Cash crunch threatens federal disability benefits
WASHINGTON—Nearly 11 million Americans who receive federal disability benefits risk seeing their checks reduced unless Congress acts by next year to replenish the system’s trust fund, Social Security trustees reported Wednesday.
The pending cash crunch in the disability fund is one of those slow-motion — and largely self-created — crises that Congress usually fails to resolve until a deadline hits. The latest report puts that deadline, the date when the disability trust fund will reach insolvency, in fall 2016.
After that point, tax revenue will cover about 80% of scheduled disability benefits, unless Congress acts to fix the system.
The trustees also forecast that the main Social Security retirement fund will remain solvent until 2034, one year longer than previously reported. The Medicare trust fund will remain solvent until 2030, the trustees projected, the same date reported last year.
“Both Social Security and Medicare are secure today and will remain secure in the years to come,” Treasury Secretary Jacob J. Lew said in announcing the forecasts.
One of the system’s public trustees, Robert D. Reischauer, the former director of the Congressional Budget Office, offered a less rosy assessment.
Though Social Security and Medicare are stable for now, “these vitally important programs are on a fiscally unsustainable path if one looks out several decades,” he said, largely because of the huge number of baby boomers entering retirement.
The sooner Congress acts to fix the two programs’ long-term financial problems, the more options lawmakers will have, he added.
By contrast, Congress’ failure to deal with the problems of the disability insurance system “could offer a case study in the potential consequences” of kicking issues down the road.
Over the next year, the millions of people who depend on benefit checks will be put through a lot of unnecessary anxiety as the deadline approaches, he said, adding that “beneficiaries deserve better.”
Disability benefits are financed by a portion of the Social Security taxes that workers and employers pay.