House backed rule threatens to cut disability benefits

You may have heard that the Social Security disability trust fund may have less money than it owes in late 2016. Some might ask, "if tax dollars are going towards the disability trust fund, how is it running out?" There are a number of reasons. For starters, only 1.8 percent of the payroll taxes that are taken out for Social Security go towards disability benefits. Another reason is the fact that the program has been "paying out more than it collects since 2005." So far, reserves have covered the difference. Some experts say that this, coupled with an aversion to raising taxes, has left Congress between a rock and a hard place.

Although Congress can shift funds between the Social Security retirement fund, which has $2.7 trillion in reserves, and disability fund (and has done so 11 times), that option is now off the table. A new House rule bars the passage of any bill that might redirect tax revenue from the retirement fund into the disability fund. This seems to leave Congress with only two options: cut disability benefits or increase taxes in 2016 or 2017. Some estimate that disability benefits could be cut by 20%.

The reasoning behind the passage of this rule was ostensibly to force Congress to come up with a permanent solution to the disability fund problem instead of a temporary fix. But those who are opposed to the rule point out that even when faced with a deadline, Congress doesn't always make decisions in a timely manner, which will only hurt the estimated 11 million people currently receiving benefits through SSD.

Source: Seattle PI, "House GOP forcing 2016 debate on Social Security's finances," Stephen Ohlemacher, Jan. 10, 2015

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