Part IX- Policy Issues

SSI Study

Futterman:

This is a report that I produced in 1974, this is after I retired. I was called back by Bruce Cardwell.

Q: He was asking you for advice about SSI; and how to manage SSI, because there were troubles.

Futterman:

In the first place, the Congress put Social Security in trouble. Because they were amending the law, as I remember it, right up to the very last minute. It was very critical for Social Security to pick up that ball for 50 States and continue making payments without fumbling, which was a major achievement. But they were robbing everything in the reserve that they had to do all the other tasks. They were putting everybody to work around the clock to achieve that. But they could not have continued it without real trouble. There were lots and lots of problems, and the place was in such a mess. There was no coherent approach to it. This was a quick and dirty report.

Q: So Cardwell asked you to do a study and make some recommendations?

Futterman:

Yes. SSA was in the process of preparing to administer the new SSI provisions of the law. It was an extremely large task and the time available to do it was far more compressed than was desirable. Cardwell asked me to quickly review what was in the works and give him a very "quick and dirty" report. Under the circumstances, I couldn't talk to too many people, because they were up to their ears getting ready.

Q: I see your report is March of 1974. So it was right at the beginning of the implementation.

Futterman:

So I think I was called in around January or something. You'll have to read the body of the report. This will give you some flavor. Read the introduction in that; that will give you some feel. But I'll read you a little from this perspective. "I thought it was necessary to lay some kind of a ground work for understanding this report; the circumstances under which had occurred, etc." And I outlined the complexity of the thing, touched on them. I said, "The dimensions were large, the task was complex (this is after I'd done some sketching out of these elements); the timing was critical and the period available for implementation of the program was really shorter than it appeared. Seemingly, 14 months were available to do the implementation from the date of enactment. And to some, this might have appeared fully ample, particularly in light of the fact that generalized planning took place so many months before the enactment of the SSI program. The effective time available for planning was considerably less. For one thing, the Congress later made significant changes in the legislation; changes were made for mandatory State supplementation. The requirements for redetermination of eligibility for those who came on the State APTD rolls after June 1973, and final advice from the States as to who would administer their supplements, and the multiple variations in payments, were not received until mid-December, only a few weeks before the actual conversion was to take place. These and the delays in working out basic policy necessarily impacted upon the system; and the administrative planners' abilities to do their jobs in ways ensuring both high quality and timeliness. Under the circumstances, one could not have ruled out the occurrence of a disaster, with up to 3,000,000 needy people without funds they absolutely needed to live on. No such disaster occurred. In the first week of the new year, 3,056,300 Supplemental Security Income checks were in the mail for the delivery to aged, blind and disabled people. Our best information at that time indicated that 95 to 98 percent received their checks promptly." As I tried to explain earlier, this report was a little bit different. Usually, one doesn't try to review the organization itself so much so that the criticisms of what's happening would have something to be seen against, the background.

Q: Now did you do this study by yourself. This was a one-man study? You didn't have a work group or something to do this?

Futterman:

No, this was my study. I asked Bob Peddicord, who had retired with me, to assist me. But basically it was my study. And Sid Leibovitz was on loan, as I mentioned to you earlier. He was sort of my gopher, get information, dig it out, etc. I met with various people that were available to talk. I think it's a good report, considering. But not one that I feel most comfortable with.

There was another section that was thrown in that was just gratis. Cardwell also said, "And I'd like to have whatever thoughts you have about reorganizing." I had not been thinking about reorganizing. But I did do a section on reorganization. And it's a different kind of organization. And it's useful. They were read by Cardwell. One of the things I did was that I restricted the number of copies so that he would be perfectly free to restrict the ideas contained in it so that they would not distract from any reorganization plans that he might be leaning to; this was as he was just coming in, and I didn't want to handicap him in any way. He did give this report out to a certain number of people. There were a lot of others that wanted copies that I referred to him. I did not try to push any idea, and I never did.

Q: What were you suggesting by way of reorganization? Do you recall what you said? (At this point, Mr. Futterman began reviewing some documents from his files, reading from them and commenting on them.)

Futterman:

Well yes. And we could go into this again. I am going to talk about this in some depth, I need to review it just to refresh my memory.

This is dealing with the SSA organization of the future. The basic strengths of Social Security as I saw it. "If there are reasons at this point in the history of SSA, as we think there are, to examine the organization and consider some changes for the future, the first and most important thing to do is to identify the major basic strengths of the existing organization. It is very important not only to preserve these strengths, if they can be, but to reinforce them, and capitalize on their value in making any set of changes. It is not an exaggeration to say that we gave this view important weight, and of all our considerations (meaning me, this is all mine, some participation and discussion with Bob Peddicord) for change we kept a sharp focus on the desirability of continuity in carrying forward of the many organizational factors that have accounted for SSA's success in the past. An SSA organization has not been static; it has evolved over time. One of the outstanding demonstrations of its strength is that it has produced a tradition of success, that serves as an inspiration in tackling new responsibilities. Organizational change, if any is made, should retain and should build on this tradition. In the absence of some overriding reason, it should in no sense break with the past, but should be a considered and a planned projection of past experience into a future that clearly contains larger challenges for SSA."

"A second important strength of the top SSA structure is that the Commissioner is able to look to a substantial number of key individuals who serve as extensions of himself in overseeing day-to-day operations in all major sectors of his responsibility. In addition, these key lieutenants operate in a matrix of crossing activity: operational, program, and managerial that assure the Commissioner of at least two informed views on all important matters. Each of the lieutenants carries a vital responsibility and when the SSA system is working normally, their creative response as a group to the demands placed upon them by their roles contributes in large measure to the results SSA achieves. Reinforcing this wide sharing of oversight responsibilities, providing assurance that decisions will not be based on narrow considerations." (Talking about operational considerations alone, as against program considerations, as against another parts like accounting operations in the field.) "If the decisions are made, they need to be now, they need to be taken into the context as a whole."

In this regard, that talk that was written up in the journal, for accountants, and the last parts of that report talk about how everything needs to be evaluated in terms of the whole entity, not parts of it, in terms of the function of the whole entity, in service to the public. How does it affect the public? Nothing important in the agency should be decided on a sole view. That cross-view I was talking about; you had the operation over here and then you had somebody looking across it, like me, from financing, organizational and other considerations from Administration. And there were others like Programs they looked at the operators. Like Alvin David's function was in Claims Policy, in those days, they had this cross-over function.

SSN Study

Futterman:

After I retired, I was appointed the head of a committee that was established to study the Social Security number. I did 95 percent of the work. Joe Nathanson helped me, he was an analyst for me. You may not know him, he went to the West Coast. At that time, there was a lot of business about the Social Security Number becoming a universal identifier. I wrote a report, which I thought was a pacemaker. I thought it had great potential. For instance, the evil one saw with a universal identifier is one could not escape one's identity. In the American way, we had in mind that people could expiate their sins, could get away from themselves; if necessary, change their identity. And giving numbers, that was a problem. But on the other side, incredible opportunity, like for keeping one's medical history in some central depository under one number. Today you go from doctor to doctor and you lose your history. They don't know whether you had diabetes or the flu, or whatever. We had the opportunity for doing it in a creative way under controlled conditions. And I think I did recommend a limited use.

Q: I have a copy of your report here. "Social Security Number Task Force-- Report to the Commissioner." Can you talk about the report?

Futterman:

In the last year or two or maybe three of my tenure, I did a lot of this stuff here. As I indicated to you before, I don't work well on a task force because I find they're unwieldy instruments and they're wasteful at times. I did almost all of the reports; I did have some help, major help from Bob Tetters, who was a real professional.

Q: In the Public Affairs and Information Office; he was the head of OASIS.

Futterman:

He was the editor of OASIS. And he was a self-effacing professional; he approached that task like a good journalist would. Part of his task also was to help me on anything, you know, writing and whatever. Only occasionally--on these big reports, where I would have somebody from his staff sit and help draft the report, like on this one--Bob would be brought in. When I gave him credit for his help, verbally, personally, not before an audience necessarily, he would disclaim, he said, "Well, you were the one, all these ideas are yours." Unlike some of his staff in their talk on their own with their own colleagues, "I wrote that report. You know, I did this." Bob Tetters never would do that. Some of the people made contributions, and one of them in particular, Phil Nathanson, was a talented wordsmith. And not only that, but he also had good ideas of his own. But, in my judgment, he looked possessively on the things that he did.

But I had a unique way of working with these people; far more detailed than any they experienced any place else. I would go to great lengths initially to tell them the details of the ideas, how to develop it, etc. Then I would edit it, very thoroughly and further expound it, and all that, and keep shoveling back and forth. There were times, in these reports, where they would introduce an expansion or an idea that I felt was useful, then I would employ that. These were largely, like 90%, my product. I'm not talking always about the words. I could say the same about words, but not about 90%, but the product of my ideas. Because I wasn't letting anything go out that didn't have my support, I was supersensitive to that, if I could do better, I did it.

International Technical Exchange Proposal

Futterman:

This is entitled "A System for Developing and Maintaining a Directory of Technicians: A Technician Exchange and Visitation Program and Document Center," which would collect and disseminate information about automation and mechanization of the Social Security operations. This was a proposal that I was making to the Committee on Organization and Methods of the ISSA organization. It was light-years away from the kind of thing that they were doing. But it would have, if it was enacted, it would have had a tremendous educational force and effect, because it would be a directory indicating the sources of information in inter-nation exchange which Social Security in the United States was engaged in, and ISSA itself was doing it sort of blindly each year. It would be a directory of technicians: people knowledgeable about particular things and a visitation program. So instead of having these big get-togethers, we could do it on a much more detailed basis of small groups with detailed programs.

Q: Was this ever adopted?

Futterman:

It was never adopted. But it was the kind of thing that lays seeds, although I couldn't see whether they generated any activity. In fact, I never noticed any particular reception given to it. But a lot of people got copies of this. I obviously did a lot of work. It was not a polished effort, but it had a lot of good ideas for international development on a very practical level where people would benefit. If you've ever attended these international affairs.

Q: I never have.

Futterman:

They are big on talk and generalities, but short on accomplishments. Ideas are important, but they need to be implemented.

Administrative Style

Q: Is this one over on your stack?

Futterman:

Yes. As I recall it, there was a series of conferences. I was not one to attend those. I used to send my own staff, not on the theory that I didn't like to, but my theory of supervision was to spread myself as efficiently as I could. And I didn't feel that attending a two or three-day conference was necessarily the way for me to make the most efficient use of my time. I carried a very large workload. And so I thought it would be easier, generally, to send some of my able lieutenants, who could distill what was the essence of it, even though it might not be quite the way I would do it; but it still was an efficient way to operate. Except when I was invited to make a talk, which was not that often. And when I did, I would indulge myself an extra day or so and stay on. But as I recall in this particular year, 1967, I made the rounds. And each talk was somewhat different. Did we talk about this?

Q: No, not yet.

Futterman:

This is a speech from January 30, 1967. Now of course, I wasn't talking about this; I was talking about the reports. I always wrote my own talks. Sometimes, I often had just scraps of notes taken from other speeches stitched together loosely. But for these talks, I think I mostly had this and modifications of the first one.

One of my big themes was on administration. Wherever I talked, whenever, I would always present my views of administrative style. It's what distinguishes one administration from another. Another that might be very similar to it in certain respects, is the emphasis you give to the public, the emphasis you do to serve the public as its servants, rather than its masters. These are elements of management style. Very pertinent, particularly when you're talking with South Americans and others, or even Europeans, who have different styles. You can convey values that are not always observable from the text of the descriptions. But obviously, you go into one office, and people are dealt with considerately in terms of chairs to sit on or comfortable surroundings; I mean, an office that is not unpleasant, that is cheerful, etc., homey. And I translated that into the programs.

My wife was one of my agents in a way because she was hired to carry out part of this program, not by me, but by Hayman Cooper. She had left Social Security years before and she was interested in getting back, and Hayman Cooper offered her a job to help furnish district offices. And she did some innovative stuff with some of the offices, where she got the kind of equipment they needed and individualized the style.

I was working on the bigger concept of building our own offices out of Trust Fund revenue, and making sure that they had all the conveniences for the public, parking areas and so forth. Large enough so that people could sit down in comfortable surroundings with carpets, which were a great innovation. And making the place homey, and not just something that all the words would bounce off the walls and the floors and just a hubbub of noise. Give it a real service-oriented character; that's only one aspect.

Bob Ball and I had the same idea of what constituted useful public service in terms of the one-on-one thing. And we both sort of came to the same conclusion that it was helpful; it was civil for us to help old ladies sit down; that was the civil thing to do. Service, well there are other things that were more important. One would expect civility, naturally. But helping people do what they couldn't do easily or well was our definition of what was good public service. These were making things easier. That's what good public service is.

That's all-encompassed in this paper: "Administrative Style and Its Relationship to the Program." I'd like to get into this myself and reread it or at least part of it.

Ombudsman

Now, I wrote this piece, and this is on the Ombudsman. I'll stand by it even today; I don't remember it verbatim. But this became the fashion, and it was sweeping the country. We learned about the Swedish idea of having an ombudsman represent the public. But I didn't like the idea. I didn't like a lot of ideas. As I told you, I didn't like annual reporting, I didn't like changing the day, instead of sending checks out all at once.

Q: Payment cycling or staggered payments?

Futterman:

Yes. Because from the point where I stood what you wanted to do was to always advance the public interest. With the ombudsman it seemed to me what you were doing, inevitably, was undercutting the very administering agency that you were trying to improve upon as far as performance was concerned. Why did I say that? The ombudsman becomes adversarial. He is closer to the public, is taking a position that is like a cheap, throwaway political one-liner today. He's representing the public. All of a sudden, the preachment of Ball and Futterman and others like them, who said, "you know, we exist only to serve the public" we all of a sudden are adversaries to this public figure, which is only designed to make the organization defensive. So philosophically, in terms of the larger value, you don't want to take that away; you don't want to take that out of the job description of an agency. You want to work on the problem. If the problem is they're not showing enough consideration of the public interest, then you need to work on that, not to set up a mechanism that goes around it.

The analogy I often used in those days, is that I used to play golf with my brother's friends. They never took lessons, I didn't either. But they never took lessons and they were older. One fellow always was beaten by his wife; she would not hit nearly as hard as he did. But she would hit straight. He would whack the ball a lot further, but you never knew what direction. In the end, she beat him because she went straight to the hole and dumped it in; he would go to one side, then the other side, you know, on every other green. And it was because he had a horrible slice in his stroke. Well he tried to eliminate it, but he couldn't. He didn't know how; he didn't have the patience, that was more likely, he didn't have the patience. So he heard of a shortcut way of doing it, of shaving the face of his club to offset his natural slice. So what he was doing, he was inventing, in his swing, a hook. He wanted to hit that ball straight; he had to do what others would do to hook it. And he hoped to get a straight ball out of it.

And I analogized these things the same way. To force the organization to be in a bad posture which can be corrected by somebody else, that's not the way to do it. The way to do it is to eliminate the thing in the swing which causes the problem.

Q: That's excellent. That's good.

Futterman:

The ombudsman, I have explained to you. I just thought that is not the way to go. I haven't read this since I wrote it, which would be when?

Q: January of 1968.

Futterman:

And this would be my own effort. I may have had some help, I don't know, I doubt it, because it would have been too much trouble for me to farm it out.

These views are not universally held, even today. And Bob Ball, when I wrote it, he didn't have any ideas like this. I think he had a deal with the ombudsman in the Department. Or maybe there was a paper or something that had to be done; he gave it to me. Oh, I'm writing to him; usually I write for him.

"In response to the question made some months ago: I lean heavily on the research insights provided by a group I appointed to study and research the problem." (In the group was George Calder, and a few others.) "We spent several months reviewing the literature and studying the issue. I sought expression of the views of the group, but the final recommendations are my own, although they are not inconsistent with the group's views. The assignment of the group was to assist me in formulating these views. I did not envisage workgroup responsibility for the recommendations. Our main conclusion is that it is not practical, nor is it desirable, to set this up in a large federal agency. An auditor at large might be set up as a small augmentation to the existing one. I have not developed the idea of the auditor at large in detail; however, I will be happy to work on a more specific proposal." I remember this document well. And again, one of the things where I didn't follow the crowd.

Q: Yeah, oh yeah. I'm surprised by your view. But then, as you describe it, I understand; it makes sense. Okay, let's do one more and then I think we should quit for the day.

Suggestion Systems

Earlier on in the 1950's, it became a fetish to have suggestions. Again, I was against the suggestion system. Why? Same reasoning. When I came up the line in the 1930's and 1940's, we were a bunch of visionaries when we were hired in the depths of the Depression. We were overeducated for the jobs. I had a master's degree. On my staff we had master's degrees and bachelor's degrees, and I had a few Ph.D's on the staff at the clerk level. We were overqualified. And we drew staff, as I said in other settings, this is why I thought that it was great that, even though it was a terrible time, it was great, a great time to start the Social Security program. Because for many years thereafter, we had dedicated staff members who had qualifications far beyond what was needed and they were able to use them over the years.

Now, what's wrong with the suggestion system? This is characteristic of the way I approached a lot of issues, and maybe you'll get a feel for what I've been saying constantly. Well, it used to be that a supervisor was a teacher. He tried to bring along the people under him so that they understood better what the process was all about. So they understood their part in it and could take pride in it. It's like the story I told you about the bricklayers. One was laying brick, the other one was building a cathedral. And the difference in his esprit de corps is remarkable. If you're participating in something that you fully understand, at least you understand in terms of the large picture, and you agree with it; you say, "I am building a cathedral." You work in Social Security and all you know is, you're coding a document, as we did in the early days, and you don't know where it went or what the coding was for, you just had a very limited appreciation of what you were doing.

What opened my eyes, was when I first learned how that all fitted into some kind of a process. In my eyes, that was part of my function as a supervisor, of an immediate supervisor. If they had an idea, I would work with them to develop it and give them credit for it, and not necessarily excluding the part that I played in it, but not taking credit for somebody else's ideas, as if it's your own. But that was the normal process. I still rate employees and supervisors. At work they were close together. And the suggestion system, what happened almost immediately--I don't know whether it is still operated in your day.

Q: It is.

Futterman:

The employee is very quick to make sure he has it documented up the line and never tells the supervisor; he was afraid that everybody's going to copy it either way. And as a result, a lot of trash goes out, which requires answers, so that you don't discourage people. And you've automatically made the individual antagonistic. It's just like an adversary of the supervisor. He's got an idea, he doesn't want to share with it, because the supervisor doesn't perform his full function. So you're built in now with the suggestion system based on the idea that some ideas were taken over and not given credit. So you've shaved the club so that there would be a way around it. And you've lost the proper use, the full use of the supervisor. Get the idea, do you agree with it?

Q: Yes. I think you're right; I never thought of it that way.

"Revolving Door" Commissioners

Futterman:

"Revolving Door." This is a refined version; apparently, it's either the final or near-final draft of revolving-door commissioners, as I call it. Do you have this?

Q: No. I don't think I've seen this yet.

Futterman:

This is the title of a piece I wrote. It was at a symposium in honor of Bob Myers. And it had to do with, it was an antecedent to my work for the National Commission, I think, or maybe this was a part of it.

Q: I think so. The more I think about it, I remember seeing that in the National Commission report.

Futterman:

Well, I wrote it for the National Commission. The President tried to submerge it, because it was critical of Stan Ross. He was a very close friend of Stan Ross. And Wilbur Cohen was anxious for me to testify before the Congress on the basis of it. But, I forget his name, he had a Jewish name, he was a Boston lawyer like Stan Ross was. And he just wanted to smother me with kindness and all that. But he was supposed to print it as a part of the report, and distribute it. He had some kind of easily solvable problem with either the Government Printing Office, or whoever was doing the work for him. I told him how to solve it, and so he had to solve it that way. Then he said it would go out as Appendix E. Well, it did not go out. Then I had to call him and remind him that I didn't see it go out and I didn't get a copy. And he sent something out. But he managed to keep it out of the main report as an appendix. But Wilbur Cohen thought I should testify on this thing. It was a quick report. Anyway, this is the refined version. Oh, it's edited, see what that is? This is not the same as I sent to the Commission. But it was edited, and I don't remember the slant on that.

The English Stamp Book System

Q: What is the significance of this memo?

Futterman:

This one is "Report of Inquiry," this was the one I told you that I was sent to England. Bob Ball said that he might look into this option. It was sort of a little bit tongue and cheek. Not completely though. It was designed to stimulate thinking. It was always bothering me that we were running those machines at great speed so that we can pick up next month's checks. These loads were getting larger and larger. And a lot of it had no change from the previous month, the vast majority of it. So the normal technique of handling things like that would be not to handle the 100 percent volume, but adapt the process to seek out the small percentage. The idea that I thought of was to print all the checks at once, since almost all would be good except for a small percentage. Which meant you only printed them once except for the small percentage.

Q: So you're talking about printing them all at the start of the year?

Futterman:

I wanted to print an annual book. Send out an annual book.

Q: And that's why you went to England to study how they did their payments?

Futterman:

Well yes, but obviously, I had to study an entirely different system in two weeks. I talked to a couple of people, two or three people. I spent a few days there. You get the major outline and then you know what the problems are; you even discount what they tell you because they said they didn't have any problems at all. My concern was that if you print a whole book of checks, wouldn't a lot of scoundrels in this country get them and, somehow or other, force the use of them? And how do you maintain, in this country, an assurance that the people who have the whole book of checks are the people who are supposed to have them? Now in England, they approach it the other way; "well no problem, everybody knows everybody else." They're thinking about the small, ordinary towns where everybody goes to the post office and the post office knows everybody, and so, that's the greatest assurance; "no problem at all." Well, they had problems; they were just not seeing them.

But it still was a nugget of an idea that obviously had great potential that could not be ignored. And that's why I threw it out for that kind of thoughtful reevaluation of what we were doing.

Benefit Recomps.

I'll touch on just a few more. I won't go into that depth.

Automatic recalculations. It always bothered me that the law reflected a program that was inadequately oriented in some cases to the people most in need of its benefits. A lot of people, let's face it, the truth is a lot of people for whom benefits are designed are the low-paid. A good proportion of the lower paid people are not very knowledgeable about the law, they need help. In those days we did not automatically do recalculations, you had to file an application requesting one. And knowing when to request one, or knowing about recalculations and knowing when they qualify for a recalculation and to file an application, was something many people did not know.

Q: I didn't know that!

Futterman:

Yes, sure.

Q: So if somebody worked and had additional earnings we didn't do it for them automatically?

Futterman:

We didn't make the effort to find out.

Q: We didn't do a recalculation unless they came in and filed and application?

Futterman:

It was one of the results of ideas that I developed and pushed. I wasn't identified with it, but it was my idea.

Q: I didn't know that!

Futterman:

I said, "We have the data. Why don't we process it like a good organization does." We have an address. They may not always be good, but we did research and we found that in a large percentage of cases, many years after the application was filed, we could still contact the individual at the address shown on the SS-5. If we couldn't contact him we could get somebody at that address that would give us a clue. So that's an idea.

Q: So this became AERO? It became the Automated Earnings Recomp Operation?

Futterman:

Yes.

Q: Oh. I just assumed that we always had AERO from the beginning?

Futterman:

No. No. I can't give you cards and spades anymore, because I can't remember all of the details. But when it was finally implemented it was an imperfect job and I think it still is. I am sure we don't know how to contact some people except to go through their latest employer or something like that. I don't think we have ever expanded that effort much. What do we do now?

Q: Well what they do now is just to get their earnings records from their employer and they do a recomp. We do a computer interface. We match between the beneficiary rolls and the earnings records rolls.

Futterman:

My idea did not go that far. My idea was just working from our own central record. And I think that a part of it had to be that he just did some work. So we know how to contact him, we don't have to go back in time. I've probably written it up in memoranda that are hidden all over the place. I doubt whether you would find it. Sid Leibovitz might help you a little. I think that he was in this with me to some extent.

Old-Start Comps & Annual Earnings Reports

That reminds me--and I don't have this part of my notes. I don't know which office I was connected with, whether I was Bob Ball's Executive Officer or whether I was in the Office of Administration. I think I was in Bob Ball's office at that time.

I knew the record system pretty well, and I knew what its inadequacies were, and so I knew that I could project myself out in the field to the kind of problem that the field had to address. Automatic recomputations was one. I said to myself, "It's a hell of job to find out the highest benefit that an individual is entitled to." New Start and Old Start, and to not understand it. It was easy enough to take the New Start, ignore the Old Start, and figure out what benefit he was entitled to. What was the highest of several benefits he was entitled to with a New Start? But then you had an obligation to go one more step and that one more step at that time, and still is I am pretty sure, was not amenable to automation, because when they first set up the Master Record they didn't set it up in a fashion that they could pull up annual earnings from each year. So from the period of 1937 to 1950 they didn't have an automatic record. They couldn't pick out the years.

So now you had to go back in Central Office, or wherever, in Central Office I guess, to look up the employer reports manually. Dig out a single employer's report and if it were General Motors you had to look further. You had to be smart enough to know to try to sharpshoot it in this thing, and to get the actual annual reported earnings for the individual. I forget now whether the ledger sheet, the manual ledger sheet would have showed it to you. Yes it would have! But we discarded the manual ledger sheets. I am pretty sure we didn't have it during that time, of course we don't have it now, there is no need to maintain it except for this one possible thing. If it was posted we would be able to go to the ledger sheet manually. And that might have had it one year instead of going back to the employer report. But I think we had to go back to the employer report.

The whole idea of this process, we are going through this expensive process of automating the annual reports of the individual so that we could produce quickly, automatically, at minimum cost, a benefits calculation. We would have to go out and take a walk at the end of the process and do two things. I will describe the one right now, and then remind me to give you the other process which is at the end of the Lag Earnings Period. If we had to do that, then we were in effect putting a bottle neck in the automation process that had to be worked at the old manual process timing. It would just really nullify to a very great extent the top benefit of the program. Because at the end we would have to slow down, get some manual information, recalculate by hand, essentially, or some other way, the best benefit.

Now we knew in many cases that it didn't improve the benefit amount to consider this other calculation. We knew that it didn't improve, and so I met with one of the guys. Sid Leibovitz was one of the key guys in this process. As a matter of fact it was he who gave a name to what we were doing. And I am having a little trouble remembering it, but it was a formula, not an exact, precise formula. I forget the exact word that was used as an adjective to describe the formula, but the formula was not a precise exact mathematical formula, but one which by trial and error produced the right results with minimum error. So we proposed using the formula instead of actually going back and getting the actual earnings. We sold that provision to the Congress, explaining the costs of doing the step manually. We now would apply the formula and we would assure the Congress that within these margins of error, 2 percent or something like that, this formula would produce the right answer. And the error was on the high side, which is what I insisted on, if there was any error, it would be the high side--on the side of giving people 2 percent more than they would really be entitled to if we did it manually. And the cost of that error would be less than the cost of retrieving the earnings and actually doing the calculation.

Q: Now let me make sure that I understand this. In the old system we had to do two computations, Old Start and New Start. To do Old Start we had to go back and actually retrieve these records and manually comp them. So what you're doing here is your estimating what the result would have been from the Old Start and if it were higher than the New Start then you could use it? And if you did the estimate and you could see that the Old Start was clearly not to their advantage then you didn't have to bother with it. Is that the idea?

Futterman:

That was part of the formula.

Q: Okay.

Futterman:

Part of the formula would drop those things out. Sid Leibovitz, who I give full credit, I don't know whether the little group that he was working with shared some responsibility for originating this approach, but he was the head of this little group, he reported to me. I sought out Alvin and I sold him this proposition. Who wouldn't buy it--the way I had packaged it? I didn't just go up and say, you know, "Lets get rid of this." I took care of the natural concerns of the Congress and I was, I guess, wise enough to package it in a way that if we erred it was on the side of the constituents. And that error would cost us a lot less than if we were seeking exact justice.

Q: Okay, very good.

Futterman:

You like that?

Q: That sounds good.

Futterman:

Now what's the other end of the process? The Lag Earnings! Now I was one of the very few people in Social Security opposed to annual earnings reports. And I kept it out for a long time, while I was there, I didn't keep it out, my arguments kept it out. There were many times annual reporting was proposed. Mostly the concern was for the burden on the employer. That's how it arose.

Q: Instead of doing it quarterly?

Futterman:

Instead of doing it quarterly. I always had a lot of different thoughts about that. On balance I was always against it. Not that I didn't think that there was merit in relieving the employer of making quarterly reports, for one annual report. But I had a number of objections to it.

One objection that I had was that there was not sufficient concern by those advocating it as to what effect this relief for employers was having on the system. So it was not, as they would argue and they did argue, that we are asking the employer to do all of this stuff for no reason.

Well there were several problems. Let's say right at this point, that I never heard anybody else marshal these facts, not that once enunciated you can't understand them, but there was not time given for the other side of the argument.

First off, annual reporting created an administrative problem for us that was extreme. When you have annual reports you get the load coming in three months, and nine months of the year you don't have anything to do with annual reports. So you have a peak in your staffing needs. A lot of organizations, like IRS, had this problem of not being able to "level the load" so you can have a full time staff doing this. One of our administrative wise men, who came into Social Security in the early days, was John Corson. He came into the Candler Building, the record keeping in the early days, on a similar problem. I was a very young man then, it was 1939 or 1940. John Corson, in another connection having to do with production, forced, practically forced, Accounting Operations to level the workload. And I have always been impressed with that thought. Why is it important, this leveling of the staff? What do you do with this staff? If you are forever going to be plagued with part-time staff, you are going to have lots of expensive problems in training, hiring, so forth and so on. And it really drags an organization down.

So, immediately one is confronted with the realization that you may be trading a minor problem on the part of employers and giving us, without consideration of that cost, a major problem in carrying out the Social Security Act.

Second, was it an improvement to have annual reporting in the program? No it is not an improvement. Quarterly earnings gives you more up-to-date information. Annual reporting in effect says, "Automate to make this damn punch card and all this information so that we can get at it real quick." Real quick to do what? To go out and visit the employers and have a dialogue with them, or write to them and wait for them to get around to it so we can add a few things at the end and then manually compute and add to it? That didn't seem to me to be any better than what we were just ready to eliminate.

I don't want to confuse these things. Annual reporting I objected to before I got into this formula business. No we didn't want to do that. Any automation process ought to go increasingly toward full automation with minimum manual interruption. Not put at the end a lot of manual interruptions that in effect slowed the process down to a walk.

So program-wise was it better results? No it wasn't better results. It meant that we had to wait and that the beneficiaries had to wait. It meant a costly operation at the end at great cost, because now in order to save them two or three stupid reports which they did very easily, we were now interjecting for every individual a costly manual process. Each individual involved in that report was a multiplier of the cost.

Third, what were we saving for the employer? I was convinced that we did not save much. In many, many cases the employer would do quarterly reporting on his own. That is the way to keep records. And he wouldn't call it earnings reporting, but he would summarize his records quarterly routinely so that he does not have an unbalanced end of the year job.

So that was one aspect of it. One aspect is that we were benefitting the employer only because some loud mouth Chambers of Commerce and business advocates were saying that it was a big improvement for them. Reason tells you that it may be a little easier for them to meet their own requirements for quarterly reporting rather than to conform to what we required. But it wasn't that great a burden. Second, did it impact the program adversely? Yes, it didn't enhance it. Did it impact the beneficiary adversely? Yes it did. Did it add to our cost? Yes it did. And I haven't told you all the costs, you know. There were other costs in the District Office that Annual Reporting would get you involved in because the "lag earnings" period would be a year, not just two months. So the "lag period" when you are trying to work up a claim in the field would require you to go out to get manual reports for a whole year back, or maybe more, because you may have to go back beyond that year because that last year may still be in process.

I have only begun to tell you some of the reasons. Now again I stress if we could keep those other problems down and make it a worthwhile trade, sure our objective is to relieve the employer from unnecessary tasks. From tasks that they should be relieved of, because it is our obligation, in the positive way, it is our obligation to make sure that we don't ask the public or the employers or anybody to do something unnecessary. Don't you agree?

Q: Well I tend to agree with you.

Futterman:

That's as strong as you get? I usually leave people persuaded!

Q: I am persuaded!

Futterman:

So that is in part the kind of thing that reinforced my position. In this case I did nothing, but when the time came up to voice my objection, I did. I don't claim that my arguments were so persuasive that they made people turn around, some people never change their mind, depending on where their narrow self-interest lay.

But sometimes I had more than just a minor say. I would argue it before it got started if I was the head of a little team that was going to present something to the Department or the Bureau of the Budget. I probably gave them enough thoughts to slow them down. But this came popping again up, of course, after I was no longer there, and it was finally adopted.

Q: And it created huge problems for us and put us years behind in earnings postings. It was part of our Systems Modernization crisis and we were years behind in our annual earnings reports. So you were proven to be a prophet!

Futterman:

Well I was almost alone in that. Bob Ball didn't show any real concern on that. I never remember talking in any depth about annual reporting with him or even just letting him know in a cursory sort of way that I didn't favor it. And whenever the matter was approached in my presence I would always make it clear that I wasn't for annual reporting.

Payment Cycling

Futterman:

Another one that I was not for was, what do you call it, staggering the benefits? What do you call that system?

Q: Payment cycling is what we call it now.

Futterman:

Benefit Payment Cycling. I was against that and I won't go into details about it. Are we doing Benefit Cycling now?

Q: We haven't started yet, but we are publishing it in the Federal Register, this month I think.

Futterman:

Well I was against that--I am talking 25 years or more ago. But I was against that, and again, this had powerful forces behind it. In Treasury, the Disbursing Office, they, in effect, cycled the organizations for which they performed the check writing function, like VA and Welfare or other payment organizations, Civil Service, etc. They cycled within a month. So they don't do everybody's checks every day. And I really didn't see how they greatly benefitted by a continuous recycling. Although I think in the days when they were using punched cards and all of that, they had cards available waiting for their cycle, in two or three days. In the meantime they had to service the accounts. There was certain information that we needed from the files to expedite some of the claims work, and so that was involved in it. If you were doing it daily you wouldn't have to do that because you had the tape, or whatever, and you do that daily portion and they wouldn't be waiting for the day to run it. So there was both of that in Payment Centers and the Disbursing Office.

But on the other side my focus, again, is first let us improve the program. Does it improve program service? I didn't think so. I think it will sow confusion. I think there is great advantage in keeping the terms of the program simple to the people. This is a minor point in this. This is not the illustration that best brings out the point I am making, the general point that I am making to keep the program simple. But I can anticipate, as I anticipated 25 or 30 years ago, and this business agitation for the payment date being cycled through the month was that there will be a lot of confusion in the District Office in interviewing people. Maybe less now since you are on a direct line with Central Office and you can get data quickly, almost real time. But when you couldn't get information real time and somebody came in and wanted information about why he didn't get his check etc., and you ask him what day of the month? When were you supposed to get it? And he answers "I'm not sure," and all of that. And so you always have trouble trying to find out from these people, who didn't get their checks, when they were supposed to get it and you have to resort to other records to find out what their cycling date was. And so it confused the interview, and multiply that by 3 million claims a year or whatever you get, that is a lot of possibilities for confusion and it is not just the 3 million this year it is the accumulation of beneficiaries on the rolls.

Q: What about the argument about leveling the work? You argued the opposite case when you were talking about Annual Earnings.

Futterman:

No I don't argue that. The first rule, the first rule that Futterman follows, is that you organize your effort to achieve your purpose as closely as you reasonably can. Obviously you are not going to be able to give man-to-man personal service to each individual. So it has to be a reasonably beneficiary-oriented organization that can do it and it ought to be done at reasonable cost, etc. But that is your primary concern. And so within that framework of what is reasonably possible with today's technology, etc. and at acceptable cost, you try to achieve that rather than make economies that in some ways sacrifice the achievement of the mission. Am I clear on that?

Q: Yes.

Futterman:

So, I might easily agree to arguments about leveling the work load if it didn't bring with it a diminishing of the quality of the service to the individual. Now take whatever case I'm talking about now. I am talking about cycling the benefit. It doesn't improve the situation for the individual. It doesn't achieve fully or satisfactorily making our operation more efficient. It makes Treasury's work more efficient. But how does it affect the accomplishment of the end result of delivering the check? Better? No, it is more confusing to the individual. He doesn't know when he is going to get it. Today everybody knows that he is supposed to get it on the 3rd. That is a very important value. A very important value. It is important not only to the individual because he knows when his check is supposed to come, it is crystal clear. But then they come into the District Office with some problem about their check. Now it is very clear when they should have received the check, and when they shouldn't. And interviews are very costly things. To put a stamp on a card or a form letter it is expensive to prepare it. To talk to a person in the District Office is very expensive. Just to talk to them. Whether you serve any purpose or not it is expensive. And put a price on the individual knowing when he ordinarily should receive it, and he's confused about it. Because he doesn't get a clear message. I thought there was a real big value in that.

Q: The more that I think about it I believe that it is being published in Federal Register today. Our plan to start cycled payments is being announced in today's Federal Register, I think. What an irony.

Futterman:

If you want to, from the Historian of Social Security, don't attribute it to me, but from your study of the history of Social Security records, call to the attention of the Federal Register, the people in the Federal ... "

Q: Well, you have a chance to comment, I mean it is open for the comment period.

Futterman:

I don't have the time. I am making my maximum contribution. I don't have time. I have to learn about that computer. It worries me that I have now had it two months and I don't know how to operate it.

"Automatic" Entitlement

Q: Don't worry you'll get there. You're making progress. All right what else do you have?

Futterman:

I've got a lot of examples. I said to myself, this is not at the same time necessarily, but it came out of the same attitude, I said to myself, "We know when they're 65." One of the big costly items in processing claims was this business of proof of age. And it was not only costly, but I am thinking about it from the point of view of serving the public.

Now this is a part of leveling the workload when you consider it. People are neat usually, very neat, they have neat habits. Most people are neat in this respect. When they have to do something and they have a choice they like to do it at the beginning of the year, especially if it's to file for benefits, they'll file at the beginning of the year. If it is on a monthly bases they will do it the first week of the month. If it is on a weekly basis they will do it the first two days of the week. If it is on a daily basis they will do it in the morning. That's habits.

And so we have enough problem leveling the workload, but leveling over what period, that's important. You can have on the average enough people to staff for the whole day, but you don't need so many at night as you need in the morning. And that says something for flexibility in employing people and all of that.

I remember we had extensive one or two-man consultant groups come in and take a look at our organization. For many, many years we didn't have any consultants, but this was a guy named Gus Cooper. I gave him a lot of his ideas. He was looking for expensive parts of the process, and I was welcoming his ideas. It turned out that his ideas were, in large part, a regurgitation and extension of many of the things that I told him.

I was talking about this expensive part and not only was it was expensive, but it didn't serve the public well. They came in on Monday, on the first of the month, and on the first of the year, and they were inconvenienced. Our staff was overloaded under bad conditions in which to serve them and so it was much better for us to be able to schedule them for their retirement claim. We could level the workload that way. And why didn't we do it? We knew when he was born and we could routinely write people, the address might be a problem, but I told you that even if you had to go with the address on the SS-5 application, or the last employer, you could do this reasonably. And so my proposal was, and still is, that we get the first date of eligibility, not 62, but 65. We write people and say you are qualified. You are now eligible for Social Security. You have met the qualifications and requirements and if you intend to retire right now, call this number. And then, you know, pick out a date where you can have an appointment with this guy and file your claim. I thought that adds great dignity to the process.

I always go back to my major point, that McKenna's son attributed to him, and Bob Bynum reaffirmed. That he felt himself to be a public servant and that the public came first. Whether that was actually true or not is immaterial. What it represents is the truth, that we all are and should be public servants, first and foremost, and our purpose is to achieve the aims and purposes of the Act. That's the thing that we need to address all of the time. That's one thing that made me effective even in a relatively subordinate rank. Sometimes between two divisions that were arguing, and even though I didn't have authority sometimes to deal with it, I would deal with the staffs and the first concern I had was not who is responsible, who's territory this was, but the first concern was is this the best way to handle the public, to serve the public? I don't want to hear about who's territory it is. If the answer to that is yes, then that is a very subordinate question of who is to do it and whether it is a part of your charter or that charter. If the way is to sort of "split the baby," which is often the solution, you know, we are responsible for so much of it, that's not a better way to do it. It often is the way to decide. Just as I responded to your questioning me about this business of leveling the workload here, but are you consistent? Yes I am! You can be inconsistent if you are truly motivated first by establishing that this is the best way to serve the public within restraints. You understand what I am saying?

So are they doing that today?

Q: I am not sure, we 've talked about it, but I am not sure actually whether we do that or not.

Futterman:

I know that it is very much reduced. But that reminds me of another thing now.

Q: We do appointments now, but this age 65 notification, I don't know if we are doing this yet.

Futterman:

Well I know that you make appointments, but that isn't the point. The point that I am making is for us to initiate, advise the people, we should advise them that you now meet the requirements for benefits. By your age and by your earnings record. And then if you are intending to retire, call so and so. We'll arrange an appointment at your convenience, or at our mutual convenience or whatever you want to say, which is much, much better service. It's not one level it is two levels.

Bob Ball enunciated this principle many, many times, except he wasn't making applications of it, he was just stating the principle. The only time that I remember him saying it more than once in our conversation telling me something, I mean we were sharing, he said, "The way we can provide service best is to help the people do what they can't do for themselves as well." That means that instead of burdening individuals to go to census records, which is a difficult task for an individual, we can go to the census records a lot cheaper and easier than for them to do it. That's service. Putting a seat under the bottom of an old lady at the end of the interview is not service it is courtesy, civility, but not service. You are expected to do that. Now Bob didn't say all of those things, but I apply it to putting the seat under, he never said that. Many people's idea of service is being polite to people. Nobody is arguing about that. Buddy you really ought to do that or get the hell out of here. But real service, thoughtful service, the organization of your effort, the direction it takes, the sharing of burdens between yourself and the public, is very much a determinate of service. And how you do that, how you organize for it, how you approach it, is very much at the heart of the kind of service that you give.

To give a small example, it's taken for granted in foreign countries, it is also taken for granted in the Motor Vehicles Administration, that you stand in line and often you get to the front of the line and find that you are in the wrong line and then you have to go to another line and sometimes they process you through three lines.

I understand that it's cheaper for us to process a form letter that is approximately right for most people, but very perplexing to a lot because for one they don't understand it and secondly in many cases they can't apply it. It's too generalized or not specific. Some cases you look for it and you don't find it. It's not for this particular case and there is no excuse for us, other than cost reduction, to write a form letter, because we can get a 100 thousand of them through the automatic machine and we can stuff it in the envelopes and send it.

No, the only use for machines is to provide better service. I made that speech, the one that I gave you, before a Public Administration group, where I was sandbagged, and I said in tones that where reproaching: "We plead guilty to what you call impersonalization, but we call personalization." I call it personalization, because by our process of keeping lifetime earnings records for individuals we are able to individualize a benefit. Now that's a value to the American people that they are willing to pay for. So we are treating people according to individual facts. If we had a stamp plan, or we paid them two hundred dollars a month or three hundred dollars a month or whatever, it would not be personalized. You can argue that it is too personalized, but don't argue that it is a useless thing. It is very important. It is a very important value and it is not impersonal--we are in fact going just the opposite way, we are adapting our system to each individual's circumstances almost, because we've narrowed the categories so that we pay an individual benefit. No two benefits are the same, and that is a value. That was a side pass. I get so many side passes.

Q: That's all right.

Futterman:

Oh you wanted more?

Duplicate SSNs

Futterman:

Automating the account number. We were having the usual trouble of issuing the account numbers in the office and it was necessary to make sure that they didn't have duplicates. So they would send in these requests to search and we would have to search manually in the flexoline files and then return it to the office and they would issue the number. My proposition was to make that automatic. We could not automate the whole process, but as I looked at it I thought we could automate much of it.

Q: So let me make sure that I understand. Under the old process we used to issue accounts in the local offices and in order to do that they would write back to Baltimore and have somebody screen the SS-5 records for duplicates and then send back a number?"

Futterman:

Yes. How would they know in the local offices? If you had to issue a number there was some procedure that I have forgotten. If somebody needed a number to get a job or whatever there was some kind of a temporary procedure, but not issuing a new number. And a lot of employers would not hire a person unless they had an account number.

Q: So how did you automate that? What did you do? I can tell you how it worked when I got mine in a local office I guess this would have been the early 1960's when I got my card. They had pre-printed stock with account numbers on them and I went into the local office and made an application and I think that they typed it up in the contact station actually, and I think that they typed my name on that pre-printed stock and issued that card to me right then.

Futterman:

Obviously, if a kid sixteen years old came into the office and he never worked before.

Q: I was fourteen I think.

Futterman:

You came into the office. The chances of you having worked before and having a Social Security account number are very small. But if somebody thirty years old comes in, someone that obviously worked, and tells you that he doesn't have an account number, you know you are opening the system to fraud with more account numbers. It's difficult, but it is not impossible, and sometime I will talk to you if you want about something else I think might have done. Something I did for OPEP, Program Evaluation and Planning, while I was in Fiscal. About the low cost of claims, allegedly, under an unemployment insurance program. You know that they don't keep records. They have something like the last year's records. I am digressing now. I'm talking about the importance of a single number, making sure that to the greatest extent that you don't issue duplicate numbers, don't make it easy for somebody. In unemployment one could, with no stretch of the imagination, imagine ways of defrauding the Unemployment Insurance Program as has been done innumerable times. People will go establish an account number and work in several different states under several different names and get account numbers and qualify because maybe they had in the course of a year or whatever enough qualifying income several times. And that is a lot of people. Not a lot, numerically, but it is a lot more people than Unemployment Insurance was happy with.

It was real easy on Unemployment Insurance. It is a very short period in which you can establish an identity. But in Social Security, it is not so easy. First off, no youngster is going to come in. And second if he is going to apply for retirement benefits he has to be 62 or 65 or whatever. And you ask yourself how does this guy live? Is he the kind of guy that is living off his inheritance. Obviously, you don't need any more evidence than to look at the guy to know that he wouldn't do that. He didn't come in from a foreign country, he lived here all of his life. So what work did he do? If he had a thin earnings record, if you are not stupid as a claims interviewer in the field, you begin to question the bona fides of the guy. So in effect the lifetime earnings record ties you to an identity.

Now this is another argument which I made, and was original, because Alvin David, and I can still remember it, came out of the blue just a little while ago, that he was so grateful to me to develop this argument for our system, because we were constantly under attack by things like the Townsend System. I told you about a particular paper, but it has manifested itself in more than that one instance. These arguments showed that our system was safer in terms of the Trust Fund. This administrative cost more than paid for itself, because to do away with it you're buying benefit costs many, many times more than the cost of administration. Administration is down to one cent, two cents on the dollar. Benefit costs, the fraud part of benefit cost on other programs, are a lot, lot bigger than it. So if we let people go to the bag, called the Trust Fund, and take their own money out of it, "saving" all of that administration, there would be no savings. It would cost the Trust Funds more than giving a detailed accounting.