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Obama Budget Would Preserve Disability Benefits While Promoting Thoughtful Reforms

The President’s 2016 budget shows that he’s serious about running Social Security’s disability programs — Disability Insurance (DI) and Supplemental Security Income (SSI) — tightly without slashing vital benefits.  Lawmakers should follow that approach.

The budget would replenish DI’s trust fund by reallocating payroll tax revenues from the much larger old-age and survivors insurance (OASI) fund.  That would avert a 20-percent cut in disability benefits in 2016 and give the President and Congress time to focus on restoring solvency for Social Security as a whole.  The budget also proposes testing new approaches to help people with disabilities remain in the workforce; policies that prove successful could be part of a future solvency plan.  (The Administration provides further details here, here, and here.)

The budget would:

  • Extend the life of the DI trust fund. Rebalancing payroll taxes between the DI and OASI funds is a traditional — and historically noncontroversial — way to even out the programs’ finances.  Due to the last two such measures, DI now needs more funds soon while the OASI fund doesn’t.  Reallocation doesn’t affect anyone’s taxes and, done right, it would make both the OASI and DI trust funds solvent through 2033.
  • Test strategies to help people with disabilities remain in — or return to — the workforce. The budget would authorize the Social Security Administration (SSA) and partner agencies to test innovative techniques, such as offering services soon after the onset of a disability, to help people with severe impairments remain in the workforce.  If carefully designed, these demonstrations can yield valuable information about the success and cost-effectiveness of such approaches.  That beats rushing headlong into proposals that have no proven efficacy and could cause unintended side effects.  While most DI and SSI beneficiaries can’t work, rehabilitation strategies — in combination with SSA’s work incentives — may modestly reduce the number of people coming on to the rolls and boost the number returning to work.
  • Provide more reliable funding for program integrity. Continuing disability reviews and financial redeterminations of DI and SSI recipients more than pay for themselves over time by weeding out people who should no longer receive benefits.  But erratic funding has produced large backlogs in these reviews.  The President’s budget (like previous Obama budgets) would insulate these essential program-integrity activities from the annual appropriations process and instead ensure steady, multiyear resources.
  • Restrict a person’s concurrent receipt of unemployment and disability benefits. The budget would reduce DI benefits dollar-for-dollar by the amount that a person receives in unemployment insurance benefits.  This approach is fairer than some other harsh proposals to address these overlaps.

Although not specifically targeted at workers with disabilities, the budget’s proposals to make permanent key provisions of the Earned Income Tax Credit (EITC) and Child Tax Credit that are set to expire after 2017, and to expand the EITC modestly for childless and older workers, would also help people with severe impairments who are struggling to work.