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Social Security’s Disability Insurance Financing Crisis: Why Another “Quick Fix” Funds Transfer May Cost Far More Than Advertised
Social Security’s trustees have long warned Congress to address the troubled finances of the Disability Insurance (DI) program. Given the DI trust fund’s projected exhaustion date of 2016, legislation will be required during this Congress to prevent large, sudden benefit cuts. Some have suggested shoring up the DI trust fund by shifting payroll tax funds from Social Security’s much larger Old-Age and Survivors Insurance (OASI) trust fund, which is projected to remain solvent through 2034. By itself, however, such a reallocation would merely put off necessary substantive repairs, delay the financial reckoning for the disability program, and hasten the insolvency of the retirement fund. Absent near-term, fundamental reform, Social Security’s broader financing problem could grow too large to solve at all. Policymakers should not squander this opportunity to begin critical reforms of DI. Read More…