Social Security Reform Must Extend Beyond Disability Insurance

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Unless Congress takes action, Social Security’s trust fund for Disability Insurance (DI) will run out next year and beneficiaries will suffer an across-the-board cut of 19 percent.

Some suggest that Congress could simply reallocate some of Social Security’s payroll tax revenue from the Old Age and Survivors Insurance program (OASI). But that program has growing problems of its own, with cash deficits that are projected to grow larger and larger as the population ages.

Last week House Republicans approved a rule that prohibits a reallocation between OASI and DI unless steps are taken to strengthen both programs. As Concord Coalition Executive Director Robert L. Bixby discusses in a new blog post, this rule points policymakers in the right direction.

While some critics say DI suffers from fraud and abuse, many experts blame its impending insolvency on demographic pressures, health issues and a tight labor market. Almost three in four DI beneficiaries are over 50.

Draconian cuts in disability benefits would be unacceptable, as many members of both parties agree. Some reallocation of payroll taxes may be necessary. But as the new House rule suggests, this should be done within the context of a broader plan to address Social Security’s overall finances — and in a way that protects other important federal budget priorities as well.

External links:
2014 Social Security Trustees Report
Possible Cuts to Disability Payments (Washington Post)

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