Congress Can't Dodge Social Security Disability Insurance Trust Fund's Approaching Insolvency

Roll Call, February 20, 2015 | Go to article overview

Congress Can't Dodge Social Security Disability Insurance Trust Fund's Approaching Insolvency


As if stirring, like Rip Van Winkle, from a 20-year snooze, Congress is finally awakened to the teetering finances of the Social Security's disability program. Better late than never, but policymakers have known for years that this day would arrive - and it has.

While some say the alarms being raised about the projected depletion of the Social Security Disability Insurance Trust Fund by late 2016 is a manufactured crisis easily fixed by accounting maneuvers, it is actually a stark reminder of the need to address the structural imbalance in the Social Security system. We can't afford for Congress to ignore these challenges for another 20 years

To understand the impending insolvency of the disability program, it is important to recognize that Social Security is technically two different programs - one for old age (the Old-Age and Survivors Insurance Trust Fund, or OASI) and one for disability - each with its own trust fund. Both these programs face huge financial shortfalls, but because the old-age fund is bigger and projected to run out of funds further in the future, the idea has been floated to extend the life of the disability program by "reallocating" funds currently dedicated to the old age program.

Some reallocation or transfer will likely be necessary given the short timeline. But as Congressional Budget Office Director Doug Elmendorf has noted, simply moving money around between programs does not advance the goal of actually improving either program, not does it improve the finances of the drastically out-of-balance Social Security system as a whole. Reallocation might buy some time for the disability fund, but it puts both programs on track to deplete their reserves and be unable to pay full benefits in the early 2030s - when today's 45-year-olds are just retiring and today's 62-year-olds are barely 80.

Many of the drivers of growth in the disability program will also apply to the old-age program - just a few years later. The aging of the baby boom generation into the ages when disability is most likely - 45 to 65 - is a major cause of the recent strain placed on the SSDI program and this same demographic wave is headed to the old age program next. It would be irresponsible for policymakers to ignore the warning buoy when it is clear the tidal wave is coming

Back in 1950, there were 17 workers for every senior collecting Social Security benefits. Today that ratio is 3 to 1. By the time the boomers are all retired in 2030, it will fall to 2 to 1. …

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