President Obama’s proposal for solving the Social Security crisis would only make the situation worse, according to the Senate Republican Policy Committee. The committee released a paper Thursday blaming the Obama administration for damaging the Social Security system, particularly the Disability Insurance Trust Fund.
When the Disability Insurance Trust Fund is depleted in late 2016, payments to its 11 million beneficiaries will automatically be cut by 20 percent.
“The finances of trust fund have worsened drastically in comparison with the agency’s 2007 projection of what would happen,” the paper said. “The number of program enrollees is up 21 percent during the Obama administration. …The condition of the trust fund has significantly worsened during the Obama administration, and the depletion of the trust fund is coming 10 years sooner than experts predicted in 2007.”
Over the past 20 years, changing demographic factors are responsible for a third of the growth in disability insurance payments. The paper cites the poor economic recovery, relaxed eligibility rules, and mismanagement by the Social Security Administration as reasons for the rest of the growth. “This includes skewed agency policies that incentivized hundreds of administrative law judges to essentially rubber stamp disability claims,” the paper said. The increase in Disability Insurance enrollees comes despite improving health and working conditions.
The number of Disability Insurance recipients with subjective health conditions, such as back pain or depression, has grown significantly, according to Mark Duggan, a former advisor to Obama on healthcare policy. “The employment potential of SSDI applicants with these more subjective conditions remains substantial, and it is often difficult to verify the severity of these conditions (in contrast to cancer or heart conditions),” Duggan wrote in 2013. “With the liberalization of the medical eligibility criteria, it has become increasingly possible for people who are capable of working to qualify instead for SSDI benefits.”
Other loopholes in the disability insurance system have nothing to do with health. Vocational guidelines from the 1970s mean workers might be eligible for disability insurance if they cannot speak English, even if they can do work that does not require English-speaking skills, according to the paper.
Even liberals have admitted that the Disability Insurance system is failing. The Senate Republican Policy Committee paper cites a paper by the Center for American Progress and the Brookings Institution that says as much. “SSDI is ineffective in assisting workers with disabilities to reach their employment potential or maintain economic self-sufficiency,” the 2010 paper said. “Instead, the program provides strong incentives to applicants and beneficiaries to remain permanently out of the labor force.” Yet Obama’s proposal would do nothing to improve the long-term effectiveness of Disability Insurance, only delay its looming insolvency.
Only 63 percent of Americans are in the labor force today, down from 66 percent when Obama took office. Growth in Disability Insurance recipients has been a significant factor in that decline, according to research from the Federal Reserve Bank of Atlanta.
Obama’s fiscal year 2016 budget proposes a simple reallocation between the Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund. Such reallocations have occurred in the past, but they were supposed to be followed by long-term solutions to improve the finances of the two trust funds. “In 1994, the SSDI portion of the payroll tax was increased by 50 percent,” the paper said. “Reforms were promised with the reallocation. The reforms never happened, and SSDI’s finances have deteriorated to the point where another reallocation is being proposed.”
