The Congressional Budget Office has put out a report on Policy Options for the Social Security Disability Insurance Program. The report deals mostly with the fact that the Disability Insurance Trust Fund is predicted to run out of money in about four years and how this fact might be dealt with.
The CBO has a great reputation but I don't think this is one of their better efforts. Somehow, they fail to mention the option put forward by Social Security's Chief Actuary of temporarily raising the Disability Insurance program’s share of the FICA payroll tax rate from 1.8 to 2.2 percent for 2012 through 2024 and to 2.0 percent for 2025 through 2029. You would think that they would be aware of this proposal but it isn't mentioned. They list the people they consulted in producing the report and the Office of the Chief Actuary is not mentioned, which I find amazing. That should have been where they started.
The CBO has a great reputation but I don't think this is one of their better efforts. Somehow, they fail to mention the option put forward by Social Security's Chief Actuary of temporarily raising the Disability Insurance program’s share of the FICA payroll tax rate from 1.8 to 2.2 percent for 2012 through 2024 and to 2.0 percent for 2025 through 2029. You would think that they would be aware of this proposal but it isn't mentioned. They list the people they consulted in producing the report and the Office of the Chief Actuary is not mentioned, which I find amazing. That should have been where they started.
Here are some of the ideas that did make it into the report:
- Permanently raise the FICA tax by 0.2% -- which couldn't possibly solve the Disability Trust Fund problem in the short term
- Reduce all disability benefits by 15%
- Reduce disability benefits dramatically for those age 53 and older, an idea which is discussed at length
- Eliminate Social Security disability benefits entirely for those 62 and older, an idea which is linked with reducing disability benefits for those 53 and older. CBO needs a reality check. Louie Gohmert may be the craziest member of Congress but I don't think even Gohmert would endorse this!
- Increase the waiting period from 5 months to 12-- another sign of a need for a reality check
- Introducing government representation -- indicating that CBO is unaware that this was tried in the past and did not reduce the number of people approved for Social Security disability benefits. By the way, as I have pointed out before, I can only link to an interim report on the government representative project. The experiment was such an embarrassing failure that Social Security quietly terminated it without ever writing up a final report! And yet, this idea keeps turning up in Very Serious Reports like this CBO study.
By the way, the CBO estimated the effects of increasing the age ranges in the grid regulations by two years. That would only reduce disability benefit payments by 0.5% by 2022. This doesn't sound like something even worth considering since it would generate a ton of controversy and wouldn't save much money.
The more you look at this, the more it looks like Steve Goss, Social Security's Chief Actuary, has a good handle on what is economically and politically feasible, regardless of who wins the 2012 and 2014 elections. CBO ought to be talking with him.
The more you look at this, the more it looks like Steve Goss, Social Security's Chief Actuary, has a good handle on what is economically and politically feasible, regardless of who wins the 2012 and 2014 elections. CBO ought to be talking with him.
13 comments:
"rus out of money"
Is that an error?
A more effective solution that wasn't mentioned: abolish the grid rules.
Even as a conservative who believes that significant changes need to be made, I find most of the listed ideas non-starters. Disability benefits are not particularly generous, so cutting them 15% is ridiculous. A twelve-month waiting period only makes sense in the context that the disability has to last twelve months, but is still not a good idea. Government representation might help keep some of the claimant's representatives in line, but would slow down the process and probably not make significant difference.
As far as the current FICA payments go, we can assume they are being used to pay for benefits.
But the excess payments, the trust fund, is merely numbers which represent what can be withdrawn from the Treasury without an appropriation. It does not make it any easier to pay benefits than it would for the government to pay Medicaid benefits.
From a paper entitled "Fiscal Year 2013 Analytical Perspectives Budget of the U.S. Government:"
Pages 459-460 - "From the perspective of the Government as a whole, the trust fund balances do not represent net additions to the Government's balance sheet. The trust fund balances are assets of the agencies responsible for administering the trust fund programs. The trust fund balances are also liabilities of the Treasury. These assets and liabilities cancel each other out in the government wide balance sheet. When trust fund holdings are redeemed to fund the payment of benefits, the Department of the Treasury finances the expenditure in the same way as any other Federal expenditure - by using current receipts if the unified budget is in surplus or by borrowing from the public if it is in deficit. Therefore, the existence of large trust fund balances, while representing a legal claim on the Treasury, does not, by itself, determine the Government's ability to pay benefits.
http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/spec.pdf.
Don Levit
The Government Rep project wasn't really an abject failure. It just got cancelled without any really serious review when a new Commissioner and new OHA director came in and decided to cut all ties to the previous "administration." A very odd move, since both people subsequently came to realize that it probably was a good idea--or at least one worth pursuing despite the moaning and groaning of the representative crowd.
Let's see if my math right: from what I recall the average SSDI person gets $1,2XX per month. Out of that they have to pay their Medicare fees, and probably some sort of prescription coverage fees that will run between one and two hundred dollars per month combined. Then of course they have their rent, utilities, food bills, and miscellaneous stuff such as some occasional clothing purchases etc. So what exactly are these people going to live off of if they get a cut in their benefits?
Basic problem is you must take money from someone in order to give it to someone else and get support from those paying to continue the program. We must find a balance: setting realistic rules to achieve that balance recognizing the needs and expectations of those paying and understanding that social security retirement, disability and survivor benefits are not and have never been set to meet all the financial needs of those receiving payments.
It's not hard to get the impression that some folks would like to see SSDI become an insurance policy in which you pay your premiums, but never collect, if needed. That's how it would be ran if it was a private business, wouldn't it? Or, if you do collect, then the payout is so low that you spend your remaining days hating life.
..."temporarily raising the Disability Insurance program’s share of the FICA payroll tax rate from 1.8 to 2.2 percent for 2012 through 2024 and to 2.0 percent for 2025 through 2029" is NOT a policy option that solves the DI funding problem. It's a temporary patch that robs from Peter (the retirement program) to pay Paul (the DI program). My guess is CBO is trying to lay out options to solve the funding problem and not just shift money around.
"On the one hand, an increase in the tax rate for disability insurance would encourage affected workers to work fewer hours or to work less hard because they would keep less of each extra dollar they earned" (p. 13)
I love how this is still thrown out every time they talk about changing the earnings cap. People who actually consider how to dodge earnings exceeding the cap are already rich enough to focus their earnings outside of wages subject to the FICA tax. For the standard American worker, not a single one is going to go "oh, I should not work overtime or take that promotion because I would pay more into Social Security."
Is the CBO really oblivious to the fact that disabled people -who are not all mental cases like some politicians preach- actually have higher medical expenses than the average non-disabled individual?
"On the one hand, an increase in the tax rate for disability insurance would encourage affected workers to work fewer hours or to work less hard because they would keep less of each extra dollar they earned" (p. 13)"
This falls under the category of "you cant' make this crap up!"
First, I'd like to see a reporter go stand on a city street or in front of a major employer changing shifts and have them ask the average work what the tax rate is? I'll bet most won't even know. Second, the news routinely reports that most people don't even get 40 hours per week. So now, we're to believe they won't accept more hours if given the chance to work them?
These are the ideas of the ruling class and this is how they think about the 99%.
Want to make a difference, fund CDR, return $9 to the system for every $1 spent working them. Ship them outside the system to have them processed, it is no more work than filing a reconsideration. Either will reduce the role.
Want something more radical? Offer healthcare to those who do not have it and stop and treat the conditions prior to them escalating to a point of disability.
What will they do? Raise the GRID and hire more $100000/yr ALJs (all lawyers) while the poor SRs and CRs in the field offices are fewer and fewer. If you didnt have the common sense to be born rich, its your fault for being poor!
Lower the number of SSDI claims by making it impossible for Long Term Disability companies to recup the money they have paid a Claimant from PDB of the Claimant and the Aux. Bet you would be able to hear the lobbyists cheer as they get more money to fight that idea!
Post a Comment