One of the worst 2016 predictions facing the United States is that the Social Security Disability fund is running out of money. Barack Obama, Democrats, and Republicans all have preferences for how to handle the financial crisis, but will Social Security check cuts be required?
In a related report by the Inquisitr, the push for an unemployment extension bill in 2015 faltered after the U.S. unemployment rate improved.
Social Security is actually composed of two separate funds. One is designated for disability insurance while the other is specifically for retirement benefits. A new Gallup survey found that 66 percent of Americans believe Social Security is in a “state of crisis,” and 64 percent doubt they will ever receive their Social Security retirement checks at all. Medicare has enough money in its Hospital Insurance Trust Fund to continue paying benefits at current levels until 2030, while the entire Social Security fund is expected to run out of money completely by 2034.
But the most immediate crisis begins in 2016 with the Social Security disability fund. According to some Democrats and Barack Obama, Social Security disability could be saved from this new fiscal cliff by shifting part of the budget from the retirement fund over to the disability fund. Otherwise, Social Security benefits for the disabled would automatically be cut by 19 percent because revenues only cover 81 percent of scheduled benefit payments.
This solution has already prompted a response from Republicans. According to the New York Times, “Republicans adopted a new rule in the House that could block a direct reallocation of money at the expense of the trust fund that provides benefits for retirees.” According to the Herald Extra, some Democrats have even suggested expanding Social Security benefits, an idea which earned a scoff from Senator Orrin Hatch, chairman of the Senate Finance Committee.
“Where are they going to get the money?” asked Hatch, whose committee has jurisdiction over Social Security. “They don’t ever seem to give any consideration to how deeply in debt our country is and how difficult it’s going to be to get out of it.”
Even if the funds are not combined, Social Security checks for retirees would need to be cut by 21 percent in 2035. One solution suggested by some experts is to essentially raise taxes on the rich. The current Social Security payroll tax cap allows all income over $110,000 to go free of the payroll tax that funds Social Security. Some argue that eliminating the Social Security cap in combination with raises payroll taxes on all Americans would make Social Security solvent beyond our lifetimes.
Whatever the final solution may be, the SSA says that kicking the can down the road and letting Social Security run out of money completely in 2016 should not be an option.
“The more time that they take, the less acceptable the changes will be because there needs to be adequate time for the public to prepare and to adjust to whatever changes Congress will make,” said Carolyn Colvin, acting commissioner of the Social Security Administration. “Remember, these are our most vulnerable population. These are the elderly who helped to build this country. These are the disabled who certainly did not wish to become disabled.”
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