Social Security Disability Insurance: A Fix Put Off For Another Year (Or Seven)

    With the buzz in Washington currently swirling around newly elected Speaker of the House Paul Ryan, and outgoing Speaker John Boehner, it was easy to miss the budget deal just signed into law by President Obama. Unfortunately for taxpayers, there is plenty to dislike.
This budget agreement relaxes previously agreed upon bipartisan spending limits, and fails to address long-term spending problems. Another less-noticed failure: The decision to kick the can down the road on reforming the troubled Social Security Disability Insurance (SSDI) program.
SSDI, as opposed to Social Security Old-Age & Survivors Insurance, is intended to replace income for those who have become disabled and can no longer work. While SSDI provides an important safety net, a surge in use (and abuse) of the program is threatening to turn that safety net into a hammock taxpayers can’t afford to sustain.

Before the budget deal was struck, SSDI was slated to exhaust its trust fund at the end of 2016—triggering automatic 20% cuts across the board to current beneficiaries.
Not more than 10 years ago, SSDI was projected to exhaust its trust fund in 2027 according to the Annual Report from the Social Security Board of Trustees 2005 report. However, due to a host of economic and structural problems and a spike in applications and fraud, the trust fund situation is more dire than originally projected.

The vast majority of those accepted to the SSDI program never return to work
Many individuals who lost their jobs or had their hours reduced during the Recession and weak recovery have looked to SSDI to make up for their lost wages—whether they were prevented from working due to disability or not. Evidence suggests that the flat-lining economy increased SSDI applications by 6.7%. This data is troubling since the vast majority of those who are accepted to the SSDI program never return to work—even when the economy improves.
But the weak economy isn’t the only factor. Poor management at SSDI has also contributed to the program’s looming insolvency. A recent report from the Social Security Inspector General, for example, found troubling issues with payments from the SSDI program.