Most people think there is only one Social Security trust fund but there are two. The one most people don't know about is the Disability Insurance Trust Fund. It has much more immediate problems than the Retirement and Survivor's Insurance Trust Fund. The Disability Insurance Trust Fund is predicted to run out of money in 2018. Restoring the Disability Trust Fund to health isn't that big a deal.A small reallocation of the FICA tax would do it with little effect upon the Retirement and Survivor's Insurance Trust Fund. You may have noticed, however, that Republicans have been taking hostages lately, refusing to agree to routine measures that prevent catastrophes, in order to achieve leverage. This tactic may have run its course as the public is tiring of crises and Democrats seem willing to practice brinksmanship themselves. Still, there is a very real threat that Republicans will attempt to use the problems of the Disability Insurance Trust Fund to force dramatic changes in Social Security's disability programs.
It's impossible now to predict whether there will be a crisis in a few years or what the Republican demands or Democratic response might be. It may be worth looking though at the question of exactly what looms if there is no agreement. My first thought was that there won't be a crisis because there is already authority for borrowing between the Trust Funds. Unfortunately, my memory failed me. There was such authority at one time but it expired in 1987. Let's hope this authority can be quietly renewed before 2018. My second thought is to wonder just how benefits might be paid if the Disability Insurance Trust Fund runs out of money because the exhaustion of the Disability Trust Fund does not mean that there will be no money to pay benefits. Actually, there will be enough money to pay about 84% of the benefits since there will still be revenue coming into the Disability Insurance Trust Fund, allowing some benefits to be paid out of the revenue stream. Would Social Security just reduce each month's check by 16%? Probably, but a Congressional Research Service study on the subject tells us that the Disability Trust Fund running out of money would be terra incognita. There is no clear statutory answer. Perhaps, the answer would be to delay each month's checks until sufficient funds are available to cover them, making each check later and later.
It's impossible now to predict whether there will be a crisis in a few years or what the Republican demands or Democratic response might be. It may be worth looking though at the question of exactly what looms if there is no agreement. My first thought was that there won't be a crisis because there is already authority for borrowing between the Trust Funds. Unfortunately, my memory failed me. There was such authority at one time but it expired in 1987. Let's hope this authority can be quietly renewed before 2018. My second thought is to wonder just how benefits might be paid if the Disability Insurance Trust Fund runs out of money because the exhaustion of the Disability Trust Fund does not mean that there will be no money to pay benefits. Actually, there will be enough money to pay about 84% of the benefits since there will still be revenue coming into the Disability Insurance Trust Fund, allowing some benefits to be paid out of the revenue stream. Would Social Security just reduce each month's check by 16%? Probably, but a Congressional Research Service study on the subject tells us that the Disability Trust Fund running out of money would be terra incognita. There is no clear statutory answer. Perhaps, the answer would be to delay each month's checks until sufficient funds are available to cover them, making each check later and later.
