What will we do when Social Security goes broke? Who knows but we will have a real life preview in 2016 as the Social Security Disability Fund will be tapped out. And during an election year too! President Obama has obdurately refused to address any long term fiscal problems and now as his former pastor would say "the chickens have come home to roost." What will happen, assuming we follow the law, is every recipient will see his or hers monthly stipend reduced by 20% putting the average recipient below the poverty level.
For those who truly cannot work the cut will be devastating but 1 in 20 Americans are not disabled even though that many may be able to convince a federal bureaucrat as much. Since 1991, the recipiency rate has doubled. With increasing numbers of DI recipients come rising costs, roughly doubling real (inflation-adjusted) spending on Disability Insurance since 2000. What started out to as a noble program to help those with specific disabilities was amended (reformed was the word used by the proponents of the change) to a subjective definition of disabled. It has morphed into early retirement schemes or long term unemployment benefits and now it is broke and it cannot be fixed with a pen and a phone unless Obama has $267 billion in his hip pocket. That is the projected shortfall over the next 10 years. Then there is the Medicare looting. After a 2 year wait the newly disabled are eligible for Medicare further straining a fund that was targeted by Obamacare for $700 billion in cuts.
One remedy that should certainly produce outrage if not gunfire is "reallocation" favored by the administration and some in congress. Under reallocation monies would be shifted from Social Security Retirement which is slated to go belly up in 2036 to today's deserving needy who have milked the their own fund dry. Congress could increase the employers contribution to DI. It did in1994 when Congress reallocated a portion of the payroll tax revenues from the Social Security program to the Disability Insurance program. Despite a 50 percent increase in the DI payroll tax rate since 1994, the DI trust fund once again faces imminent insolvency. Does any congressman think he can increase payroll taxes on a population that has seen real wages decline for 20 years?
Maybe the Clinton Foundation will spring for a loan.