Policy: Entitlements

Social Security disability fund to go broke in 2016

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Watchdog,Brookings Institute,Federal Budget,Entitlement Reform,Social Security,Corruption,Entitlements,Waste and Fraud,Follow the Money

Disability stories aren't going away. Last month, New Mexico Watchdog reported how the number of people in New Mexico receiving Social Security disability benefits has skyrocketed nearly 60 percent in the last nine years.

Now, we've learned that, by the Social Security Administration's own figures, the national Disability Insurance Trust Fund is on a path to go broke in less than three years.

On May 31, the Social Security Board of Trustees released its annual report on the long-term financial status of the Social Security Trust Funds and reported in matter-of-fact fashion that "The DI Trust Fund will become depleted in 2016."

Why? Because New Mexico is not alone among states seeing dramatic increases in people qualifying for disability benefits and, unless another source of funding appears or the federal government clamps down on accepting applications, the money will run out.

"That will require legislative action [by Congress] to address the that imbalance," Social Security spokeswoman Kia Anderson told New Mexico Watchdog.

"This thing is a quite a mess," said Tad DeHaven, a budget analyst for the Cato Institute, a libertarian think tank. "I'm not aware of any plans for substantive reform."

While a congressional subcommittee has been holding hearings on disability issues, no formal legislation has been introduced to deal with the fund's looming fiscal evaporation.

DeHaven suspects that Congress "will take the easy way out" and transfer money from the larger Social Security fund into the disability coffers. But as economists say, there's no free lunch, and simply shifting the dollars will amount to "tax increases on workers to pay for these benefits," DeHaven said.

Taxes from the nation's employers and employees make up the disability trust fund. "It comes from your FICA (Federal Insurance Contributions Act) taxes," DeHaven said, and whatever money remains after disbursements is invested in special interest-bearing Treasury bonds.

Some Social Security administrators have blamed the trust fund drop-off on the rising number of Baby Boomers who are aging. "The fund has had more Baby Boomers than covered workers," Anderson said.

But independent studies insist that aging boomers don't account for the most significant increases in spending.

Rather, it's been liberalization of what qualifies as a disability and the growing market for lawyers specializing in disability claims.

Figures from the Center for American Progress and the Brookings Institution Ñ two think tanks known to be left of center on the political dial Ñ show that, while the SSA's approvals for disability claims resulting from causes such as cancer, strokes and heart attacks have remained constant from 1981 to 2009, benefits have jumped dramatically for those with musculoskeletal and mental disorders during those same years.

As a result, the Bureau of Labor Statistics reports that, while in 1968 there were about 51 full-time workers for each worker collecting disability, by April 2013, there were only 13 Americans working full-time for each worker on disability.

Then there are the lawyers.

While a respectable number of claims are initially rejected, attorneys for claimants often win on appeal. Add to that a backlog of an estimated 1.3 million cases under review, and administrative judges feel overwhelmed.

"I no longer feel that I am serving the American public," Thomas W. Snook, a U.S. administrative law judge in Miami, told a congressional committee earlier this month. "I feel I am serving the claimants' representatives, especially a few large law firms; and I am powerless to do anything about it."

Cato's DeHaven noted that "there is no perfect solution here. But the burden of proof is not on the private sector and not on taxpayers but it's on the government and their responsibility to taxpayers É Maybe an answer is, get responsibility back to the state level."

A more stringent evaluation of disability claims has been talked about but is fraught with political perils. Democrat Jimmy Carter and Republican Ronald Reagan tried to stem the rising tide more than 30 years ago "but after pressure, notably from news stories of people not getting disability benefits, they ended up liberalizing the process," DeHaven said.

Rob Nikolewski is a reporter for New Mexico Watchdog, which is affiliated with the Franklin Center for Government and Public Integrity.

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