Social Security and Retirement

Protecting Social Security Disability Benefits for America's Workers

For opponents of Social Security, every day is a good day to cut Americans’ earned retirement and disability benefits, and no justification is too small, irrelevant or outlandish. In the latest attack on Social Security, congressional Republicans have taken aim at the Disability Insurance Program—using an artificial funding crisis to hold disability benefits hostage to their demands for “reform,” a term Americans understand is code for cutting benefits. The very first day of this Congress, House Republicans deployed a procedural maneuver prohibiting Congress from making routine financial adjustments between Social Security’s two trust funds, the Old Age and Survivors Insurance Fund and the Disability Insurance Fund, without simultaneously requiring other changes to the Social Security program.

Social Security’s overall surplus of $2.8 trillion is enough to pay 100 percent of all earned benefits, both disability and retirement, through 2034. A shortfall in the disability fund, however, is projected near the end of 2016. Without Congressional action, monthly benefit payments to disabled workers and their dependent children and spouses will be slashed by 19 percent. That is because the current formula for allocating Social Security contributions between the two funds is out of balance—a problem that can, and should, be easily addressed.

As with Social Security’s retirement benefit program, workers and their employers share the cost of the disability benefit program through payroll contributions. Of the 6.2 percent of the first $118,500 of 2015 wages paid by employers and employees to fund Social Security, Congress currently directs 5.3 percentage points to the retirement benefit fund and 0.9 percentage points to the disability trust fund, based on estimates of each program’s needs. This allocation between the two funds has never been set in stone.

We support, as the president proposed, a simple reallocation of the payroll contribution percentage that goes into each fund—with no strings attached to harm current or future beneficiaries. Reallocation is a routine practice, used many times with bipartisan support. Congress has made the adjustment in both directions, helping Social Security’s retirement fund about as often as it has benefited the disability fund. Reallocation would put the entire Social Security program on sound footing until 2034 with no cuts to disabled workers, retirees or survivors.

Alternatively, we support combining the two trust funds into one. When Congress added the disability benefit to Social Security in 1956, it established a separate disability fund for easier monitoring of the new benefit, given the country’s limited experience with disability insurance. Today, with nearly 60 years of experience behind us, the rationale for two separate trust funds no longer stands; in fact, there is every reason to combine them. Doing so would put an end to artificial crisis points, such as the one we are now facing, eliminating the opportunity for those hostile to Social Security to try to do harm to the program.

First, Social Security’s different benefits function as an integrated family protection program. For example, workers who begin receiving disability will have their benefits paid from the retirement fund when they reach the requisite age. Because the benefit amount is identical, this is a seamless transition of which most beneficiaries are unaware.

Second, all Social Security benefits, whether paid as disability or retirement benefits, are generated from a single source and formula. We all make one contribution to Social Security through our paychecks; we don’t make one for disability and one for old age. Joining the two funds would not add to the deficit or the debt.

Social Security disability benefits are too important to working families to be the target of political mischief. The disability insurance program protects nearly all Americans—90 percent of workers ages 21 to 64—in the event of a severe disability or illness that prevents substantial work. While workplace safety and health conditions have improved since enactment of the Occupational Safety and Health Act, many workers still remain at serious risk of workplace injury or illness (and even death); employer-reported work-related illnesses and injuries exceeded 3.8 million in 2012. Injury and illness are frequent occurrences off the job, as well.

Contrary to the claims of Social Security’s opponents, it is not easy to qualify for disability benefits. In addition to having a substantial and recent work history, a worker must have a severe medical condition, expected to last for at least a year or result in death, which significantly limits the ability to do basic work activities and any job in the national economy, considering age, education, past work experience and skills. After all stages of appeal, fewer than four in 10 are approved.

Benefits are far from generous, averaging just $1,165 a month for disabled workers. Still, this disability benefit is the only source of income for eight out of 10 beneficiaries, and nearly one in five, or about 1.6 million disabled worker-beneficiaries, live in poverty. In the absence of the disability program, that figure would more than double.

The looming threat of disability benefit cuts should not be a bargaining chip to force changes to the program that could not stand on their own merit. Americans should not have to worry about their earned benefits while Congress engages in partisan gamesmanship about such changes.

Congress also should provide adequate administrative funding to address the backlog in disability claims and ensure program integrity. The Social Security Administration (SSA) is a highly cost-effective agency with annual administrative costs at less than 1 percent of total expenditures. But inadequate administrative funding has resulted in agency layoffs, diminishing the ability to serve the public, precluding it from completing tens of thousands of disability reviews and hampering program integrity activity to ensure that only eligible persons receive benefits.

We call on Congress to enact either of these two commonsense solutions to ensure that Social Security will be able to pay from its own funds 100 percent of promised and paid-for benefits, both disability and retirement, through 2034 without benefit cuts or damage to SSA’s program integrity efforts. Rebalancing or merging Social Security’s two trust funds is a necessary prequel to strengthening and expanding Social Security for the future.