Jul 21, 2014

When Will The Disability Insurance Trust Fund Run Out Of Money?

     We should get the Social Security Trustees report for 2014 in the near future. That will give us an updated projection on the Disability Insurance Trust Fund. That Fund is a matter of some concern since last year's Intermediate projection was that it would run out of money in 2016. Until the 2014 Trustees Report comes out, we can take a look at the newly released numbers on the Disability Trust Fund operations through the 2d quarter of this calendar year. The Trust Fund balance is down $10.4 billion in the first half of 2014. This contrasts with a deficit of $11.8 billion in the first half of 2013. While a declining balance is a bad thing, the reduction is 12% better than last year. The Trustees Intermediate projection made last year was that the Disability Trust Fund would go down at almost exactly the same rate in 2014 as in 2013 so thus far this year we're doing about 12% better than the projection made last year. That's pretty good. If the Disability Trust Fund continues to do 12% better than the Intermediate projection for the entire year of 2014 the difference would be about $4 billion. This is on top of the fact that the actual results in 2013 were $1.2 billion better than the 2013 Trustee's projection.
     To quote a Republican Senator from years gone by, "A billion here, a billion there and pretty soon you're talking about real money." While the projection made last year was that the Disability Insurance Trust Fund would run out of money in 2016, to be exact the projection was that the Disability Insurance Trust Fund would be $7.4 billion short of meeting its obligations for 2016 which works out to an exhaustion date in Autumn of 2016. A $1.2 billion improvement over the projection for last year and a 12% improvement in the first half of 2014 -- all you have to do is assume that things continue at the same pace and the Disability Trust Fund lasts into 2017. To state it another way, as of the end of June there was $80 left in the Disability Insurance Trust Fund and it was declining at the rate of about $28 billion a year. You do the math. If the Disability Insurance Trust fund continues to decline at the same rate we're currently seeing, it lasts into 2017 -- only a few months into 2017 but into 2017. If you think that the improvement we've seen over the last year and a half won't turn into a flat line, that is that we will continue to see small improvement, the Disability Trust Fund may limp into 2018.
     Social Security's actuaries never claim to know exactly what's going to happen over the next few years. That's why they give not one projection but three, an Intermediate projection (which is the only one that people pay attention to), a Low Cost or optimistic projection and a High Cost or pessimistic projection. When I say that the numbers we've seen since last year's Trustees report indicate that the Disability Trust Fund is likely to last at least into 2017, I'm talking about something that is well within last year's optimistic projection that the Disability Trust Fund will never run out of money. What I'm saying only differs slightly from last year's Intermediate projection and the difference is based upon what has actually happened since that projection was released.
     One might reasonably say that there is little real difference between a Disability Insurance Trust Fund exhaustion date of October 2016 versus an exhaustion date of April 2017 but politically there's a big difference. As of today, April 2017 looks to be a much stronger time for Democrats than October 2016. It would certainly be better if something could be done about the Disability Insurance Trust Fund before the last minute but does anyone really believe that will happen, especially if the political balance of power is likely to be different a few months later?
     In any case, it shouldn't be long before the Trustees report is released.

4 comments:

Anonymous said...

It is not clear to me that April, 2017 is so much better than Oct., 2016. The GOP is likely to be in the majority in at least one house of Congress even if there is another Dem in the White House in 2015. This problem has been known for years and Congress has done nothing. I don't expect them to do anything before there is a crisis and even then Congress has repeatedly shown a proclivity to kick the can down the road in a short term fix e.g., as in the current highway fund crisis).

Anonymous said...

Not just disability insurance. There is a bigger picture,all government public resources will be depleted,SSI,welfare,food stamps etc in this weak economy,especially if the majority of the refugee/illegal immigrants keep coming and are allowed to stay. It will increase demand on these vital resources. It's a disaster.

I'm a person of color(black),no predjudice about the issue,but just an objective belief.

Alan Brady said...

Are you sitting comfortably? Many an afternoon has been enjoyed by a family, bonding over the discussion of Business Security. While it is becoming a hot topic for debate, there are just not enough blues songs written about Business Security. Inevitably Business Security is often misunderstood by the over 50, many of whom fail to comprehend the full scope of Business Security.

Amelia Heartwright said...

I personally think it's great that the government has programs in place to help people with disabilities. However, I'm curious about what the process is to make sure that people are vetted before getting money. Also, are there other options for people to get disability benefits other than government programs? http://www.disabilityspecialist.net