US Social Security Disability Program In Trouble

Author: DW
Published: 2011/08/27
Category Topic: U.S. Social Security - Academic Publications

Page Content: Synopsis - Introduction - Main

Synopsis: Congress says Social Security disability program supporting trust fund will be dry by 2017 leaving the system incapable of paying full benefits.

Introduction

Main Content

New congressional estimates put the Social Security disability benefits funds at "empty" by 2017, which will render the program unable to pay full benefits unless Congress acts, reports The Fiscal Times. This news comes after a previous report that the Social Security retirement program will exhaust its funds by 2036.

More than 54 million people collect retirement, disability, or survivor benefits from Social Security, but by 2021, that number will grow to 71 million people, according to the CBO in January.

Laid-off workers and increasing numbers of aging Baby Boomers drawing upon the system contribute to the projected shortfalls. Applications for the disability program's benefits are up nearly 50% since 10 years ago. "It's primarily economic desperation," Social Security Commissioner Michael Astrue told the Associated Press. "People on the margins who get bad news in terms of a layoff and have no other place to go and they take a shot at disability."

The disability program is also being hit by an aging population, disability rates rise as people get older, as well as a system that encourages people to apply for more generous disability benefits rather than waiting until they qualify for retirement.

Also, not to be overlooked, some people are double dipping the system by collecting unemployment insurance benefits, which extend for 99 weeks, as well as Social Security benefits and/or state and federal pensions.

The flood of benefits claims has created an increasing applicant backlog, many of whom must wait two years before their cases will see resolution, and this problem is making the cash-strapped program's financial situation even worse.

This year, Social Security will pay out $45 billion more in retirement, disability and survivors' benefits than it recoups in payroll taxes, a figure that almost triples when the new one-year payroll tax cut is included, CBO said. Projections for the total year will balloon to $727 billion or 4.8 percent of GDP.

Much of the focus in Washington has been on fixing Social Security's retirement system, with proposals ranging from raising the retirement age to means-testing benefits for wealthy retirees. But the disability system is in much worse shape. The trustees who oversee Social Security are urging Congress to "shore up the system," by reallocating money from the retirement program to the disability program, says The Fiscal Times. However, this would only provide a short term fix, especially as claims for disability benefits typically go up when disabled people are laid off and can't get re-employed.