Running head: A PROBLEM EXISTS

Should the U.S. require all S.S. recipients to have their checks delivered to a bank account rather than by mail?
Ada L. Smith
Professor McCurdy ENG215 November 11, 2013

The United States government should all require Social Security recipients to receive their checks electronically through a bank account rather than through mail delivery. Approximately 93 percent of S.S. recipients receive their Social Security benefit payments electronically (ssa.gov, 2013). One reason Social Security checks should be delivered electronically to a bank account rather than using mail is it will be beneficial for the government and citizens of the United States financially.
According to U.S. Treasurer Rosie Rios, the cost to print a paper check is approximately 92 cents more than by direct deposit (U.S. Treasury, 2013). Eliminating the printing and postage costs of paper checks is estimated to save the federal government and the Social Security trust fund $125 million per year (U.S. Treasury, 2013).
Retiring the paper check form of receiving Social Security funds will be the right thing to do for American taxpayers and benefit recipient. This would also be beneficial in increasing security of the United States citizens through the reduction of identity theft and fraud. While starting the process of direct deposit may be a bit of a hassle, it will decrease government cost and spending, reduce risk, increase efficiency, improve transparency and streamline administration work. It will also increase convenience by means of providing easier and quicker cash access.
History
The Social Security Act was signed into law by President Roosevelt on August 14, 1935 (History.com). In addition to several provisions for general welfare, the new Act created a social insurance program designed to pay retired workers age 65 or older a continuing income after retirement. The U.S. Treasury has been responsible for printing Social Security paper checks since the early 1940s (ssa.gov). At the beginning stage of this process the Treasury Department was able to print 7,000 checks per hour, according to the Social Security website (ssa.gov, 2012). The first Social Security check was printed on January 1940 to a recipient named Ida Mae Fuller in the amount of $22.55 (ssa.gov, 2013). Computer systems and printers are now used by the Treasury Department to fulfill the requirements of the Social Security Administration for benefit checks. This form of payment is more familiar to Social Security recipients.
Cost
The federal government spends an estimated $4.6 million per month processing paper checks. Over the next 10 years, the overall cost to taxpayers would add up to $1 billion (Hicken, 2013). According to the Treasury, 5 million paper checks are delivered through mail each month. About 93 percent of recipients currently receive their Social Security payments electronically (Hicken, 2013). About nine million still receive paper checks in a yellow envelope by mail. Most use direct deposit or some other electronic form. As the government continues to retire the paper check, more will opt for direct deposit over paper.
More resources are required to send payment to the beneficiary from the government. Those resources include the cost of paper, ink, postage and envelopes, payroll for government workers to print and mail the checks and the machinery to print checks. It costs the Treasury department $1.25 to issue a payment by paper check than by direct deposit or electronic form (SSA.gov, 2013). Furthermore, the federal government spends excess money to a large number of civil employers who deals with lost, forged or stolen checks. Additionally, cost rises when claims have to be processed and followed up from people who did not receive the expected government check.

Identity Theft and Fraud
The second problem is identity theft and fraud. Even though only a small percentage of checks are stolen, forged or lost, a lengthy follow up each month would be required to that low 5 percent rate applied to millions of payments made for thousands of transactions each month. When those checks have not arrived on time, the Treasury department receives about two thousand calls per work day, about half a million calls a year, from beneficiaries who have had a problem with a Social Security or government check (U.S. Treasury, 2013). Just last year, more than 670,000 Social Security and SSI paper checks were reported lost or stolen. Estimated $93 million Treasury-issued checks were fraudulently signed and had to be reissued (U.S. Treasury, 2013). Each year, beneficiaries are waiting for lost, stolen or fraudulently endorsed checks to be reissued for new ones. Some 70,000 Social Security checks for $64 million in benefit payments had to be reissued. Things that happen to paper checks cannot happen with direct deposit. When looking at the numbers and all the money lost due to reprocessing those paper checks, direct deposit is the safest option available.
Environmental Impact
And lastly, the third problem with paper checks is the environmental impact. Paper checks have a huge environmental impact that goes further than the natural resource used up in producing the paper and printing the checks. Just about all paper checks are circulated through the U.S. Postal Service or other carriers that depend on airplanes and trucks for transportation. According to the Electronic Payments Association, producing and delivering paper checks uses over 674 million gallons of fuel each year, and burning that fuel produces more than 3.6 million tons of greenhouse gases each year (FirstData, 2010) Distributing physical paper checks also produces a large amount of paper waste including the mailing envelope, related receipts and deposit slips, and accompanying inserts to go along with the check. The printing of paper checks increases deforestation using approximately 542 million pounds of wood every year (FirstData, 2010). Garbage bags, garbage trucks and landfills also suffer from all of this paper waste. Therefore, the federal government should require S.S. recipients to move toward having benefits electronically received through a bank account via direct deposit or other electronic form rather through the mail. Phasing out paper checks will not only help the government and American taxpayers save money, but will lessen the environmental impact that is created when the trucks and airplane pollute the air with all of those greenhouse gases emitted in the air. S.S. recipients will feel more secure with monies delivered electronically. Direct deposit is a win-win situation all the way around: government saves money, safe and secure for S.S. recipients and the environmental impact of producing paper checks will be lessened. Direct deposit is the new way of thinking in the 21st century.

References

Hillis, 2013 social security says today is the last day to get paper check benefithttp://www.swoknews.com/news-top/local/item/5276

Hicken, Melanie, 2013 No more paper Social Security checks come March http://money.cnn.com/2013/01/09/retirement/social-security-checks/ FirstData, 2010, http://www.firstdata.com/downloads/thought-leadership?fd prepaid_government_wp_031210.pdf Using Payment Cards to Achieve Lower Cost and More Secure Government Funds Disbursement ssa.gov, 2013 The First Social Security Beneficiary 2013 http://www.ssa.gov/history/imf.html ssa.gov, 2013 Pre Social Security Period Traditional Sources of Economic Security 2013 http://www.ssa.gov/history/briefhistory3.html
U.S. Treasury, 2013 U.S. Treasury to "Retire" Paper Check for New Recipients of Social Security and Other Federal Benefits, Saving Taxpayers $1 Billion http://www.fms.treas.gov/news/press/treasury_to_retire_paper_check.html