Social Security disability trust fund projected to run out of cash by 2016

A government entitlement program is headed for insolvency in four years, and it’s not the one members of Congress are talking about most.

The Social Security disability program’s trust fund is projected to run out of cash far sooner than the better-known Social Security retirement plan or Medicare. That will trigger a 21 percent cut in benefits to 11 million Americans — people with disabilities, plus their spouses and children — many of whom rely on the program to stay out of poverty.

“It’s really striking how rapidly this is growing, how big it’s become and how D.C. is just afraid of it,” said Mark Duggan, a University of Pennsylvania economist and adviser to the Social Security Administration.

Part of the reason for the burgeoning costs is that the 77 million baby boomers projected to swamp federal retirement plans will reach the disability program first. That’s because almost all boomers are at least 50 years old, the age at which someone is most likely to become disabled.

The growing costs are also a result of the economy’s troubles. When people can’t find work and run through their jobless benefits, many turn to disability benefits for assistance.

“They’re desperate,” said Ken Nibali, a retired associate commissioner of the program. “Some who are marginal and struggling to have a low-paying job now literally have no options.” So, he said, “they figure, ‘I do have trouble working, and I’m going to apply and see if I’m eligible.’ ”

Sen. Tom Coburn (R-Okla.), said he has tried to interest fellow lawmakers in the issue, without much luck. “Nobody wants to touch things where they can be criticized,” Coburn said, adding, “the fund is going bankrupt” and “then what are we going to do?”

Applications to the disability program have risen more than 30 percent since 2007 — the last recession started in December that year — and the number of Americans receiving disability benefits is up 23 percent.

More Americans receive disability benefits than 20 years ago, although people are less likely to have physically demanding jobs, health care has improved and the Americans With Disabilities Act bans discrimination against those with handicaps.

Social Security is made up of two programs: the retirement plan supporting 40 million senior citizens and 6 million survivors, and the disability insurance program created during the Eisenhower administration.

The disability program pays benefits averaging $1,111 a month, with the money coming from the Social Security payroll tax. The program cost $132 billion last year, more than the combined annual budgets of the departments of Agriculture, Homeland Security, Commerce, Labor, Interior and Justice. That doesn’t include an additional $80 billion spent because disability beneficiaries become eligible for Medicare, regardless of their age, after a two-year waiting period.

The disability program is projected to exhaust its trust fund in 2016, according to a Social Security trustees report released last month. Once it runs through its reserve, incoming payroll-tax revenue will cover only 79 percent of benefits, according to the trustees. Because the plan is barred from running a deficit, aid would have to be cut to match revenue.