Social Security Disability Trust Fund Running Dry

The Washington Post is reporting that the Social Security disability program’s trust fund is projected to run out of cash far sooner than the better-known Social Security retirement plan or Medicare. That will trigger a 21 percent cut in benefits to 11 million Americans — people with disabilities, plus their spouses and children — many of whom rely on the program to stay out of poverty.

The disability program is projected to exhaust its trust fund in 2016, according to a Social Security trustees report released last month. Once it runs through its reserve, incoming payroll-tax revenue will cover only 79 percent of benefits, according to the trustees. Because the plan is barred from running a deficit, aid would have to be cut to match revenue. The disability program pays benefits averaging $1,111 a month, with the money coming from the Social Security payroll tax.

Part of the reason for the burgeoning costs is that the 77 million baby boomers projected to swamp federal retirement plans will reach the disability program first. That’s because almost all boomers are at least 50 years old, the age at which someone is most likely to become disabled.

The growing costs are also a result of the economy’s troubles. When people can’t find work and run through their jobless benefits, many turn to disability benefits for assistance.

‘They’re desperate,” said Ken Nibali, a retired associate commissioner of the program. “Some who are marginal and struggling to have a low-paying job now literally have no options.” So, he said, “they figure, ‘I do have trouble working, and I’m going to apply and see if I’m eligible.’ ”

Sen. Tom Coburn, R-Okla., told the newspaper that he has tried to interest fellow lawmakers in the issue, without much luck. “Nobody wants to touch things where they can be criticized,” Coburn said, adding, “the fund is going bankrupt” and “then what are we going to do?”

Applications to the disability program have risen more than 30 percent since 2007 — the last recession started in December that year — and the number of Americans receiving disability benefits is up 23 percent.

Tags: ,


%d bloggers like this: