Some of you may have seen an article in your local paper late last week announcing that the Social Security disability program is in financial peril. Many papers picked up an article by the Associated Press which suggests that the disability program is being overrun by people who have been rendered unemployed by the recent economic downturn. The article describes a “stampede for benefits” and cites a Congressional Budget Office report that shows that the funds set aside for the disability program are set to expire in 2017.
This article may obviously alarm disability recipients, claimants and their loved ones. I don’t think there is reason to panic however. The article makes passing reference to the fact that Congress can act to make sure the program is properly funded. This is explained in greater detail by the Congressional Budget Office report itself:
CBO projects that the DI trust fund will be exhausted in 2017 and that the OASI trust fund will be exhausted in 2040. Once a trust fund’s balance has fallen to zero and current revenues are insufficient to cover the benefits that are specified in law, the corresponding program will be unable to pay full benefits without changes in law. The DI trust fund came close to exhaustion in 1994, but that outcome was prevented by legislation that redirected revenues from the OASI trust fund to the DI trust fund. In part because of that experience, it is a common analytical convention to consider the DI and OASI trust funds as combined. CBO projects that, if legislation to shift resources from the OASI trust fund to the DI trust fund was enacted, the combined OASDI trust funds would be exhausted in 2038.
In plain English, this means that the disability trust fund can be replenished by the retirement trust fund just as it has been before. The only fear is that Congress will not act rationally and take the necessary steps to shore up the disability programs. This projected shortfall in the disability trust fund has been known for quite a while. I recall being at a seminar in 2010 at which a congressional staffer spoke about this problem. She made it sound as if a forgone conclusion that Congress would direct that revenues be diverted from the retirement trust fund to assist the disability program.
The AP article is troubling in one other way. It focuses too greatly on the recent economic problems as the reason for the increase in disability benefit claims and recipients. As explained by Attorney Charles Hall on the Social Security News Blog (citing a piece written by Kathy Ruffing at the Center on Budget and Policy Priorities): “The reasons for the increase in the number of people drawing Social Security disability benefits are primarily the aging of the baby boom population, the increase in the number of women in the work force and the increase in the full retirement age.” The AP article makes passing reference to the aging-baby boomers, but ignores these other causes and chooses instead to focus the blame on the ailing economy.
