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When the Levy Breaks: The Battle Over Social Security Disability Insurance

Posted Jessica L. Kurtz on Feb 26, 2015 in Social Security Disability

One of the major polarizing battles in Congress today is one that could affect many disabled Pennsylvania residents—and soon. The Social Security Disability Insurance (SSDI) program is scheduled to run out of sufficient funds for beneficiaries as soon as 2016, and lawmakers are at odds over a suitable fix.

SSDI has long been strained beyond its intended capacity as our workforce continues to expand and age. The system is flooded with appeals and applications, leaving the Social Security Administration scrambling to handle the growing mountain of claims. Even SSDI’s larger sister program, the Retirement Benefits Fund, is expected to be completely depleted by 2034.

The road to this point is a convergence of several problems, the largest of which is that our tax dollars—money you earned over your working lifetime—are being spread thinner and thinner to support several programs. Both Democrats and Republicans realize that a solution must be put into action quickly, but both are in disagreement over what the solution should be.

From the Left: Divert, Compromise, and Take

Democrats seem primarily interested in a quick solution that will shore up SSDI funds for another few decades, guaranteeing that those dependent on their SSDI benefits will not see the forecasted 19 percent reduction in benefits that would become effective in 2016.

The favored solution thus far seems aimed at tax allocation adjustment. Currently, employees and employers pay a 6.2 percent payroll tax that goes toward the SSDI trust fund and the retirement benefits trust fund. President Obama has suggested increasing the portion of the payroll tax allocated to the SSDI trust fund by 0.9 percent, which would redirect funds that would otherwise go to the retirement fund. This solution would greatly extend the life of the SSDI trust fund, and only affect the retirement fund slightly. This solution would leave both trust funds depleted by 2033.

Another solution that has been proposed is to increase the income cap for payroll taxes. Currently, income that is subject to payroll tax is capped at $118,500.

From the Right: Delay, Question, and Fix

While the left seems focused on quick solutions meant to buy time for current beneficiaries, Republicans are reluctant to be trigger-happy on solutions that only delay problems. Conservatives quickly passed a rule to prevent fund reallocation from the retirement fund until Congress is able to make real improvements in how Social Security funds are managed.

It seems as though GOP leaders will push for system improvements, ensuring that beneficiaries are truly qualified, but in the meantime leaving the 2016 benefit cuts looming as a threat to Congress to pass real reform.

Where Does that Leave Pennsylvanians With Disabilities?

One of the most frustrating things about the SSDI funding issues is that even though you paid into the system for years, you potentially face significant reductions in your benefits. Impressively, both sides raise valid issues. Funding difficulties should not affect current beneficiaries so drastically so soon, and yet putting money in a clearly broken system only delays the inevitable.

After recently going through, or if you are in the midst of the SSDI application process, what are your thoughts on the recent debate? Should we focus on long-term financial health, or instead on compromising long-term solutions in favor of temporary fixes with immediate results? Sound off in our comment section below, or share your thoughts with us on our Facebook page—we’d love to hear your thoughts.