Social Security

Social Security Disability Benefits Running Out Of Money, GOP Claims Fraud, Democrats Want A Tax Fix

With Social Security Disability benefits running out of money, Republicans and Democrats are arguing over what caused the problem and how it should be fixed. But, would many Americans support a higher Social Security tax in order to fix the problem?

In a related report by The Inquisitr, back in 2013, disability claims were skyrocketing, jumping up 29 percent. The number of Americans receiving social security disability benefits soared to 8.8 million. As of the end of the end of 2013, the Social Security Administration (SSA) says the number of people receiving benefits was 8,942,584, which is almost three percent of the entire US population.

Now, Republicans like Senator Tom Coburn of Oklahoma claim Social Security disability fraud is running rampant:

“Probably a third of everybody on disability, there’s no way that they’re disabled…. It’s nauseating.”

The reason Coburn says this is because the number of people who have applied for disability benefits rose sharply after the beginning of the recession:

Social Security Disability Trust Fund Chart

As you can see from the chart, the number of payments began to exceed the income from taxes in 2008, and ever since then, the Social Security Disability Fund has been drained dry. The SSA knew about the solvency problem for over 10 years, but originally it was not expected that payments would exceed income until 2014.

The SSA also announced recently that the number of people receiving disability benefits has hit a record high, with almost 11 million people now on Social Security Disability. Progressive-leaning organization Media Matters also claims, “Fox News’ Stuart Varney dishonestly hyped new data on the number of Americans receiving Social Security Disability Insurance (SSDI) to accuse beneficiaries of committing fraud to avoid finding a job.”

But is social security fraud the main reason for the problem? Unfortunately, the fight over the Social Security Disability fraud statistics is rife with disagreement, with progressives claiming the rates are lower than one percent while conservatives are estimating they may be much higher. The report from Coburn claimed a random examination of 300 case files by Congressional staff showed that more than 25 percent “failed to properly address insufficient, contradictory, or incomplete evidence,” which they claim indicates a high rate of fraud.

The Office of Inspector General claims the SSA receives more than 150,000 fraud allegations every year, but in 2013, only around 10,000 cases were actually prosecuted. If you go by data provided by the SSA, then there were 2,640,100 applications in 2013. If we assume that the 150,000 allegations of fraud are true, then that would mean around 5.7 percent of all disability benefits applications made in 2013 would be fraudulent. But if we go only by the number of prosecutions then the fraud rate was around 0.4 percent. Of course, both of those numbers are a far cry from Coburn’s personal estimate of 33 percent.

Social Security Tax Increase?

With Social Security running out of money quickly, the real question is how to solve the problem. Under the current law, the SSA commissioner may not borrow money from another fund or transfer money from other SS funds. But Congress has reallocated funds in Social Security as a quick fix 11 times before, so it would not be surprising if the laws are rewritten, yet again. But, there are other ways Congress may choose to deal with the problem.

Because raising taxes right before the 2014 mid-term elections is almost taboo, most solutions have focused on reducing payments to the disabled, which is probably just as unpopular as higher taxes. But Democratic Senator Sherrod Brown believes that not only should be Social Security payroll taxes be increased, he also says the size of Social Security itself should increase:

“We should stop playing defense on Social Security, and instead talk about why Social Security is a public pension that we should be proud of, that has lifted tens of millions of people out of poverty. The three-legged stool — Social Security, pensions, private savings — has seen two of the legs sawed off for a large number of people. It’s time to look at expanding Social Security as an issue of retirement security.”

Brown says benefits to seniors should be increased by modifying the inflation rate calculations and he recommends upping the Social Security payroll tax cap, which would mean the rich would pay more.

How do you think Congress should solve the problem?

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