Costs in one large part of the Social Security system are not rising as fast as experts thought they would several years ago, and the system as a whole may be in better financial shape than generally supposed.
The unexpected good news comes not from the basic old-age insurance program for which Social Security is best known, but from the disability insurance program it runs on the side.
In the early 1970s, for reasons still not completely understood, there was almost a disability stampede in this country. The annual total of disability awards began increasing rapidly. The Social Security actuaries had to make a corresponding increase in estimating the disability program's future cost.
No sooner had that increased estimate been made, however, than in 1976 and 1977 the number of disability awards suddenly leveled off -- and then last year plunged to 1972 levels. The actuaries have had to go back to their adding machines; they are revising their cost estimates as they do every year). The official figures will not be published until spring.
But the new estimates are almost sure to strengthen the hand of those in Congress who, mainly for political rather than any actuarial reasons, want to rescind or reduce the huge tax increase voted in 1977 to sustain Social Security. Most of that tax increase has yet to take effect. More than a third of it was earmarked to pay future disability benefits. Experts in and out of government think the new figures will show that part of this disability tax was unneeded for the disability fund (though it still may be necessary for the old-age fund, which remains in deficit).
These potential effects on taxes and politics indicate how the disability program has grown in recent years; it has snuck up on Congress. Its future costs may not rise as fast as recently predicted, but it is still one of the largest federal programs in its own right, one of the great building blocks of the federal budget.
Optimistic Americans tend to think of disability as a rare occurrence. But it is quite common.
Of every 100 young men now entering that part of the work force covered by Social Security, 30 can be expected to draw disability benefits sometime before they reach age 65 if present disability rates continue. The figure is only slightly lower for women.
Social Security's disability trust fund now provides about $15 billion in benefits a year to about 5 million beneficiaries, more than the population of Maryland.
Most of these recipients are older workers, their bodies finally worn out by work.
There is almost a disability industry. The volume of appeals from Social Security disability decisions is so great that the system has had to create its own judicial corps of 648 administrative law judges. That is more than the number of U.S. District Court and appellate judges combined.
And the process does not end at this administrative level. One out of every 20 civil cases filed in U.S. district courts is a further appeal of a Social Security disability decision.
Nor is Social Security the only source of disability benefits in the work force. It is merely the largest of a long list of federal programs.
All told, the federal government estimates it will spend nearly $40 billion next fiscal year in disability benefits -- about $1 out of every $13 in the budget. In addition to those benefits paid under Social Security, this money will go to veterans, coal miners, disabled federal civilian employes, the military, the disabled poor and various other groups. In addition, there are state and local government and assorted private forms of disability insurance.
The disability insurance program was added to Social Security in the 1950s. In the mid-1970's, disability expenditures -- an eighth of all Social Security expenditures -- began outstripping the disability trust fund's share of the Social Security tax each year. When Congress passed the Social Security tax increase in 1977, the disability trust fund was the one the experts said was closest to exhaustion. (The other trust funds are for the old-age and survivors insurance program, and for Medicare.)
Disability awards in 1970 were 350,000. By 1975 they had climbed to 592,000. No one quite knows why, though Social Security experts now think the recessions of 1969 and of 1973-74 were important reasons. People with partial impairments who in other circumstances might have continued working -- and might have been adjudged able to continue -- gave up and resorted to disability.
In 1976, however, the number of disability awards fell slightly, to 551,000, and it in 1977 it was 569,000. Then last year it dropped to 457,000, according to a preliminary estimate made for the House Ways and Means subcommittee on Social Security.
Congress expresses Social Security costs and taxes as a percentage of socalled covered payroll in Social Security jobs. That payroll is all wages subject to Social Security tax in any given year.
In 1977 the Social Security tax was 5.85 percent for both employer and employe on the first $17,700 of wages. The tax rate was already scheduled to rise under existing law to 6.05 percent in 1978, 6.3 percent in 1981 and 6.45 percent in 1986, while the wage base -- the maximum amount of wages to which the tax applies -- was scheduled to rise automatically each year at about the rate of inflation.
In the 1977 tax bill, Congress voted to raise this wage base faster than inflation for several years, then return to the inflation rate. Thus the wage base this year is $22,900, and by 1981 it will be $29,700 -- a large tax increase, but one that hits only higherpaid workers.
But Congress also voted a large increase in the rate, which will affect all workers. The rate has been raised to 6.13 percent this year, and is scheduled to go to 6.65 percent on Jan. 1, 1981, two months after the next election, and to 6.7 percent in 1982.
It is mainly this scheduled 1981 rate increase that many members of Congress want to forestall. Recently the caucus of all House Democrats formally asked the Ways and Means Committee to report out a bill to rescind it.
The Carter administration, for a variety of reasons, has urged Congress to wait a while before tinkering with Social Security taxes. Among other things, it wants Congress to "earn" any reduction in scheduled Social Security taxes by imposing hospital-cost controls and thereby cutting future Medicare costs.
The new disability numbers may complicate this strategy. The 1977 tax increase amounted to about 1.8 percent of covered payroll over the next 75 years, a number that sounds low but is large.
Of this amount, more than a third -- 0.67 percent of payroll -- was said to be needed to pay future disability costs. But experts say that, in the forthcoming actuarial report, these estimated disability costs are now likely to be lowered by 0.4 percent of payroll. That would leave the disability trust fund in surplus -- and Congress with a lot of money to play with.
The question remains: Why have the award totals now turned down, and more important, will they stay down? Dennis Sweeney. a Baltimore legal services lawyer and Social Security specialist who has become a leader in efforts to aid the disabled nationally, has an optimistic theory.
It is not simply that the economy has improved, he says. In the 1950s and 1960s, many eligible workers were unaware of the disability benefits to which they were entitled under Social Security.
Since 1970, Sweeney says, for a variety of reasons poverty lawyers and state and federal officials have been making the workers more aware of their due. For one thing, in 1972 the federal government took over the old state welfare programs for the disabled, and in that process case workers found that many people on those welfare rolls were eligible for Social Security, too.
Now, however, Sweeney believes that this reservoir of unreached eligible workers is drying up. The big increase in disability payments in the early 1907s was a one-time-only affair, by this analysis, and in future years the system sould go forward on more level terms.
NEXT: Changing the definition. CAPTION: Illustration 1, $1 out of every $13 in next year's budget is for disability; Illustration 2, 3 out of every 10 men now entering the work force may end up on disability; Illustration 3, 1 out of every 20 civil cases filed in federal courts involves disability, By Robert Barkin -- The Washington Post; Chart, Benefit Outlays For The Disabled. By Richard Barkin -- The Washington Post;