The Sky is Falling

September 16, 2015

Earlier this summer, there was an announcement stating that eleven million people face a deep, abrupt cut in disability insurance benefits in late 2016 if Congress fails to replenish Social Security’s disability trust fund, which is running out of money, the Obama administration said Wednesday.  Officials expressed concern about the program as they issued their annual report on the financial condition of Medicare and Social Security, which together account for about 40 percent of all federal spending.  The trustees of Social Security, including three cabinet secretaries, said the disability trust fund would be depleted in the last quarter of 2016. After that, they said, benefits would automatically be cut by 19 percent because revenues, largely from payroll taxes, would be sufficient to cover only 81 percent of scheduled benefit payments.

The report sets up a fight between President Obama and Republicans in Congress. Mr. Obama wants to replenish the disability trust fund by shifting some payroll tax revenues from Social Security’s retirement trust fund.  Republicans, however, want more significant changes to improve the program’s finances. These changes could include reductions in disability benefits, restrictions on eligibility, new measures to combat fraud or new strategies to help people return to work. In January, Republicans adopted a new rule in the House that could block a direct reallocation of money at the expense of the trust fund that provides benefits for retirees.

The White House acknowledged the financial problems of the disability program in a separate report issued last week by Jeffrey D. Zients, director of the National Economic Council, and Shaun Donovan, the president’s budget director.

For more information, read the whole article here:

http://www.nytimes.com/2015/07/23/us/disability-benefits-face-cuts-in-2016-trustees-say.html?_r=0

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