Newest House Procedural Rules Will Impact SSD Trust Fund
The media has been reporting that the Social Security Disability (SSD) Insurance trust fund will fall short of money sometime in 2016. Solutions have been bandied around for several months, but since 2014 was an election year, no action was taken by Congress. Now a new Congress has been sworn in and they are getting to work.
Possible Solution to the Shortfall
The easiest and fastest solution to resolve the SSD trust fund shortfall would be to reallocate some payroll tax revenues from the Social Security retirement trust fund to the SSD trust fund. There is precedent for a reallocation. Senator Sherrod Brown from Ohio noted in a press release that “Reallocation is a simple procedure used by Congress to rebalance how Social Security payroll tax revenues are apportioned between the two trust funds – the equivalent of transferring money from a checking to a savings account. Reallocation is commonsense, bipartisan policy that has been utilized by both parties 11 times since 1957– most recently in 1994.”
Another solution would be to raise taxes to go directly into the SSD trust fund. Without a reallocation or new tax revenue, those receiving SSD will have their benefits cut by 20 percent come 2016.
How Would This Impact the Social Security Retirement Fund?
The Center on Budget and Policy Priorities looked at what a reallocation of some payroll taxes to the SSD trust fund would mean for the Social Security Retirement Fund. If the reallocation is made “to put the two trust funds on an even footing would prolong the DI trust fund by 17 years (from 2016 to 2033), while advancing the OASI fund's depletion by just one year (from 2034 to 2033).” The Center also pointed out that the last two reallocations underfunded the SSD trust fund. “Congress redirected a big chunk of payroll taxes from DI to OASI in 1983 and only partly offset that in a 1994 law. If the SSD's tax rate had remained at its pre-1983 level, we wouldn't need to replenish the fund today.”
The New Congress
Every new Congress, both the House and the Senate, passes procedural rules spelling out how work will be done. These include how bills are to be introduced into the different houses and other housekeeping measures. The current 114th Congress has adopted a rule that says no bill or resolution will be considered if it proposes to reduce the actuarial balance of the Social Security Retirement Fund by at least 0.01 percent of the present value. H. Res. 5, Section 2, Subsection q.
This means that the procedural rules will not allow a reallocation from the Retirement fund to the SSD trust fund. This move is seen as the new Congress' statement that the SSD program will be under great scrutiny and reforms will be proposed. What those reforms could be are unknown at this time.
No matter what reforms may come, having a strong advocate at your side to work your way through the Social Security Disability application process is essential. Let our knowledgeable attorney assist you with all your SSD needs.