Boskin: Social Security Disability Insurance Fund May Implode in 2016

Wednesday, 17 Jul 2013 07:58 AM

By Dan Weil

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One of the major problems facing the Social Security system is its Disability Insurance Fund (SSDI), says Stanford University economist Michael Boskin.

It's "the ticking time bomb of entitlement reform," he writes in The Wall Street Journal. "According to the Social Security trustees, the bomb is due to go off — when the fund, running out of money, will need to make steep cuts in benefits — just in time for the 2016 election"

The number of beneficiaries in the disability insurance program has skyrocketed to almost 11 million in June from 2.7 million in 1970, Boskin notes, at a cost of $140 billion last year, up eight times, adjusted for inflation, from 1970.

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Part of the problem is that eligibility requirements for the insurance have loosened since 1984, explains Boskin, chairman of the Council of Economic Advisers under President George H.W. Bush.

"Disability insurance has clearly become, in part, a form of extended unemployment insurance and early retirement, with Medicare benefits."

So what's the solution?

"The best alternative ... is to slow spending," Boskin states. "That would mean targeting benefits far more effectively to those in real need and limiting payments for those who can reasonably be expected to work."

Howard Gleckman, a resident fellow of the Urban Institute, offers several prescriptions in an opinion piece for the Tax Policy Center. They include:

• "Identifying potential disability claimants quickly and using vocational rehabilitation and job training to help keep them in the work force."

• Integrating SSDI with health care and supportive services in a better manner.

• "Better aligning incentives for employers to retain workers with disabilities rather than letting them simply shift to SSDI."

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