AP: Republicans Resisting ‘Easy Fix’ for Social Security Disability Crisis

WASHINGTON (AP) — The 11 million Americans who receive Social Security disability face steep benefit cuts next year – right in the middle of a presidential election – unless Congress acts.

Social Security’s trustees say the disability trust fund will run out of money in late 2016. That would trigger an automatic 19 percent cut in benefits.

There is an easy fix available, but Republicans in Congress are resisting.

GOP lawmakers see the funding crisis as an opportunity to improve a program that they believe is plagued by waste and abuse. Democrats are much more defensive about the program, noting that its modest benefits keep millions of disabled workers and their families out of poverty.

Lawmakers from both political parties would like to resolve the issue this year, protecting beneficiaries from steep cuts before presidential politics consumes the capital. But a deal remains elusive as Social Security approaches its 80th birthday Friday.

President Franklin Roosevelt signed the Social Security Act on Aug. 14, 1935. The disability program was added in 1956.

Some things to know about the disability program’s funding crisis:

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BENEFITS ARE MODEST

The average monthly payment for disabled workers and their families is $1,019. That comes to $12,228 a year. A 19 percent cut would lower the average annual benefit to less than $10,000.

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HOW IS THE DISABILITY PROGRAM FINANCED?

Social Security is self-financed by a 12.4 percent tax on wages up to $118,500. Workers pay half and employers pay half. Social Security also gets revenue from taxes on benefits and interest on the program’s two trust funds.

Last year, the wage tax generated $756 billion. By law, the tax revenue is divided between the disability trust fund and Social Security’s much larger retirement fund. The retirement fund gets about 85 percent of the money, and the rest goes to disability.

Over the past 20 years, the fund balances have gotten out of whack. The retirement fund has enough money to pay full benefits until 2035, according to the Social Security trustees. But they disability fund is projected to run out of money in fourth quarter of 2016.

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WHAT’S THE EASY FIX?

Congress could redirect tax revenue from the retirement fund to the disability fund, as it has done in the past. The last time was in 1994.

If Congress redirects the tax revenue, the retirement fund would lose one year of solvency, so both the retirement program and the disability program would have enough money to pay full benefits until 2034.

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WHY DO REPUBLICANS OPPOSE THE FIX?

Republicans say that simply redirecting the tax revenue would be taking money from retired workers to pay disabled workers – robbing one fund to finance another.

Also, Republicans say they want changes in the disability program to reduce fraud and to encourage disabled workers to re-enter the workforce.

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WHAT DO DEMOCRATS SAY?

Democrats say they too want to reduce fraud and to encourage disabled workers who can work to re-enter the workforce. But they accuse Republicans of manufacturing a crisis by refusing to redirect tax revenue between the trust funds.