Home > News > Republicans want to reform disability insurance. Here's why that's hard.
208 views 9 min 0 Comment

Republicans want to reform disability insurance. Here's why that's hard.

- February 17, 2015

Social Security checks wait to be mailed to beneficiaries. (AP/Bradley C. Bower)
Republicans have been railing against big government for years, but for the past two decades they have all but ignored the growth of one of the nation’s biggest and costliest programs: Social Security Disability Insurance (SSDI).
That may be changing. Congressional Republicans are making noises about fundamental reforms, voicing concerns that “malingerers” are swelling the ranks of the beneficiaries, as in Sen. Rand Paul’s musing that “over half of the people on disability are either anxious or their back hurts — join the club.
SSDI is a big target. It provides a monthly check to more than 10 million people at a cost of $140 billion annually in 2013. The program has been growing for years, a surge attributed to a mix of factors, including the increase in Social Security’s full retirement age, the aging of the baby boomers and the growth of women in the workforce (which has increased the pool of possible recipients).
Benefits are paid through a trust fund that quietly takes a portion, currently 1.8 percent, of the 12.4 percent Social Security wage tax, with half coming from employers and the other half from the paychecks of employees. But the trust fund is running out of money; the Social Security trustees say it will fall short by the end of 2016.
All Congress has to do to fix this is to reallocate a small portion of the tax from the retirement program to the disability fund, a move that would have negligible impact on the retirement program’s finances. But, in the opening days of the 114th Congress, House Republicans seized on the program’s looming insolvency, enacting a resolution that creates a point of order against any reallocation bill that does not also include reforms that improve the trust fund’s actuarial balance.
In theory that means that if Congress is unable to reform the program, disability benefits will be cut by nearly one-fifth when the trust fund runs out.
Will reform happen? The automatic triggering of draconian cuts makes it seem more likely, but the nearly 60-year history of SSDI suggests five major obstacles:
1) There is no strong constituency for reform.
SSDI was enacted in 1956 after a ferocious struggle in which business groups lined up against the legislation. As Martha Derthick’s “Policymaking for Social Security” recounts, after enactment, business groups more or less withdrew from opposing SSDI, even as the program expanded, and have since played only a minor role in the politics of the program.
Why? The most obvious explanation is that employers can pass the costs of their portion of the tax to workers in the form of reduced wages. The real costs of the program are borne by everyone who receives a wage, a diffuse and amorphous group.
In theory one could imagine a powerful “Wage Workers For Reduced SSDI Taxation” coalition, but so far this has failed to materialize, and thus the ranks of interests that will mobilize in support of cutting disability insurance are pretty thin — mainly organizations ideologically committed to reduced government.
2) The opposition will be united.
On the flip side the beneficiaries of the program are well organized and can be counted on to fully mobilize to protect SSDI. Disability organizations like Disabled American Veterans, the Consortium for Citizens with Disabilities, and The Arc (for people with intellectual and development disabilities) may not have huge financial resources, but it’s not fun for politicians to oppose them.
Disability groups are likely to be joined by AARP and other senior groups, which have deeper pockets and may see SSDI cuts as the opening salvo in a broader attack on Social Security.
3) Backlash is likely.
Cutting a program aimed at people with disabilities can be politically perilous, as the Reagan administration learned in the early 1980s. The administration reasoned that some SSDI recipients were either not really eligible or healthy enough to work, so it expedited a review process aimed at “cleansing” the rolls.
The result was a political fiasco. The media found horror stories of despondent disabled people who had been summarily cut off and left penniless, including several who committed suicide. A huge backlash against the reviews led to their suspension and, eventually, policies that expanded SSDI eligibility.
4) SSDI is a complex system.
The process by which people apply for SSDI benefits is multilayered, involving state agencies, two levels of appeal within the Social Security Administration and further appeal to the federal courts. Intervening in this system is no simple matter. As Jennifer Erkulwater shows, even if Congress acts, reform can easily go awry if the SSA is not cooperative or the courts begin to question the direction of the policy.
5) Increasing the employment of people with disabilities requires investment and ingenuity.
The main rationale for cutting SSDI is saving money, but any realistic plan to shrink the program will require further spending, both to vet the current eligibility of recipients and to get qualified beneficiaries back to work. The Obama administration is proposing to invest more money on both these ventures, but it’s unclear that Republicans will go along.
Moreover, the much-ballyhooed path from the disability rolls to the workplace appears much bumpier than policymakers imagine. A 2010 OECD report concludes that no nation has yet discovered an effective way to get people receiving disability benefits into work. The only successful strategy identified thus far is to intervene early, before people even apply for disability benefits, and encourage them to stay in the jobs they have. Alas, this approach is hard to envision for SSDI, as people can only apply to the program after they have been out of work for a minimum of five months.
Of course, it is possible that Republicans will overcome these challenges, maneuver a bill through the always-tricky obstacle course on Capitol Hill, and persuade a Democratic president to sign a major disability reform package. Don’t bet on it. As some journalists have sleuthed out, the fine print of the House resolution gives Congress an out: Lawmakers could reallocate just enough money to keep the program for a couple of more years without triggering the point of order. A small reallocation would have a barely perceptible effect on the fiscal health of the retirement program.
If Congress has to choose between a tough vote cutting benefits to people with disabilities and a simple vote for reallocation, it is not hard to see the path of least resistance.
Thomas F. Burke is a visiting scholar at the Institute of Government Studies at UC-Berkeley and a professor of political science at Wellesley College. Jeb Barnes is a professor of political science at the University of Southern California. They are the authors of “How Policy Shapes Politics: Rights, Courts, Litigation and the Struggle Over Injury Compensation(Oxford University Press, 2015).