A hearing by the House Ways and Means Social Security subcommittee last week drew attention to the impending insolvency of the Disability Insurance (DI) trust fund in 2016. While there were some disagreements, there was also a clear bipartisan consensus that something must be done to shore up the finances of Social Security.
A hearing by the House Ways and Means Social Security subcommittee last week drew attention to the impending insolvency of the Disability Insurance (DI) trust fund in 2016. While there were some disagreements, there was also a clear bipartisan consensus that something must be done to shore up the finances of Social Security.
The hearing featured testimony from Charles Blahous, a public trustee for Social Security, Ed Lorenzen of the Committee for a Responsible Federal Budget, and Webster Phillips from the National Committee to Preserve Social Security and Medicare.
All three agreed that, given the limited time between now and the exhaustion of the DI trust fund, it would be impossible to avoid a draconian cut in disability benefits without reallocating some of the payroll tax from OASI (the retirement program) to DI. Congress last reallocated the payroll tax in 1994.
However, both Blahous and Lorenzen strongly advocated that reallocation be accompanied by structural reforms to strengthen the long-term solvency of Social Security as a whole. They noted that OASI actually faces a larger shortfall over the long term than DI. Reallocation, they said, should not be used as an excuse to avoid addressing this challenge.
“One of the lessons from [the] 1994 reallocation is that if we enact reallocation legislation delaying depletion without addressing the long-term shortfall facing Social Security system,” said Lorenzen, “the pressure on policymakers to act will be reduced and action to restore Social Security solvency will continue to be delayed until we face the crisis of imminent trust fund depletion again.”
Blahous warned that delaying broad reforms until close to 2033 — when all of Social Security’s trust fund reserves are projected to be exhausted — would mean that general revenue subsidies would have to be used to supplement Social Security payroll taxes. He said that could destroy Social Security as we know it, “virtually forcing an abandonment of the program’s historical financing structure that has in the main served the public well for three-quarters of a century.”
Fortunately, there was at least some level of bipartisan agreement among the members of the subcommittee. Many Republican members raised their own concerns about Social Security’s financial outlook. Rep. Jim Renacci (R-Ohio) pointed out that Social Security’s unfunded liabilities have doubled over the last decade, while Rep. Mike Kelly (R-Penn.) bristled at the prospect of workers and future beneficiaries not being able to rely on benefits from a safety net that Congress was too indecisive to make secure.
Rep. Earl Blumenauer (D-Ore.) criticized leaders on both sides of the aisle for failing to adopt any meaningful reforms over the past two decades. He argued that the options for securing the program’s finances are well known and that ordinary citizens could likely come to a consensus far quicker than their elected officials.
The Concord Coalition’s experience hosting interactive budget exercises across the country lends support to Rep. Blumenauer’s statement. Participants in the exercise, Principles and Priorities, have shown time and time again that ordinary Americans can come together and make tough fiscal choices. Hopefully this Congress, facing a deadline to act on Social Security, will do the same.
