Budget Woes and the Social Security Administration (SSA): Part 2

In Budget Woes and the SSA: Part 1, we looked at how funding shortages have impacted services provided by the SSA. Today, we will examine how funding issues will affect the future of the Disability Insurance program (the DI part of SSDI).

First, a quick note on terminology. Social Security benefits of all varieties are paid out of two Social Security Trust Funds: the OASI Trust Fund and the DI Trust Fund. The OASI Trust Fund (Old-Age & Survivors Insurance) pays benefits to retired workers and the families of deceased workers. The DI Trust Fund pays benefits to injured workers.

As things stand now, The OASI Trust Fund is solvent until 2035. However, experts predict that the DI Trust Fund will last only until 2016. At that point, it will have only enough funding to pay about 79% of promised disability benefits. In order to secure the future of the DI Trust Fund past 2016, Congress will have to take immediate action.

The SSA’s Chief Actuary, Stephen Goss, testified before Congress that some of the factors that have traditionally driven up DI program costs, factors mostly related to workforce demographics (i.e. baby boomers and women), seem to have leveled off. In light of that partial stabilization, according to Goss, ensuring the future solvency of the DI Trust Fund would require only a one-time reallocation of payroll taxes from the OASI Trust Fund to the DI Trust Fund. That would guarantee solvency of both Trust Funds until 2033.

The Congressional Budget Office (CBO) was not in favor of the proposed reallocation. In Part 3, we will examine why not.