The U.S. House sent a strong signal of its plans for Social Security the first day of the new Congress. A new procedural rule may make Social Security benefit cuts much more likely in the near future. At issue is the solvency of the Social Security disability insurance program (SSDI), but all Social Security recipients, including retirees and people who receive survivors’ benefits, could be affected.
The Social Security disability trust fund is due to run dry soon after the 2016 presidential election. Unless Congress establishes new funding before then, the benefits of more than 11 million disabled beneficiaries will be reduced by one-fifth, to match the levels of tax revenues that the program receives.
Most Social Security policy analysts expected Congress to address the shortfall, at least temporarily, by shifting funds from the retirement trust fund, which is in better shape. Congress has transferred revenues about 11 times in the past as a short-term funding fix to allow time for more comprehensive changes to be worked out.
The House rule, however, bars transfers from the retirement trust fund unless those transfers are accompanied by changes that either reduce benefits or increase taxes. Because the Republican majority is opposed to most tax increases, Social Security advocates feel the debate is “rigged” in favor of benefit cuts. The most widely discussed Social Security change that Congress and President Obama have proposed in recent years would reduce the cost-of-living adjustment (COLA). That affects ALL Social Security recipients, including retirees and widows.
The House can set aside the rule if it wants to. And there are good reasons to want to — constituent outrage and re-election being two of them. Automatic benefit cuts could also create a funding crisis for federal and state low-income programs that assist people with incomes lower than the federal poverty level. With the average monthly disability benefit at just $1,150, Social Security disability payments are very close to the federal poverty level— just 15% above it. Cuts would push more people into those assistance programs.
The Disability Insurance Trust Fund does need fixing. Last year a TSCL poll found that forty-five percent of respondents favored tightening eligibility criteria and conducting more annual eligibility reviews to reduce fraud. The majority, fifty-four percent, favored asking high wage earners to pay Social Security taxes on all of their earnings to increase revenues.
Let your Member of the House know what you think of the newHouse rule on transfers between Social Security trust funds, and what alternatives you favor to fund the disability program. Send an email to your Congressman at www.SeniorsLeague.org.
Sources: “House Rule Sets Up Election Year Battle Over Social Security,” Stephen Ohlemacher, Associated Press, January 7, 2015. “House Republicans Change Rules On Calculating Economic Impact of Bills,” Jonathan Weisman, The New York Times, January 6, 2015.