Will Money Run Out For The Social Security Disability Trust Fund?

The consensus in the country is that unless Congress acts to rebalance the Disability Insurance Trust Fund, there will be a short fall starting in mid 2016.  The belief is that this shortfall will cause the government to pay about  80 percent of the monthly disability benefit to those who are entitled.  Why is there a shortfall?  Experts say that is is largely due to changes in the American population and the retirement age.

Shortfalls, for various reasons, have occurred in the past.  Each time a short fall has arisen, Congress has stepped in to “reallocate” the various trust funds so that disabled Americans who have been declared qualified to receive disability benefits continue to receive those benefits.  This reallocation is “normal” for the federal government.  Basically, what is reallocated is the Social Security payroll tax income dealing with old-age benefits or the Old-Age and Survivors Insurance (OASI) and the Disability Insurance Trust Fund.  Notability, the reallocations, of which there have been 11 since 1968, run in both directions.  That is sometimes the Disability Insurance Trust Fund has been reallocated to transfer money to the OASI and sometimes the OASI has been reallocated to transfer money to the Disability Insurance Trust Fund.  The thought about this reallocation is that if allowed, both the OASI and the Disability Insurance Trust Fund would be stable until about 2033.  This time period would give Congress enough time to work out a sensible plan to continue funding both trust funds.

This is year is different.  Congress passed, in early January, House Resolution 5. This resolution is a procedural rule which stops any reallocation unless there has been either benefit cuts or tax increases or both which improve the solvency of both funds.  The trouble is that this goal is nearly impossible to reach.  No politician will vote to cut benefits and the GOP controlled House will not vote to increase taxes.  As a consequence, there will be no reallocation.

The mood in some corners of Congress is anti-disability recipients.  Instead of the government paying those Americans who have worked hard all of their lives, paid into the “system” and earned the right to be considered for disability payments, they are now being painted with the “hate brush” of being lazy, work-shy and worse malingerers.  Congress’ war cry is that the disability system is broken.  They are attempting to pit the retirees against the disabled.  As usual for Congress, facts are in short supply.

The truth is that the vast majority of disability recipients do not want to be on disability, they would rather be working.  The truth is that vast majority of disability recipients have had to fight “tooth and toenail” for the disability benefits that they have been awarded.  The truth is that the system is not broken (only about 41 per cent of those who apply are eventually awarded benefits).  The truth is that reallocation would not harm or endanger either fund.

 

 

 

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