Social Security’s budget crisis begins next year

11 million Americans receiving Social Security disability benefits could face painful cuts as early as 2016.

Image credit: iStockphoto

This week marks the 80th anniversary of Social Security, a good time to remember the program’s many successes and achievements over the past eight decades. For nearly 11 million Americans with injuries or disabilities and their families, however, it may also be a reminder of an impending crisis that Congress must confront.

Unless lawmakers act by the end of next year, Social Security’s Disability Insurance (DI) Trust Fund will run dry, forcing a 19 percent reduction in benefits for all beneficiaries if the program continues without an additional source of revenues. The pain would be immediate and immense, especially considering that the average disability benefit is only about $14,000 a year. Imagine the difficulty of paying for groceries, housing and other needs while suffering a 19 percent reduction in income. It’s easy to see why lawmakers agree that the DI shortfall must be averted. How to avoid the crisis, however, remains an area of significant contention.

For some elected officials, the solution is to transfer the needed money from Social Security’s other major trust fund – the Old Age and Survivors Insurance (OASI) Trust Fund. Advocates for this approach often call it a “routine” way to bring the DI Trust Fund into balance, but they ignore the fact that OASI itself has serious problems.

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