Apr 22, 2014

Things Keep Looking Better For The Disability Trust Fund

     The numbers are in to show how Social Security's Disability Insurance Trust Fund did during the first quarter of calendar year 2014. The Fund's balance declined from $90.445 billion to $84.057 billion during that time period, a reduction of $6.388 billion. That looks bad, like the Disability Trust Fund is rapidly heading towards zero. The Disability Trust Fund may become exhausted without some change but things are actually improving. The reduction in the first quarter of calendar year 2013 was $7.944 billion. Last year's intermediate projection of Social Security's Chief Actuary was that the rate of reduction in the Disability Trust Fund would be almost exactly the same in calendar year 2014 as in calendar year 2013. That meats that so far this year the Disability Trust Fund is doing significantly better than was expected. This is on top of the fact that the Disability Trust Fund also did better for the full calendar year of 2013 than was projected.
     Yes, the Disability Trust Fund is still heading towards exhaustion but more slowly than was forecast last year. Last year, the Chief Actuary projected that the Disability Trust Fund would be exhausted in late 2016. With each passing month it becomes clearer that the Disability Trust Fund won't be exhausted until at least 2017. If you don't think there's a huge difference between 2016 and 2017, you don't follow politics. Also, it's looking clearer that any shortfall in the Disability Trust Fund will be a short term matter that can be easily bridged by a reallocation of FICA revenues or by allowing interfund borrowing. These have both been done in the past. It's getting harder each month to argue that dramatic changes are needed in Social Security disability benefits.


Anonymous said...

Wouldn't surprise me if they try to use the disability trust fund issues as leverage to attack the overall program.
i.e. refusing to what's been done in the past w/o some other concession. Hopefully I'm wrong on this.

Don Levit said...

The DI Trust Fund has had negative cash flow for many years.

While from an acciounting standpoint, the trust fund looks to be positive, the outflows have exceeded the cash inflows for many years.
Borrowing from other trust funds or other shenanigans simply confuse the matter, while doing nothing to stop the negative cash flow.
Redeeminmg Treasuries means adding to debt held by the public. Is that considered positive cash flow?
Don Levit