Will Congressional gridlock threaten disability benefits?
According to the Social Security Administration, $141 billion in disability benefits were paid to 11 million beneficiaries and their families in 2014. While figures like this are certainly eye opening as far as money is concerned, they are also eye opening in that they provide insight into just how many Americans are currently suffering from some sort of physical or mental disability that prevents them from working.
The reality, however, is that with this large number of disability recipients comes questions about the long-term solvency of the disability insurance trust fund, which is currently on pace to be drained of sufficient funds by the end of 2016 unless some sort of remedial measures are taken by Congress.
What this means from a more practical perspective is that any failure by Congress to address the funding problem by the end of 2014 will result in a 19 percent cut in disability benefits for all parties.
Naturally, disability recipients are wondering what Congress is doing to address this very real and very pressing issue.
Unfortunately, the answer is currently very little, as the GOP-controlled Congress is currently at loggerheads with the White House over how to fix the problem.
In his most recent budget proposal, President Obama called for the problem to be fixed by essentially reallocating some of the funds bookmarked for the SSA's retirement benefits fund to the disability insurance trust fund.
Specifically, he called for the amount of the current payroll tax going to disability insurance trust fund to be increased by 0.9 percent, a move that would redirect $330 billion away from the retirement benefits fund yet ensure the solvency of each fund until 2033.
This strategy of transferring money between the SSA's two funds is nothing new, as various administrations from both parties have successfully pursued this move 11 times over the years. Indeed, the last time this took place was during the Clinton Administration back in 1994.
For their part, the GOP-controlled Congress has indicated that it will not accept what it views as only a temporary solution absent some type of meaningful reform to improve the long-term solvency of the SSA funds.
Indeed, House Republicans passed a rule expressly prohibiting the transfer of money between the SSA funds until some sort of definitive action is taken, although what form this action would take remains uncertain at this point.
Although there is still a significant amount of time left for this issue to be addressed, it is nevertheless unnerving for the aforementioned millions of disabled Americans who rely on their benefits. Here's hoping we see this situation resolved soon than later.
Source: The Wall Street Journal, "Parties clash over Social Security disability trust fund," Kristina Peterson, Feb. 12, 2014