Social Security disability program starts running out of money in 2016
The Trustees of the nation's Social Security and medicare">Medicare trust funds have issued their annual report and -- surprise! -- the whole system is lurching toward a funding crisis. The Trustees are particularly worried about the Social Security disability fund, which could run out of money in 2016:
The DI program satisfies neither the Trustees’ long-range test of close actuarial balance nor our short-range test of financial adequacy and faces the most immediate financing shortfall of any of the separate trust funds. DI Trust Fund reserves expressed as a percent of annual cost (the trust fund ratio) declined to 40 percent at the beginning of 2015, and the Trustees project trust fund depletion late in 2016, the same year projected in the last Trustees Report. DI costs have exceeded non-interest income since 2005, and the trust fund ratio has declined in every year since peaking in 2003. While legislation is needed to address all of Social Security’s financial imbalances, the need has become urgent with respect to the program’s disability insurance component. Lawmakers need to act soon to avoid automatic reductions in payments to DI beneficiaries in late 2016.
We have often been told that Social Security is teetering on the brink of disaster. The disaster has yet to come. However, the disability program, which replaces income for the non-elderly as well as children, has grown rapidly in the last three decades, spiking during the recent economic turmoil. It has become the only source of income for millions of working-age Americans.
The most interesting thing about the Trustees' report is the timing. The disability fund may have to cut payments, they say, in the midst of a presidential campaign.
Look for this to become a hot topic in the debates.