CBO Warns of Disability Insurance Difficulties

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A new report from the Congressional Budget Office (CBO) lists numerous options for extending the solvency of the Social Security Disability Insurance trust fund, including raising payroll taxes, reducing benefits and creating incentives for people to work.

Until last fall the Disability Insurance (DI) fund had been expected to run dry this year. But the Bipartisan Budget Act of 2015 delayed its exhaustion by reallocating some payroll tax revenue from the Old-Age and Survivors Insurance trust fund for 2016 through 2018.

Permanent reforms, however, are still needed. If the disability fund is exhausted — which the budget office now expects to happen in 2022 under current law — the Social Security Administration would have to reduce DI payments to what it collects in taxes for them each year.

In 2015, DI paid $143 billion in benefits to 9 million disabled beneficiaries and 2 million to their spouses and children. The CBO projects that total DI spending will increase by 1.9 percent per year over the next decade.

The budget office also warns that without further changes to the program, it will likely increase strains on other parts of the federal budget.

Social Security’s trustees are expected to release their annual report, which will include DI projections, later this week.

External links:
Social Security Disability Insurance: Participation and Spending (CBO)

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