The 11 million beneficiaries of the Social Security disability program may have been hoping for good news Wednesday when the Social Security and Medicare trustees released their annual report on the program's finances. But they didn't get any.
Instead, beneficiaries learned that nothing has improved in the past year and that in roughly 16 months they'll all have their benefits automatically cut by 19 percent.
Time for reform is running out, and yet Congress continues to do nothing to fix the disability program. It's unclear how Republicans will reach a compromise that President Obama would be willing to sign.
To emphasize the importance of taking action as soon as possible, the trustees began their annual summary by calling for reform. "Social Security's Disability Insurance (DI) Trust Fund now faces an urgent threat of reserve depletion, requiring prompt corrective action by lawmakers if sudden reductions or interruptions in benefit payments are to be avoided," the six trustees wrote. "Beyond DI, Social Security as a whole as well as Medicare cannot sustain projected long-run program costs under currently scheduled financing. Lawmakers should take action sooner rather than later to address these structural shortfalls, so that the uncertainty now facing disability beneficiaries will not eventually be experienced by other programs' participants, and so that a broader range of solutions can be considered and more time will be available to phase in changes while giving the public adequate time to prepare. Earlier action will also help elected officials minimize adverse impacts on vulnerable populations, including lower-income workers and people already dependent on program benefits."
The message from the trustees is clear: Fix Social Security now.
It seems unlikely Congress will take any action before members leave for August recess, but Social Security reform needs to be a top priority when they return in September.
Social Security's retirement trust fund is now projected to be depleted in 2035, one year later than trustees predicted last year. At depletion, retirees would see their benefits automatically cut by 23 percent.
"I fear the slight improvement in the insolvency date for Social Security's combined trust fund will give law makers and the public a false sense that the program's financial problems are anything less than urgent — that reform can continue to be put off," said Jason Fichtner, a Mercatus Center senior research fellow and former deputy commissioner of the Social Security Administration. "Such a misunderstanding would lead to grave consequences for beneficiaries of both the disability and retirement programs. The delay in dealing with the needed structural and financial problems of the DI trust fund should be a wake up call for those concerned with the OASI retirement trust fund — delaying meaningful reforms only limits the options available."
The six trustees are Secretary of the Treasury Jacob Lew, Secretary of Labor Thomas Perez, Secretary of Health and Human Services Sylvia Burwell, Acting Commissioner of Social Security Carolyn Colvin, Mercatus Center Senior Research Fellow Charles Blahous and Urban Institute Distinguished Institute Fellow Robert Reischauer.