Disability Benefit Program Is Going Broke
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By Josh Boak,
The Fiscal Times
July 27, 2012

For a country still gasping to recover from the Great Recession, disability payments from Social Security have evolved into a lifeline and an economic trap for millions of unemployed Americans threatening the program with insolvency in just four short years.

Created decades ago to help those unable to work because of severe health problems, the $128 billion program stops many from sliding into total poverty and inflicting further damage on the economy. More Americans qualified for disability than found jobs over the past three months, and since 2000, the number of beneficiaries rose by 73 percent, even though the workforce rose by less than 10 percent. But of the 8.7 million beneficiaries, federal officials claim the vast majority – with some estimates as high as 99 percent – will never rejoin the workforce and remain dependent on the federal government.

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Both the Obama administration and congressional Republicans say that they are weighing reforms to salvage the finances of the disability system before the politics of the issue harden along partisan lines.

"It requires you to think very hard about the social contract for this program," said Janice Eberly, the assistant Treasury secretary for economic policy. "Working is preferred to any programmatic alternatives, both from the individual's view and the taxpayers' view."

Hints about what the reforms could look like appeared last week in a pair of reports by the Government Accountability Office and the Congressional Budget Office. The GAO indicated that the government could narrow the health eligibility standards for receiving disability. Guidelines for those suffering from mental disorders and muscle pain – about 67 percent of all beneficiaries – were last updated in 1985, shortly after Congress liberalized the screening process. Stricter criteria would limit enrollment and reduce the costs.

Separately, the CBO issued an analysis detailing potential savings of $22 billion in 2022 from reducing benefits across the board by 15 percent, eliminating disability payments for anyone older than 62 eligible for the Social Security retiree program, and raising additional tax revenue specifically for SSDI.

Another quick fix discussed by federal officials involves raising the share of Social Security tax revenues directed toward the disability program, although that would come at the expense of the portion of the trust fund for retirees already projected to reach insolvency by 2035.

"The growing number of people on disability and other federal benefits, combined with weak economic growth, raises serious concerns about the sustainability of the American economy," said Sen. Jeff Sessions, R-Ala., in response to the CBO report. "This program must be improved to avoid sinking our country deeper into debt, to ensure the program remains viable for those with disabilities, and to protect Social Security itself."