Social Security ran a cash-flow deficit of $55 billion last year and one of its two trust funds, used to pay disability benefits, will go bust in three years, forcing benefits to be cut by 20 percent unless Congress acts, the program’s trustees reported Friday.
Disability insurance is the smaller part of the Social Security program, with the larger portion — the pension program for the nation’s retirees — projected to be solvent for two more decades.
But the combined programs, known as the Old-Age, Survivors and Disability Insurance (OASDI) program, are already seeing a negative cash flow, taking in just $731 billion in taxes and other money from general funds last year while paying out $786 billion in benefits.
Next year’s deficit is projected to be even larger at $75 billion, and there is no sign that the shortfall will let up.
“The trustees project that annual cost for the OASDI program will exceed non-interest income in 2013 and remain higher throughout the remainder of the long-range period,” the trustees said in their 254-page report on Social Security, which was released alongside another report on the state of Medicare’s trust funds.
The 2016 deadline for the disability program is the most immediate problem.
Under current law, the two programs’ trust funds cannot be mixed, meaning Congress and President Obama will have to take some steps to prevent the disability payments from being cut.
Asked about a solution, Treasury Secretary Jacob Lew demurred, saying they have some “program integrity” proposals in their budget but said it will be up to Congress to find a bipartisan solution.
One easy fix would be to change the law and allow the main Social Security funds to cover disability payments, too. But Charles Blahous III, one of the public trustees on the board, said that would end up siphoning money away from retirees later, at a time when that system will need the funds.
Social Security last year was paying benefits to about 46 million retired workers or their surviving family members, and paying benefits to 11 million disabled workers or their dependents.