Mike Kueber's Blog

April 9, 2013

SSDI reform may be in the offing

Filed under: Issues,Politics — Mike Kueber @ 9:42 pm
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A few months ago, I blogged about Social Security Disability Insurance (SSDI) and contrasted it with Supplemental Security Income (SSI).   After describing the explosive growth of these programs, I concluded with the following comment:

  • I disagree with conservatives who commonly argue that America’s budgetary problems can be solved by eliminating waste and fraud in government.  But I wish our exploding costs for SSDI and SSI (and military disability) received a bit more scrutiny from those in Washington.

Well, the wished-for scrutiny seems to have arrived.  Today, I read a blogpost by Time magazine’s Joe Klein about SSDI, and it said the following about the program:      

  • An argument can be made that it was humane to expand the SSD acceptance rate after the housing crash of 2008. There were no jobs to be had. But we are in recovery now—and scamming the system is never a good idea. The neighbors inevitably figure out who is gaming the system. The stories grow and become exaggerated—I’ve heard specific tales of abuse all over America on my road trips. Faith in the federal government is shattered as a result.

This paragraph perfectly describes my experience with SSDI – i.e., I was completely unaware of it until I started hearing friends tell me stories about people who were gaming the system.  And this gaming was resulting in a cynicism toward the federal government.   

Although Klein often writes columns for Time magazine that I find irritating for their far-left perspective, he occasionally writes something that strikes me as exactly right, at least for a liberal.  His conclusion:

  • Once again, those of us who believe in government activism—who believe in universal health care, infrastructure development, a much better system of education and helping the truly needy—have a responsibility to make sure that the government we have is clean and efficient.

Klein acknowledged that his blogpost was prompted by a column by Chuck Lane of the Washington Post.  Lane’s column provided a wealth of information and insights, including the following:

  • Congress created [SSDI] in 1956 to help workers age 50 and older who were terminally ill or unable to work for the rest of their lives, but it has steadily expanded so that now it covers workers in their 20s with maladies such as back pain.
  • SSDI spending has tripled since 1970, relative to the economy’s size, and it now approaches a full percentage point of gross domestic product. The program paid $135 billion to 8.8 million beneficiaries (plus 2.1 million spouses and children) in fiscal 2012. Since beneficiaries are eligible for Medicare after two years on SSDI, the program also added $80 billion to the federal government’s health-care tab.
  • An aging labor force explains some of the program’s growth; older workers are more likely to become disabled. But a growing body of economic and journalistic evidence suggests that SSDI reduces work incentives, because of its permissive eligibility criteria and relatively high benefits, as compared to low-wage workers’ potential earnings.
  • Once a backup plan for dying or incapacitated workers near retirement age, SSDI now serves as ersatz unemployment insurance or welfare — particularly attractive, and particularly hard to give up, in a sluggish economy.
  • A June analysis for the Rand Corp. confirms that SSDI discourages work, saying that “the employment rate of new beneficiaries would have been 28 percentage points higher in the absence of benefit receipt.
  • SSDI is one reason, in addition to recession and aging, that the U.S. ratio of employment to population declined from 62.5 percent to 58.5 percent in the past 10 years. The ratio in Germany, an older society than the United States, went up 5 percentage points over the same period.

As Congress tries to deal with America’s budget deficit, SSDI seems like a good place to start.

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