Tags: disability | fund | Social Security | benefits

Looming Crisis in Disability Trust Fund Could Mean Cut in Benefits

By Michelle Smith   |  

More pressing than the potential shortfalls in Medicare or Social Security is the dwindling trust fund for the federal disability program.

The number of disability recipients has risen 23 percent just since 2007. As of January, the federal program was supporting 10.9 million people, including disabled individuals and their families.

But the program's coffers are expected to be bare by 2016, according to the Congressional Budget Office (CBO).

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For the past three years, the program has paid out more money than it receives. In 2012, expenditures were $135 billion; the program only received $102 billion from dedicated tax revenues.

If the trust fund runs out in 2016, the program may be forced to operate with only account receivables. CNNMoney estimates the incoming revenue will only be enough to cover 80 percent of the program's obligations.

The CBO warns that if a trust fund's balance falls to zero and current revenues are insufficient to cover benefits and administrative expenses, the Social Security Administration has no legal authority to pay full benefits when they are due.
The looming shortfall is not new; its just not talked about. Both parties are said to be ignoring the issue.

Sen. Tom Coburn, R-Okla., is one lawmaker who wants to overhaul the program. But he outlined very clearly why the approaching crisis is not being handled.

"Nobody wants to touch things where they can be criticized," he told Bloomberg.

Aggravating matters is the easier access to benefits. At one time, the disability program was generally used to support people with clearly debilitating conditions, such as cancer, or those who had suffered heart attacks or strokes. Now disability is being paid to people with conditions such as chronic fatigue syndrome and depression.

CNNMoney says people generally tap the program for benefits in their 50s, making it little wonder that baby boomers are a primary driver in the programs rapid growth.

The economic downturn, also seems to have led to more people claiming to be disabled. But there is little reason to be optimistic that economic recovery will unwind the disability rolls. Less than 1 percent of people who receive benefits return to work, according to Bloomberg.

"A ton of people are super needy but it's [disability] grown way beyond what it should be doing. It's crying out to be reformed," Mark Duggan, an economics and public policy professor at the University of Pennsylvania's Wharton School, told CNNMoney.

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