A new government report released yesterday estimates that the Social Security Disability trust fund will exhaust its reserves in just four years, two years earlier than previously projected. Obviously, this is a disaster for the millions of disabled Americans who apply for disability benefits each year.
I have been saying for years that there are three options to deal with this: raise taxes, raise the entitlement age (for retirement), and means testing. The corollary to means testing for Social Security Disability is to raise the age brackets in the Grids, the Vocational-Educational guidelines under which many cases are decided. That is, what used to lead to a finding of disabled say at age 50 or above would now not be disabling until 54 or 55.
In 2011, the payroll tax was lowered in order to spur economic growth. Unfortunately, cutting the payroll tax, while palatable to working Americans, is clearly part of why the date for "exhausting" the trust funds keeps getting closer. It really is time for the government to face up to this and I believe that they are going to do a little bit of all three potential fixes, though the one that "works" best is not only reinstating but further raising the payroll tax, because it guarantees more money is paid into the system. The age and means testing save money but the amount that is actually saved is never certain.
Although today's news today is grim, I see this as nothing new. The time for change was about ten years ago but perhaps this current scare will finally force some long overdue action on the part of the politicians.
Lew Insler, Esq.