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Federal Entitlement Program "to go bust in 2016"

Reporting at the Washington Examiner on Wednesday morning, Joseph Lawler writes, "The Social Security disability program will run out of money in late 2016, a report issued Wednesday by the Social Security and Medicare trustees warned."

Lawler continued his reporting:

"At that point, the 10.9 million beneficiaries of the program face an immediate 19 percent cut in benefits, unless Congress intervenes.

"The combined trust fund for the retirement and disability programs is projected to run out by 2034, a slight improvement from last year's estimate.

"The trust fund for Medicare hospital insurance will be depleted by 2030, unchanged from last year.

"The new figures were published Wednesday as part of the annual update on the programs' finances from the Social Security and Medicare trustees.

"Federal retirement programs face long-term fiscal problems largely because of demographics. Demographers expect that the number of retirees claiming Social Security benefits will rise from less than 50 million today to 71 million by the time the baby boomers are done retiring in 2029. The ranks of Medicare beneficiaries will grow from 56 million to 80 million.

"The more immediate deadline, however, relates to the disability program, which provides income security for disabled workers, widows and widowers, and children."

Earlier this year, Jason Fichtner, a senior research fellow at George Mason University's Mercatus Center  in Arlington, Virginia, and Jason Seligman, an assistant professor at Ohio State University, published a 'working paper' on reforms that could save the social security disability insurance program (March 5, 2015, "Saving Social Security Disability Insurance: Reforms within the Context of Holistic Social Security Reform"). Here''s the summary of their paper:

"The Social Security Disability Insurance (DI) program is running short of money. Under current projections, its trust fund will be exhausted by the end of 2016, causing an automatic benefit reduction of about 20 percent if no legislative action is taken—a significant financial shock for those on the disability rolls.

"To prevent these benefit cuts, some have proposed supplementing DI from the larger Social Security retirement trust fund. A new study published by the Mercatus Center at George Mason University argues, however, that policymakers should use this opportunity to adopt much-needed reforms of the Disability Insurance program. DI reform should (1) take account of the current retirement program and (2) not inhibit future retirement program reforms. This strategy has the potential to return DI to its original purpose—providing income support for those who cannot work due to permanent disability—while also putting the program on a path of fiscal sustainability."

Here's the lede from the Washington Post's report, posted yesterday:

"The annual check-up for Social Security is in, and one program looks more dire than the rest."

Note the picture accompanying the Post story of activists in front of the White House urging the expansion of Social Security. More delusion on the part of progressive liberals on the Left!

Additional reporting included:

  • Newsmax, where  their lede said, "Social Security’s Disability Insurance trust fund will run out of reserves next year without congressional action, trustees said, urging U.S. lawmakers to address the nation’s unsustainable entitlement programs."
  • The Wall Wall Street Journal's report included this: "Treasury Secretary Jacob Lew said the shortfall should be addressed by Congress by reallocating the share of payroll taxes that fund the disability-insurance trust fund and the much larger retirement-benefit reserves. The reallocation would leave both funds depleted by 2034, one year later than estimated in last year’s report. (beware the WSJ's paywall)

The Washington Times reported yesterday, "To stave off the cut, Rep. Xavier Becerra, California Democrat, proposed merging the two trust funds, using retirement money to cover the disability fund shortfall in the near term."

Sheesh! Just what's needed -- a short-term fix. Do members of Congress ever fix anything?

Finally, here's the summary from the 7-page analysis from the non-partisan Committee for a Responsible Federal Budget:

"Today, the Social Security and Medicare Trustees released their annual reports on the financial health of the programs. Although these projections show some improvements relative to last year, they nonetheless show both programs continue to face large shortfalls that will grow over time. With regards to Social Security, the Trustees show that:

  • The Social Security Disability Insurance (DI) trust fund is on the brink of depletion, and is projected to be exhausted in late 2016 – just over a year from today. Absent legislation, beneficiaries in that program would face an immediate 19 percent across-the-board benefit cut.
  • On a combined basis, or assuming reallocation or interfund borrowing, the Old Age, Survivors, and Disability Insurance (OASDI) trust funds are projected to be exhausted in 2034. At that point, all beneficiaries would face an immediate 21 percent across-the-board benefit cut, which would grow to more than 27 percent by 2090.
  • Over 75 years, Social Security’s actuarial imbalance totals 2.68 percent of taxable payroll, or about 0.96 percent of GDP.
  • The gap between Social Security spending and revenues is projected to grow from 1.3 percent of payroll (0.46 percent of GDP) this year to 3.5 percent of payroll (1.26 percent of GDP) by 2040 and 4.7 percent of payroll (1.62 percent of GDP) by 2090.
  • Overall, this year’s report represents an improvement over last year’s, which showed a combined trust fund exhaustion date of 2033 (one year sooner) and a 75-year actuarial imbalance of 2.88 percent of payroll (0.20 percentage points higher).

"Although the projections have slightly improved, Social Security’s long-term outlook is fundamentally unchanged. The SSDI trust fund will be depleted next year, and the combined trust funds by the time today’s 48-year-olds reach the normal retirement age – or when today’s newest retirees turn 81.

"Policymakers must act quickly to put Social Security on a path toward solvency. As time goes on, it will be more difficult to secure the Social Security programs for current and future generations with thoughtful changes instead of abrupt benefit cuts or tax increases."

As most of the reporting about the trustee's report point out, action is needed by the Congress. So, for Growls readers, we are providing information so your can provide them with your feedback. Contact information is available at Thomas (use left-hand column). Taxpayers living in Virginia's Arlington County, can contact:

  • Senator Mark Warner (D) -  write to him or call (202) 224-2023
  • Senator Tim Kaine (D) -- write to him or call (202) 224-4024
  • Representative Don Beyer (D) -- write to him or call (202) 225-4376

Ask for a written response, and tell them ACTA sent you.

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