Tuesday, 26 June 2012 04:32

Social Security Disability Recipients to Take 21-percent Cut

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In April the trustees of Social Security and Medicare announced that beneficiaries of those programs face a cut in their benefits of about 25 percent by 2033 if Congress does nothing. But buried in their report was their estimate that beneficiaries receiving disability benefits under Social Security, known as the Social Security Disability Insurance program (SSDI), will see their checks reduced much sooner — by 21 percent within four years — because of burgeoning disability claims.

Pamela Villarreal, writing for the National Center for Policy Analysis, explained that a number of factors are behind the explosion in disability claims – nearly 1 million in just the last three years — including the broadening of the definition of “disability,” the expiration of unemployment benefits, the impact of the Great Recession on the jobs market, the lack of accountability by the Social Security Administration, malingering by the program’s recipients, and the unwillingness of Congress to face reality.

She explained:

Since the mid-1950s, the program has expanded and now covers workers under the age of 50, disabled spouses of deceased workers and disabled children who were never able to work.

Disability now includes mental impairments as well as physical ones. But even with better treatments … few people ever leave the rolls, except through retirement.

The program, funded federally but administered by the states, is being milked by many who have run out of unemployment benefits and other resources and haven’t been able to find work. At present one out of every eight working-age, nonretired individuals receive disability payments, some for “mental disorders” and “back pain.” Claims for mental disorders, for instance, have more than tripled from 10 percent of cases in 1982 to 32.8 percent in 2012, with half of those based on “mood disorders” such as depression or anxiety.

Back or neck “problems” have increased by 31 percent and were the top cause of disability for 50- to 64-year olds. Depression and anxiety and other emotional problems increased by 20 percent, and now constitute one-third of all disability claims.

Once on the rolls, beneficiaries have little incentive to return to work because their disability entitles them to additional benefits such as food stamps, Medicaid, Section 8 housing, and student-loan forgiveness. As a result less than one half of one percent of those on disability ever go back to work.

The correlation between the unemployment rate and the increase in disability claims is indisputable. A study by the Organization for Economic Cooperation and Development (OECD) that covered 22 years showed that when the unemployment rate increased by one percent, disability claims applications jumped by 10 percent.

Although small relative to its bigger siblings, SSDI will outstrip its revenues no later than 2016, forcing the program to cut its benefits to the amount of revenues received. This will be the first of the entitlement programs to see serious cuts in benefits.

Oklahoma Senator Tom Coburn has tried to bring the matter up to his colleagues, with little success. He complained: "Nobody wants to touch things where they can be criticized. The fund is going bankrupt [and] then what are going to do?" Representative Paul Ryan (R-Wis.) admits that his proposed budget plan to rein in government spending doesn’t address SSDI because it’s just too small: “We’re not trying to fix every problem in American with this one document. We’re trying to prevent a debt crisis, and this [SSDI] is not a driver of our debt.”

When economist Gary North predicted with certainty that “Social Security Will Go Broke in 2010” in late December 2009, he was both right and wrong. In fact, the Social Security program began to eat into its reserves to meet its shortfall in 2010, but North was wrong in his estimate of the size of that shortfall. North estimated that payouts would exceed revenues (North’s definition of “broke”) by $25 billion. He missed it by a mile. The actual shortfall was double that, and is expected to double again — to $100 billion annually — in less than eight years.

As David John, Senior Research Fellow at the Heritage Foundation, wrote:

The new trustees report is not based on conjecture; it is based on a firm understanding of the economy and the U.S. population. Almost every new taxpayer who will begin a career before 2033 is living today and can be counted. Similarly, all the people who will face approximately 25 percent across-the-board benefit cuts starting in the year 2033 if Congress does nothing to fix the program are alive now, and most of them are paying taxes.

Social Security’s problems are based on demographics that do not change from year to year. The people who will be hurt if nothing is done to fix Social Security are not unknown people of the future: They are the nation’s children and grandchildren of today.

This is the inevitable end-game of the government’s welfare programs. The recipients of disability benefits under SSDI will be the first to suffer serious declines in their benefits. They won’t be the last. 

1 comment

  • Comment Link Madeleine Wednesday, 27 June 2012 04:03 posted by Madeleine

    I htought th epeople, the workers paid inot the disability program through their Soc ial security, they have ot work ot get those payments, if you didn't work you ar enot eligi8ble, and your payments go according ot how much you made while working. My daughter is on disability due ot a car accident that crippled her, she can walk but she is in constant pain and she can't stand for long periods of tiem and she can't sit for long periods of time. She was an assistant administrator of a major hospital in NY and she told me every immigrant that came through the door had a medicaid card and some of them were put on disability even though they never worked here. This is the problem I am having, everyone who comes here gets something for free, I think that is why people want ot come here, not because they have anything to offer us, but because we give to them. It seems to me when you can give 52 million in aid to Yeman as we did last week or millions to other countries and millions for all the wars we started this past couple of years, where does the American citizens come in, is all of our tax payer dollars going out the door and flying over to some nation in need of help, or some UN agenmda 21 or some electricity scam ot take what little money we have left away from us,

    The UN still thinks we have too much. They dump millions of people on the world , they are not illegal because the UN sends them, I live in a luxury apt building in a Chicago suburb, it is now a half way drop off point for Africans and East Indians, Africans who are getting their rent paid by us, getting their food paid for by us but the best is, they get a brand new SUV , really nice, to get back and forth in, I can't afford one but they have them and I pay for it, my dues and my taxes pay for that. They are here ot get jobs and most of them do, those jobs don't go to us, they go to them, they are decent jobs , why are they going to them and not the people out of work in America? Reducing Americans social security disability payments? I would rather those immigrants did without a brand new 60 or 70.000 dollar SUV and give the money to the people who need it. The USA has become one big welfare state for everyone except Americans. .We can't even keep what we paid into and are entitled to, the Gov. makes it sound like welfare, mean while the Gov is stealing it every month. If they reduce disability and lower or elininate Social security for seniors and medicare , all of which we paid into and keep giving to illegals and foreigners, then Americans should find some other place ot go, Tell Obama to stop sending millions to the middle East , he is the President of the USA unfortunately and he doesnt' seem ot know where he is or whose money he is spending.

    The Chinese are given instant citizenship when they come here and build their factories, hundreds of them, tax free, they don't hire Americans so the Chinese workers they bring in get 5 years instant citizenship, you ar eno wtalking aobut a lort of Chinese paying into Social security, they just bought up a load of prperty in the Rust belt here in Illinois, they will neeed more builders and more workers and they will all be paying inot SS, why is that making the Gov. poorer? that shoudl bring a lot of Social security rtevenue in here, I don't get it.

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