Donald Trump 45th President
Holder wants to be President
GORE CLINTON OBAMA LIES
CONTRACT KILL TRUMP
obama pedophile
UN AGENDA 21 EXPOSED
New World Order exposed
 loss of sovereignty
McCain Busted
VETERANS HEALTH CARE
SOCIAL SECURITY MEDICARE
SOCIAL SECURITY MEDICARE
Medicare Bill
Women Veterans Health  care
veterans
GUN CONTROL AUSTRALIA UK
VOUCHERS EXPOSED
Senators paid TPP
Secret Treaty TPP ruin America
THE TRANS-PACIFIC TRADE (TPP)
Republicans target disability
Human Trafficking
Breaking News Koch Bro
 “Affordable” “Care”
UN GUN BAN
Eric Holder Unfit to be in JD
AMERICA
BLACK CRIME AGAINST WHITES no teported
NEWS
Columbia Students
Hillary Clinton's Greatest Scandal
Obama
REPUBLICAN
DEMOCRAT
BLACK CRIME AGAINST WHITES
Bernie Sanders Storms CNN
Gas Tax
Veteran benefits under attack
The List: The 20 GOP Turncoats Who Voted For Loretta Lynch
RICK PERRY BILDERBERG GROUP
John McCains Reasons For Arming ISIL (ISIS)
obama pedophile NWO
Senators paid to fast track TPP
Other
75 REPUBLICANS VOTED
About
About
e-mail me



Disability program needs reform, not merely revenue reallocation By Andrew G. Biggs

“Republicans target disability,” say the headlines. A rule passed by the newly elected Republican-controlled House prohibits a supposedly “routine” reallocation of revenues between Social Security’s retirement and disability insurance programs, threatening dramatic benefit cuts for the disabled. In reality, the House rule may force Congress to finally enact substantive reforms for the troubled Disability Insurance (DI) program.

The average new DI beneficiary in 2013 received annual cash benefits of $14,668, plus Medicare benefits worth about $9,600 per year. Federal outlays on DI and associated Medicare benefits top one-quarter trillion dollars annually, more than three times the 1990 level. The DI trust fund is projected to run dry in 2016, resulting in 19 percent across-the-board benefit cuts.

Rising disability costs are partly demographic: an older workforce is more disability-prone, while rising female labor force participation increases the number of women qualified for benefits. But even accounting for these changes, the number of disability beneficiaries has risen by about 40 percent over the past three decades, according to analysis by the Social Security Administration’s (SSA’s) actuaries.

Yet Census Data show that the share of working-age individuals who report a disability that limits or prevents them from working has remained roughly stable over the past three decades. Self-reported health status has improved, according to the National Center for Health Statistics, fewer workers hold physically demanding jobs, according to the Urban Institute, and Bureau of Labor Statistics data show that the rate of occupational injuries has fallen. The major change is that far fewer individuals with disabilities are working: in 1990, 28 percent of individuals with self-reported disabilities were employed. Today, just 14 percent are working.

Congress itself played a role: in 1984, it loosened eligibility standards, paving the way for increased applications based on more difficult-to-assess mental conditions such as depression and musculo-skeletal disorders like back pain.

A second factor is that DI benefits have become relatively more attractive for less-educated individuals who have fared poorly in the workforce. DI benefits are increased annually along with average wage growth, while earnings for less-skilled individuals have stagnated or even declined. As a result, the “replacement rate” offered by DI — that is, benefits relative to what less-skilled workers could earn in the market — has risen substantially, according to economists David Autor of MIT and Mark Duggan of Stanford. Autor and Duggan calculate that the share of high school dropouts receiving DI benefits has doubled since 1984.

While Social Security disability is ripe for reform, many progressives wish simply to shift revenues from the retirement to the disability program without enacting any other reforms. Doing so would weaken the retirement program’s finances, which have deteriorated significantly in recent years, and leave both programs underfinanced for the future.

These inter-program transfers are portrayed as “routine.” Yet, as Charles Blahous, one of Social Security’s public trustees, has pointed out, prior revenue transfers haven’t taken place in isolation from other reforms. Several revenue reallocations were scheduled as part of the comprehensive reforms passed in 1983. The most recent transfer, in 1994, was recommended by the Social Security Trustees conditioned on “a thorough policy review of the program.” Tax reallocation, the Trustees said, “should be viewed as only providing time and opportunity to design and implement substantive reforms that can lead to long-term financial stability.” We’re still waiting for those reforms to take place.

And Social Security’s current Trustees today warn that reallocation alone “might serve to delay DI reforms and much needed financial corrections for OASDI as a whole.”

It is these actions that the House rule would prohibit: relying solely on revenue reallocation and punting real reforms to the future. A broader-based reform plan that extended the solvency of both the retirement and disability programs could include revenue reallocation to address DI’s short-term financial needs.

Comprehensive reforms must recognize that it’s not enough to simply keep workers from going on DI. That’s been tried: administrative actions under the Carter and Reagan administrations cut thousands of beneficiaries from the disability rolls. But the ensuing backlash led to Congress’s loosening of eligibility standards in 1984.

Rather, reforms should be, in the words of the bipartisan Social Security Advisory Board, “directed to self-support, independence, and contribution that can help … avoid, delay, or minimize [the] need for dependence on the programs of last resort.”

One simple reform is to make workers without children eligible for the full Earned Income Tax Credit. Currently, the EITC for a childless worker working full-time at the minimum wage is just $22 per year. Increasing the reward to work would reduce financial incentives to go on disability.

Comprehensive reform proposals from across the political spectrum focus on creating incentives for employers to keep workers with disabilities on the job. One plan developed for the Center for American Progress by Autor and Duggan would require employers to cover the initial period of disability, during which time workers would receive rehabilitative services. Likewise, a proposal from Richard Burkhauser of Cornell and Mary Daly of the San Francisco Federal Reserve, published by the American Enterprise Institute, would institute “experience rating” for employers’ disability payroll taxes, such that employers who keep disabled employees on the job are rewarded with lower taxes. Both proposals draw lessons from the Netherlands, which reduced the intake of new disability cases by 60% by using similar reforms.

In difficult economic times it is tempting to let the government’s Disability Insurance become the equivalent of “long, long-term” unemployment checks or “early, early” retirement benefits. But the financial and human cost of such complacency is too high. The disabled who can work, should work, and Washington needs to enact policies that will help them do so.

Biggs is a resident scholar at the American Enterprise Institute, a conservative think tank. He is a former principal deputy commissioner of the Social Security Administration.