White House Breaks Silence on Disability Rule
The White House finally weighed in on the new House rule preventing a simple fix to extend the life of Social Security’s Disability Insurance (DI) trust fund. The fund is projected to run out next year, and if revenue isn’t reallocated from the larger Old Age and Survivors Insurance (OASI) program, disability benefits, already meager, will be reduced by a fifth, as taxes allocated to the program aren’t enough to cover promised benefits. Though a routine reapportionment of payroll taxes would address the problem, the new rule prohibits such a move unless steps are taken to extend the solvency of the Social Security system as a whole.
Since a simple majority is required to overturn the rule or vote for benefit cuts, the rule appears largely symbolic. But depending on whom you talk to, it may or may not have real political repercussions. One thing seems clear: It’s an attempt to pit retirees against disabled beneficiaries, with Republicans positioning themselves as advocates of seniors and reformers of a disability system supposedly rife with fraud and abuse.
What happens when this comes to a head in an election year? Though Republicans may be hoping to force benefit cuts by creating an artificial crisis, it seems unlikely that they’ll let 11 million disabled beneficiaries and their dependents, who disproportionately live in red states, experience sharp benefit cuts, which would cause the average benefit to drop below the federal poverty line.
The question is how far Republicans will go and what they expect to get out of it. Right now, they’re counting on disabled beneficiaries believing reforms will target only those supposedly gaming the DI system. They also hope seniors will fall for the line that Republicans are protecting their benefits from being “raided” by a broken disability system, even though reallocation to the smaller DI program would have a negligible effect on the OASI fund and the new rule is agnostic about whether disability or old age benefits will be cut to allow reallocation. (Though the rule also allows for revenue increases to extend the system’s solvency, no one expects a Republican-controlled Congress to go this route.)
What are Republicans going after—DI, or the system as a whole? It probably depends on the Republican. One of the rule’s co-sponsors, Sam Johnson (R-TX), has used his Ways and Means Social Security subcommittee as a bully pulpit for DI reform, taking advantage of the attention the issue has garnered since a confluence of demographic and economic forces caused a run-up in disability rolls. His attacks on the disability program were amplified recently by presumptive presidential candidate Rand Paul.
Other Republicans, meanwhile, still have their sights set on the popular retirement program, though this isn’t something they are eager to broadcast to the general public. New Budget Committee Chairman Tom Price, for example, recently told a lobbying group with ties to the Heritage Foundation that raising the eligibility age, means testing, and participant-directed investments (a.k.a. private accounts) should all be “on the table.”
Some Republicans, like the new rule’s co-sponsor, Tom Reed (R-NY), may be playing it by ear. Reed, a politically-vulnerable Republican who’s on Johnson’s Social Security subcommittee and a veteran of the House rules committee, is known for railing against government spending writ large. Foreshadowing his latest maneuver, Reed once introduced a bill to protect retiree benefits from a government shutdown he helped bring about.
Reed and other Republicans have honed the strategy of going after government programs while claiming to protect voters from the effects of their own actions. Some Democrats, including President Obama, are vulnerable to such attacks because they expressed openness to cuts as part of a Grand Bargain with Republicans on deficit reduction. The president has an opportunity to make amends by defending social insurance—especially Social Security’s disability program—in his State of the Union next week.
Meanwhile, advocates and experts, notably our friends at the Center on Budget and Policy Priorities, have redoubled their efforts to educate the public about the DI program. By any reasonable measure, the problem with the current system isn’t that it’s too easy to qualify for benefits, but too hard. In 2012, only 30 percent of applications were approved, not counting those still in limbo.
Most applicants who are turned down on appeal are never able to earn a living afterward. It says something about the level of discussion that these findings, cited by CBPP, originally come from researchers focusing narrowly on the question of whether the system discourages work rather than whether it adequately protects disabled Americans and their families.
Meanwhile, Congress has slashed the system’s operating funds, including those for fraud detection, exacerbating delays in the approval process that reduce labor force participation everyone claims to be so concerned about. The backlog recently topped the million person mark with an average wait of 435 days. As administrative law judges have come under pressure from Congress, the share of applications awaiting resolution has ballooned and the total number approved has dropped despite the aging Baby Boomer generation. As for fraud? Despite some high-profile cases uncovered by Social Security investigators, reports by the Government Accountability Office and other sober assessments have found it to be a relatively minor problem.