Budget Woes and the Social Security Administration (SSA): Part 3

In Budget Woes and the SSA: Part 2, we looked at the SSA’s proposed reallocation of payroll taxes from the OASI Trust Fund (Old-Age & Survivors Insurance) to the Disability Insurance Trust Fund (DI) in order to ensure the solvency of the latter past 2016.

Today we will examine the Congressional Budget Office’s (CBO) objection to the reallocation proposal.

Joyce Manchester, a Unit Chief at the CBO, testified on the CBO’s behalf at the DI Trust Fund Congressional Hearing. She spoke to a variety of the CBO’s concerns about the current state of the SSA, including the issue of DI Trust Fund solvency.

According to Manchester, the CBO is of the opinion that reallocating payroll taxes from the OASI Trust Fund to the DI Trust Fund might harm the OASI Trust Fund’s future. Instead, the CBO offered the SSA two possible remedies to the DI Trust Fund’s shortage: generate new revenues or cut spending. Regarding revenues, the CBO suggested increasing the payroll tax rate or the taxable earnings limit for the DI program exclusively. And in order to cut spending, it offered a number of suggestions including: a 15% reduction of all DI benefits or a reduction of DI benefits for people 53 and older, revising the cost of living adjustment, altering DI eligibility rules, increasing the mandatory DI waiting period from 5 months to 12, revising regulations in order that the SSA be represented at hearings, and conducting Continuing Disability Reviews (CDRs) on a more regular basis.

The CBO also suggested to the SSA a number of major policy changes it could make to improve administrative function, such as switching from a full to a partial DI payment program, requiring employers to offer their own disability insurance programs to employees, and revising employers’ tax rates to account for their claim history (a method called “experience rating”).