calling it a Ponzi Scheme.

President Trump himself has said, “Social Security won’t be touched, other than if there’s fraud.” Trump repeated Musk’s false claims that large numbers of dead people are receiving Social Security payments at the State of Union, reporting “shocking levels of incompetence and probable fraud.”

This is why Bisignano’s nomination is concerning: he advanced from the Senate Finance Committee on a party line vote despite being a self-described “DOGE person.”

The administration is using allegations of fraud, whether outlandish or reflecting relatively minor errors, to justify big and damaging changes to Social Security. What is crucial to understand is that Trump doesn’t have to cut benefits to undermine the program. Instead, he can make service delivery dysfunctional under the false cover of “reform.”

These false claims of fraud are a pretext for “reform” which, based on what we have seen thus far, will decimate the agency. One senior SSA official put it this way: “They’re creating a fire to require them to come and put it out.”

How Fraud Claims Become Administrative Burdens

When we wrote our book on administrative burdens, we pointed to Social Security as a model to emulate: an agency of well-trained officials dedicated to customer service. But Trump is moving it in an entirely different direction. One official who worked with the agency said: "Preventing every possible case of fraud often places an undue burden on legitimate users trying to access what they need."

Here is a simple example of how false claims about fraud are already making things harder for beneficiaries. SSA announced on March 18 that beneficiaries could no longer use phone services to do any tasks that require identity verification, like changing their bank account information, applying for benefits, or fixing missed payments. Beneficiaries must instead complete these tasks either online or in-person.

The problem, however, is that most people will struggle with the online identity verification processes. It’s also a relatively ineffective way to prevent fraud. More to the point, this burdensome change is based on false claims. DOGE and Musk said that 40 percent of SSA phone calls are efforts to engage in fraud.

For example, in his doomed campaign efforts for a Wisconsin Supreme Candidate Musk told a rally:

One interesting statistic was that 40 percent of the calls into Social Security were fraudulent, meaning that it was someone trying to get a Social Security payment that was going to a senior instead to go to a fraud ring.

JD Vance repeated the claim on national television.

That sounds like a lot of fraud! If four out of every ten SSA callers were scammers, that would be a huge problem, since the agency receives 50-60 million calls for year. The problem is this claim is simply not true. Charitably, its based on a misunderstanding. Uncharitably, its a lie. The SSA has debunked the claim but the administration continues to make it.

Here is the reality: SSA said that 40 percent of direct deposit fraud occurred via calls to the agency. That is wholly different, and massively less, than 40 percent of calls being fraudulent. In fact, there is no estimate of what percentage of phone calls are fraudulent. To get a sense of how big a deal this is, you need to understand the denominator, i.e. the rate of fraud as a percentage of total activities. As the New York Times explained:

For context, more than 99 percent of Social Security benefits are paid through direct deposit, and the agency paid out some $1.5 trillion in benefits last year. The roughly $40 million in direct deposit fraud via telephone, then, represents less than 0.003 percent of total benefits.

But the false claim becomes the basis for new burdens on clients. Now, millions of beneficiaries will need to visit field offices to complete tasks they’d been able to do over the phone. Older and disabled beneficiaries, as well as those living in rural communities, will struggle to get to those offices. Internal memos within the IRS warned that the changes would increase wait times, and be especially difficult for vulnerable populations. But the changes went ahead. (UPDATE: this change did not go ahead! The Trump administration said they were backing down from the plan after public pushback! Keep it up people!)

The website problems disrupting SSA services is also related to anti-fraud efforts according to the Washington Post:

The network crashes appear to be caused by an expansion initiated by the Trump team of an existing contract with a credit-reporting agency that tracks names, addresses and other personal information to verify customers’ identities. The enhanced fraud checks are now done earlier in the claims process and have resulted in a boost to the volume of customers who must pass the checks. But the technology staff did not test the software against a high volume of users to see if the servers could handle the rush, current and former officials said. Connectivity issues and bugs with the expanded system have caused the portal that manages log-ins and authentication for many Social Security applications to go down, officials said.

Here is another example, but in this case, it is DOGE and the administration who are committing the fraud. They are manually altering the Social Security death file to put people they say are immigrants are on it. After falsely complaining that dead people were receiving benefits, DOGE is now falsely sending the living into the land of administrative dead.

A government agency is telling other agencies, employers and insurance companies that they are dead. The goal is to make the person’s life impossible. Some of the people listed are teenagers, some are in their 80s. Many appear to have no criminal record, despite White House claims to the contrary. When a senior official objected, pointing out that it was illegal and unethical, security guards escorted him from his office, and he was put on administrative law. The very real risks to not just immigrants but anyone that arises from a single political appointee being able to end the economic life of someone with no evidence or due process was set aside.

The Wheels Are Starting to Come Off

The wheels are already starting to come off. Trump era staffing cuts have caused chaos, and new reporting indicates more is on the way. The SSA website keeps crashing even as DOGE wants to cut IT staff. Senior managers are answering phones to cover for laid-off employees. And the office that reports how long people wait for services, how many calls go unanswered, and tracks customer satisfaction was cut by DOGE.

It’s going to get worse. On top of the already nearly 7,000 job cuts that have been eliminated since February, DOGE is planning for thousands more. SSA oversees 20 percent of the federal budget, and was already woefully understaffed *before* DOGE took its chainsaw to the agency. It has faced declines in its percentage of spending devoted to administration from 2.2 percent in 1957 to just 0.5 percent 2024. Staffing numbers were already at a 50 year low, with a 19 percent budget cut to service staff since 2010, even as the population the program serves has risen by 25 percent.

The ‘fraud’ reforms are projected to result in a 14 percent increase in office visits, further taxing an agency that simply doesn’t have the capacity to meet the needs of the hundreds of millions of Americans it serves. The field offices alone are losing an additional 2,500 employees this month due to buyouts. Even before these mass layoffs applicants and beneficiaries faced long waits and delays at field offices around the country.

We already know the consequences of field office cuts for vulnerable beneficiaries. One study found that field office closures led to a 16 percent decline in disability recipients in the surrounding communities due to excess demand in the remaining offices. The study found that the people hit hardest were those with moderately severe disabilities, lower educational attainment and lower incomes.

The revocation of remote work for low-paid employees (starting salary for call center work is $32,000), will make it even harder to retain employees. Software developers who oversee the system have left, meaning that updates to ensure ongoing payments will be missed. DOGE wants to cut half of the remaining SSA tech staff. DOGE’s limit of $1 on credit card spending has resulted in many offices lacking basic supplies. Other proposed policies, such as requiring work-authorized non-citizens to visit field offices will further overwhelm the system.

Actual Abuses of Social Security

DOGE and Trump’s approach to Social Security is itself a form of fraud on the American people. Their ‘fixes’ are making it difficult, in some cases impossible, to access needed services, apply for benefits, or fix administrative mistakes, while also undermining public trust in the agency.

It’s not just that the fraud claims are false. The Trump administration has been using Social Security resources for partisan ends. DOGE has been more willing to listen when Republicans want to keep field offices open, leaving Dems in the cold.

Leland Dudek, the acting administrator, admitted that he limited access to Social Security services for Mainers because the Governor disagreed with Trump over trans athletes. Dudek blocked a contract that allowed parents to do paperwork to register for a Social Security number at a hospital, saving them a trip to an office. He also ended electronic death reporting in the state. “I was ticked at the governor of Maine for not being real cordial to the president,” said Dudek. “I screwed up. I’ll admit I screwed up.”

It is an extraordinary admission of abuse of power. While Dudek said he reversed his actions, it is important to understand that he took them even though he was warned by staff, and acknowledged, that the actions would increase fraud. He wrote an email admitting that “improper payments will go up,” because of his actions, he viewed it as acceptable to punish a “petulant child” who was “disrespectful” to the President.

Maine has been subject to a series of abuses of executive authority, including threats of funding cuts from USDA, because of a minor interaction where the Governor asserted the right to fight Trump’s anti-trans order in court given existing state laws. In any normal administration it would be a massive national scandal that the federal government was selectively attacking a specific Governor in this way. The scandal barely makes a ripple given the dysfunction of the Trump administration.

Image from Sherrilyn Ifill on Bluesky

Doing Less with Less

The agency cannot keep doing more with less – eventually it will be unable to perform core tasks, which will almost certainly lead to all kinds of payment errors–and fraud too. Monthly payments need to be processed for the 73 million people receiving benefits, the roughly 10,000 babies born every day need to receive Social Security numbers, new retirees need to start receiving benefits, and beneficiaries who have died need to stop receiving benefits.

While experts have been particularly worried about the consequences for disabled beneficiaries, retired beneficiaries are also facing real threats. Computer systems need to be updated and audited. Payment systems need to be kept functioning. The agency also needs to collect and store earnings records for another approximately 200 million of us not yet receiving benefits. Automated systems require maintenance or they will fail.

Of course, the great irony is that all of these cuts are just increasing the chance for improper payments. So not only will the ‘fraud prevention’ and staffing cuts inflict administrative burdens on millions of Social Security beneficiaries, and fail to deliver promised benefits to many, it will exacerbate the payment errors they’re claiming to fix. And the agency simply won’t have sufficient capacity to fix it when they make those mistakes.

Uncertainty, Fear and Declining Trust

Social Security is a promise between the American government and its people. Keeping that promise depends upon the capacity to actually deliver benefits. Right now, the Trump Administration is taking a chainsaw to that capacity, under the guise of eliminating fraud and abuse.

As it stands, there is bipartisan support among the public to spend more on Social Security to address its problems. But that trust is turning to panic. At the time Trump is tanking people’s private retirement savings, more and more are worrying about Social Security. In a new Gallup poll, the percentage of Americans worrying about Social Security jumped from 43% to 52% in just a year, reaching a 15 year high. Town hall meetings with representatives, when they are held, invariably feature questions about the future of the program.

The confusion, uncertainty and fear are making things operationally more difficult for Social Security. For one thing, they are an invitation to scammers: fake emails purporting to be from Social Security officials have increased. Phone calls and field office visits from anxious beneficiaries have also surged, leading to longer wait times for everyone. Website problems are generating erroneous messages. For example, many Supplemental Security Income recipients were told they were “currently not receiving payments”. Such failures are also affecting SSA employees, who have had to use paper records or cancel appointments when they cannot access data.

Many of the questions are not about specific needs but Trump-era uncertainty about benefits, fraud claims, and personal data:

In one office in central Indiana, the phone lines are jammed by 9 a.m. with hundreds of retirees, further taxing a staff of less than a dozen that is responsible for nearly 70,000 claimants across the state, according to one employee. That worker, who like others spoke on the condition of anonymity for fear of retribution, said the questions have become predictable: What is the U.S. DOGE Service doing to Social Security? Will the office close? Will my benefits continue? The employees, with no training yet on the impending changes, have few answers. “I hope we’re going to be here,” the employee tells caller after caller. “But I can’t guarantee anything.”

Another senior SSA official said:

We’re just spiking like crazy. It’s people who are terrified that DOGE is messing with our systems. It’s the sheer massive volume of freaked-out people.

The Trump administrations’ actions will sow distrust in the integrity of the program as prelude to doing what some have wanted to do since 1935: to kill Social Security, once and for all.