Chuck Blahous of the Mercatus Institute, one of Social Security’s public trustees, has a very good article over at e21 on the impending insolvency of Social Security’s Disability Insurance program:
The problem in a nutshell is that Social Security’s disability trust fund is running out of money. The latest trustees’ report projects a reserve depletion date in late 2016. By law Social Security can only pay benefits if there is a positive balance in the appropriate trust fund (there are two: one for old-age and survivors’ benefits (OASI), the other for disability benefits). Absent such reserves, incoming taxes provide the only funds that can be spent. Under current projections, by late 2016 there will only be enough tax income to fund 81 percent of scheduled disability benefits. In other words, without legislation benefits will be cut 19 percent.
Check out the whole article here.
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"The biggest reason is the growing number of beneficiaries, though real per capita benefits are also growing. Disabled population growth reflects several factors, including most notably the historically large baby boom generation moving through their ages of peak disability incidence (45-64). In addition, today more women have been employed long enough to be insured for disability benefits than was the case in earlier decades."
Here you have it in a nutshell, CASH FLOW ACCOUNTING V ACCRUAL ACCOUNTING.
The SSA has had the date showing that a boom begets a boom and a bust begets a bust. The baby boom per SSA ended in 1964. That was 50 years ago and they are just now realizing that this is the reason.
Designing a program such as DI requires looking at risks. Insurance companies have been doing this for centuries. Why then does DI face a problem? One plain answer; GOVERNMENT! Congress are elected by the people which means we elect individuals who have no more qualifications at budgeting than most and in many cases far less than the average person.
Politicians like power and to gain power they have to get elected,make promises that are forgotten by voters shortly afterwards. Politicians hate to be the bearer of bad news and so they have kept the DI problem a secret, kicked the can down the road or used words like "The biggest reason is the growing number of beneficiaries, though real per capita benefits are also growing. Disabled population growth reflects several factors, including most notably the historically large baby boom generation moving through their ages of peak disability incidence (45-64). In addition, today more women have been employed long enough to be insured for disability benefits than was the case in earlier decades. "
When a junk car costs far more than its worth what do you do with it? I take my to the salvage yard and I get paid its scrap value.
It's time to scrap SS and Medicare.
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