Committee for a Responsible Federal Budget

Reps. McCrery and Pomeroy Stress Need for Disability Insurance Reforms

Sep 18, 2014 | Social Security

In a commentary published today in Roll Call, former Congressmen Jim McCrery (R-LA) and Earl Pomeroy (D-ND) argue Congress should take a closer look at Social Security Disability Insurance (SSDI).

As they explain, the looming 2016 deadline, when the program’s trust fund is projected to become insolvent and result in an immediate across-the-board cut in benefits, will force Congressional action. Given the importance of the SSDI program, they worry about the dangers of waiting until the last minute. They are calling for a constructive debate on SSDI well in advance of the insolvency date, saying "if policymakers wait until the last minute to start cobbling together solutions, they could make things far worse."

In an effort to help inform the debate on potential reforms to the SSDI system, they joined forces to launch the bipartisan McCrery-Pomeroy SSDI Solutions Initiative.

McCrery and Pomeroy, both of whom served as Chairs of the House Ways and Means Subcommittee on Social Security, explained:

The 20 percent cut in benefits disabled beneficiaries face would be mindless, unfair and traumatic — and must be avoided; But how we avoid it matters. In our view, any solution should include improvements to the SSDI program so that it better serves its beneficiaries, the workers who pay into the program and the economy as a whole.

SSDI is the first of the Social Security trust funds to face serious financial challenges as a result of demographic trends. As baby boomers have reached the more disability-prone age of 45-64, the system has seen an increase in applications and benefit payments. However, revenues have not increased along with expenses, leaving an annual funding gap and leading to trust fund depletion within two years.

The same demographic trends that are now straining the disability insurance trust fund will later affect the old-age program as baby boomers reach the retirement ages. Absent Congressional action, the program is also headed towards insolvency in 2034 or earlier if lawmakers shift money from the old-age program to ensure SSDI's solvency. While any changes to the SSDI program would ideally occur in the context of comprehensive Social Security reform that could consider a broader range of tradeoffs, McCrery and Pomeroy argue that changes in the SSDI program should be made whether the SSDI depletion is addressed in comprehensive reform or on its own.

With the insolvency date so close, avoiding depletion of the SSDI trust fund will most likely require some sort of additional revenue, such as a reallocation of payroll taxes from the old-age fund to the disability insurance fund, inter-fund borrowing, or an increase in the payroll tax rate or base. But McCrery and Pomeroy argue a clean reallocation of revenues without reform would be controversial, given the financial challenges facing the old-age program. More importantly, reallocation would squander this opportunity to make much needed improvements to make the program more effective, fairer, and more sustainable They urge their former colleagues that "At a minimum, any reallocation, interfund borrowing or revenue transfer to shore up the SSDI trust fund should be accompanied by improvements to that program."

They make the case that the SSDI program needs to be examined to not only address its financial shortfall, but also to improve the way it serves its beneficiaries, workers, and society as whole:

As we’ve studied this issue — both as Members of Congress and later as private citizens — we’ve identified areas where the SSDI program is falling short. The determination process is arduous and uneven, the eligibility criteria are outdated, coordination with related programs is minimal, there is little assistance or incentive for workers with disabilities who would like to remain in (or return to) the workforce, and cases of fraud not only cost the program money, but undermine its public support. On top of all this, the program faces a deficit between its projected costs and its revenue stream.

Yet the biggest deficit we’ve identified isn’t financial — it’s a deficit of knowledge and consensus on how to improve the program to best serve those who count on it.

For that reason, the SSDI Solutions Initiative will solicit ideas from academics, experienced practitioners, and advocates who care about the system and understand what areas could be improved for beneficiaries and those who contribute into the system. The goal is to provide policymakers with a menu of well-vetted, practical ideas to improve the system well ahead of the 2016 deadline.

SSDI is vital to millions of Americans with disabilities who depend on modest monthly payments to stay out of poverty. It is time to have a constructive debate on how SSDI can serve its beneficiaries and the 150 million Americans insured by the program better and more sustainably. 

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