House Budget Robs Social Security for Welfare Payments

Passed in haste, we now have time to review exactly what all House Democrats and around 80 Republicans voted for when they passed a budget deal hammered out between outgoing Speaker John Boehner and President Obama.

The deal hikes spending in the short term, lifts the debt ceiling and is held together by a host of budgetary tricks and sleights-of-hand.

One of the more egregious acts is to take $150 Billion out of the Social Security Trust Fund to prop up the program’s disability benefits. The Social Security raid will keep the disability program solvent through 2022, at which time Congress is likely to again raid the federal pension program.

The Disability Insurance fund of Social Security is one of the fastest growing federal entitlement programs. Created in the 1950s, it was designed to provide temporary assistance to workers suffering medical disabilities that prevented them from working. In the last several years, however, the program has ballooned.

Between 2007-2011, applications for disability assistance grew by a third. The Inspector General of the Social Security Administration found that disability applications rose in tandem with unemployment and the expiration of unemployment benefits. The finding suggests that unemployed workers are using the disability program as a kind of welfare, rather than assistance for an actual disability. The Inspector General’s office even suggested that Social Security’s disability program was the “new welfare.”

Today, more than 5 percent of the working age population receives federal disability payments. In the 1990s, the last time Congress had to bail-out the disability program, just over 2 percent of the population received disability. Almost half the growth in disability payments arose after Congress expanded access to benefits. A worker’s age, education level and even ability to speak English became factors in determining eligibility. In other words, a person’s inability to speak English could qualify as a “disability” and entitle the worker to federal benefits.

Changes in the demographics of the work force can’t explain the increase in disability benefits, however. The Federal Reserve Bank of San Francisco found that half of the increase in disability payment recipients is “unexplained,” by changes in the workforce. This “unexplained” phenomenon accounts for payments of more than $40 billion a year.

Unsurprisingly, the disability program is running out of money. According to the recent Trustees report on Social Security, the disability program pays out around $30 billion more in benefits than it collects in taxes. Next year, the disability trust fund will be completely exhausted. Over the next ten years, the disability program faces a $256 billion shortfall.

The Boehner/Obama budget deal tries to duct-tape this shortfall. The deal agreed to by the House transfers $150 billion from the Social Security Trust Fund to plug the growing hole for disability payments. Notwithstanding the fact that the Social Security program itself faces serious solvency issues, the House budget again uses the Trust Fund like a slush fund to paper over its own mistakes.

Rather than do the hard work of reforming a disability program that has exploded and evolved into a defacto welfare program, the House has chosen to kick the problem down the road. This is what passes for responsible “governing” for the establishment in Washington.