Yikes! The trust fund for paying disability beneficiaries runs out in less than three years

By Rob Nikolewski on July 8, 2013
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The disability story isn’t going away.

Last month, how the number of people in New Mexico receiving Social Security disability benefits has skyrocketed nearly 60 percent in the last nine years.

Now, we’ve learned that by the own figures, the national is on a path to go broke in less than three years.

WHEN THE MONEY RUNS OUT: Estimates by the Social Security Administration say the trust fund for disability insurance will run out in 2016.

On May 31, the on the long-term financial status of the Social Security Trust  Funds and reported in matter-of-fact fashion that “The DI Trust Fund will become depleted in 2016.”


Because New Mexico is not alone among states seeing dramatic increases in people qualifying for disability benefits and unless another source of funding appears or the federal government clamps down on accepting applications, the money will run out.

“That will require legislative action (i.e., Congress) to address the that imbalance,” Social Security spokeswoman Kia Anderson told New Mexico Watchdog by telephone from the Social Security Administration headquarters in Baltimore.

“This thing is a quite a mess,” said , a budget analyst for the , a Washington think tank that promotes free markets and limited government. “I’m not aware of any plans for substantive reform.”

While a on disability issues, no formal legislation has been introduced to deal with the fund’s looming fiscal evaporation.

DeHaven suspects that Congress “will take the easy way out” and transfer money from the larger Social Security fund into the disability coffers. But as economists say, there’s no free lunch and simply shifting the dollars will amount to “tax increases on workers to pay for these benefits,” DeHaven said.

Taxes from the nation’s employers and employees make up the disability trust fund. “It comes from your FICA () taxes,” DeHaven said, and whatever money remains after disbursements is invested in special interest-bearing Treasury bonds.

Some Social Security administrators have blamed the trust fund drop-off on the rising number of Baby Boomers who are aging. “The fund has had more Baby Boomers than covered workers,” Anderson said.

But independent studies insist that aging boomers don’t account for the most significant increases in spending.

Rather, it’s been liberalization of what qualifies as a disability and the growing market for lawyers specializing in disability claims.

Figures from the and the two  think tanks known to be left of center on the political dial — show that while the SSA’s approvals for disability claims resulting from causes such as cancer, strokes and heart attacks have remained constant from 1981 to 2009, dramatically for those with musculoskeletal and mental disorders during those same years.

As a result, the reports that while in 1968 there were about for each worker collecting disability, by April 2013, there were working full-time for each worker on disability.

Then there are the lawyers.

While a respectable number of claims are initially rejected, attorneys for claimants often win on appeal. Add to that a backlog of an estimated 1.3 million cases under review and administrative judges feel overwhelmed.

“I no longer feel that I am serving the American public,” Thomas W. Snook, a U.S.  in Miami, two weeks ago. “I feel I am serving the claimants’ representatives, especially a few large law firms; and I am powerless to do anything about it.”

“There is no perfect solution here,” DeHaven said. “But the burden of proof is not on the private sector and not on taxpayers but it’s on the government and their responsibility to taxpayers … Maybe an answer is, get responsibility back to the state level.”

A more stringent evaluation of disability claims has been talked about but is fraught with political perils. Democrat Jimmy Carter and Republican Ronald Reagan tried to stem the rising tide more than 30 years ago “but after pressure, notably from news stories of people not getting disability benefits, they ended up liberalizing the process,” DeHaven said.

Contact Rob Nikolewski at and follow him on Twitter @robnikolewski 

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4 Comments For This Post So Far

  1. L.E. Liesner
    8:00 pm on July 8th, 2013

    So true. The problem is that SDI has become so easy to get that for many it is the alternative for when unemployment insurance runs out. Fraud runs rampant throughout the system. The nanny state mentality will eventually bankrupt the whole country. Add Medicaid extention to the other financial woes we face and it speeds up the inevitable. The big question for New Mexico is, what happens if the federal government reneges on their Medicaid extention promises, instant bankruptcy for the State. Putting fiscal trust in the federal government at this time is poor policy.

  2. qofdisks
    11:28 pm on July 10th, 2013

    The notion that disability is easy to get is ridiculous. Just because so many people are on it does not mean that it was easy to get or that those people are not really disabled.
    We have an aging population. We have an obesity epidemic. We have a work climate that discards the middle aged. We have a dysfunctional health care system where problems are not detected and cared for early before more intransigent health problems occur.
    This is a recipe for high disability rates at earlier ages. But, think about it, EVERYONE will become disabled before they die. A civilized society is obliged to care for it’s young, old and disabled regardless of capacity to work.

  3. Dennis Schlessinger
    8:39 pm on July 11th, 2013

    A truly civilized society does not use force to take the property of a citizen for the benefit of another. Civilized members of a society purchase disability insurance from private companies to offset their personal risk

  4. qofdisks
    6:15 pm on July 12th, 2013

    Private companies operate from a profit motive meaning that they are wrongly incentivised to take insurance premiums and then not pay out. Making a profit from the disabled is unconscionable.
    A civilized society occurs when the abled support the young, aged and disabled. It is not a matter of using force to “take away property”. It is a matter of altruistic desire to live in a secure civilization. Taxation and just laws are merely the ancient means to provide the benefits of a prosperous, stable and secure civilized society. Security for all is security for each individual.
    Profit motive has been shown to fail time and again in providing civilized security and must constantly be reigned in as greed constantly oversteps.

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