The budget deal reached last night attempts to stave off depletion of the Disability Insurance (DI) trust fund at the end of 2016 by “reallocating” about $150 billion over the next three years from the Social Security Trust Fund to the Disability Insurance Trust Fund.
This infusion of Social Security revenues should keep the disability insurance program solvent through 2022, at which point we can expect lawmakers to rob Social Security yet again.
Congress has been kicking the can down the road on disability insurance reform for decades, and 2016 should have been the end of the road—time for meaningful reform. Instead, policymakers want to provide a little more roadway for the disability insurance program by whacking off a portion of Social Security’s roadway.
This isn’t the first time the disability insurance program has run out of money, and it isn’t the first time Congress has kicked the can down the road. As recently as 1994, the disability insurance program was about to run out of money, and Congress increased the disability insurance payroll tax by 50 percent, from 1.2 percent to 1.8 percent. That increase was coupled with a stark warning that the disability insurance program was in dire need of additional reforms to sustain it over the long run.
What has Congress done to reform the disability insurance program since then? Nothing.
Rather than looking to improve the efficiency and integrity of the program, Congress sat idly by as the percent of the working-age population receiving disability insurance benefits increased from 2.8 percent in 1994 to 5.1 percent today.
The disability insurance program is so ripe for reform that it’s hard to know where to start. There’s the inefficient, inconsistent, complex, and excessively long adjudication process; inflexible and outdated medical and occupational rules; perverse work incentives coupled with ineffective continuing disability reviews that contribute to troublingly low return-to-work rates; fraud and abuse; and failure to prevent poverty among disabled individuals, just to name a few.
While the budget deal includes some small but positive steps to improve the disability insurance program, it nevertheless provides a $150-billion bailout that leaves policymakers little incentive to meaningfully reform the disability insurance program before it runs out of money again and they come demanding another bailout in 2022.
Policymakers should reject any deal that robs the Social Security Trust Fund and fails to meaningfully reform the disability insurance program.
Instead, Congress should allow the disability insurance program to temporarily borrow from the Social Security Trust Fund while it establishes meaningful reforms, such as a flat benefit, a private disability insurance option, improved return-to-work initiatives, case-specific time limits on benefits, and commonsense reforms to the disability determination process.