The House continues to prepare the battlefield for a fight over Social Security. The disability trust fund, which is projected to be depleted in late 2016, needs more money in order to make ends meets. This is not the first time this has happened. Congress has addressed this problem before by robbing Peter to pay Paul. Through a process called reallocation, Congress raids the Social Security pension trust fund and adds more money to the disability trust fund. On the first day of session in 2015, the Republicans instituted a rule change that restricts the ability of the House to shift more than 0.01% of the pension fund into the disability trust fund. At first glance, this rule change appears to lock Congress into a major fight over entitlement spending. However, it turns out that 0.01% equates to $38.6 billion. The projected 2016 deficit is only $29 billion. In other words, the Republican rule change still allows for enough funds to be switched from the pension fund to the disability fund in order to meet the 2016 shortfall.
Politically, this is a smart move for the Republicans. This forces the Democrats to address profligate spending in SSDI and encourages meaningful debate over several key issues in disability insurance. For example, private long term disability insurance routinely kicks people off of the payrolls when their health improves to the point that they can return to some jobs. That rarely happens with SSDI because Continuing Disability Reviews are underutilized by the agency. Also, there is evidence of fraud within the disability applications and measures need to be put into place to preclude future fraudulent activities.
Further, other major issues with SSDI need addressing. For example, the Atlanta disability office forces applicants to wait for over 500 days in order to get a hearing in front of a judge regarding their disability application. This unconscionable delay forces individuals into homelessness while waiting for a hearing. This represents a larger problem within the SSA that the agency is fundamentally dysfunctional and needs reform from within in order to faithfully execute its mission.
More study needs to go into how to determine who is truly disabled. Debate exists as to whether people apply for disability due to unemployment rather than legitimate health problems. This table from the Social Security Chief Actuary indicates that disability applications has gone down since a historic high number of applications in 2010. Is this evidence that fewer people go on disability when there are more jobs? Or is it evidence that the baby boomer population’s peak number of disability applications have run through the system? If it’s the former, then we need reform to keep moochers off the government dole. If it’s the latter, then we need to prepare for another huge SSA financial catastrophe when these disabled workers go from SSDI onto traditional SSA pension.
The SSA is charged with managing over a trillion dollars in entitlement funds. This is a near impossible task and requires smart management to ensure proper distribution of funds to the correct individuals. Democrats detest entitlement reform because their base fears losing their benefits. Republicans hate tackling entitlement because it’s easy to paint the party as heartless for stripping necessary benefits away from disabled, desperate citizens. To their credit, the Republicans have set the stage for a showdown on Social Security that will force both parties’ hands on entitlement reform without forcing the parties to come to a bad solution this year. The one year escape hatch built into the rules change gives both parties an eject lever in the event that no workable compromise occurs.