Buried in the new rules that the House Republican majority plans to adopt for the 114th Congress is a provision that could threaten Disability Insurance (DI) beneficiaries — a group of severely impaired and vulnerable Americans — with a sudden, one-fifth cut in their benefits by late 2016. The provision bars the House from replenishing the DI trust fund simply by shifting some payroll tax revenues from Social Security’s retirement trust fund.
Its drafters state that the rule “would protect the Old-Age and Survivors Insurance (OASI) Trust Fund from diversion of its funds to finance a broken Disability Insurance system.” But DI — a vital part of Social Security — isn’t broken. Its recent growth stems primarily from well-understood demographic and program factors, chiefly the aging of the baby boom into their 50s and 60s, the growth of women’s role in the labor market and hence their eligibility for DI, and the rise in Social Security’s full retirement age. And the Social Security trustees have long anticipated the need to replenish the fund in 2016.
Reallocating some taxes between the retirement and disability trust funds is a historically noncontroversial measure that Congress has taken 11 times, in both directions depending on which trust fund was running short. Another reallocation to replenish the DI trust fund wouldn’t threaten seniors, contrary to the rule’s implicit attempt to pit retirement and disability beneficiaries against each other.
More specifically, here’s what people need to know:
Neutral experts like the American Bar Association and the National Academy of Social Insurance, as well as retiree advocates like AARP and the National Association to Preserve Social Security and Medicare, agree that reallocating payroll taxes is necessary and reasonable.
By barring the House from approving a “clean” reallocation in 2016, the rule will strengthen the hand of lawmakers who seek to attach harsh conditions (such as sharp cuts in eligibility or benefit amounts) to such a measure. Instead, policymakers should enact a clean and sensible reallocation to avert an unacceptable cut in DI benefits while working on the main goal: ensuring solvency for all of Social Security.