Disability fund

Social Security disability fund now faces ‘urgent threat’ of 2016 shortfall: trustees 

By Greg Robb

The Social Security disability-insurance program faces the “urgent threat” of reserve depletion in late 2016 unless Congress acts to replenish the fund, trustees of the program said Wednesday in their annual report.

Trustees said that Congress should take “prompt corrective action” to shore up the disability fund.

In the past, Congress has diverted tax revenue from Social Security’s main retirement program to allocate more revenue to disability benefits, said Kathy Ruffing, a senior fellow at the Center on Budget and Policy Priorities.

Treasury Secretary Jacob Lew said he was confident that Congress would come up with a fix.

If the disability fund is depleted, it will be able to pay only 81% of benefits.

Social Security’s combined funds will be solvent until 2034, one year later than estimated in the prior report.

The Medicare hospital-insurance trust fund will be able to continue paying full benefits without any changes in the law through 2030, the same as estimated last year, the trustees said.

Social Security and Medicare together accounted for 42% of federal spending in fiscal year 2014.

The programs face long-term challenges as millions of baby boomers reach retirement age.

Total Medicare costs will grow from about 3.5% of gross domestic product in 2014 to 5.4% of GDP by 2035.

Ruffing of the CBPP said the two programs “are not unaffordable or ‘bankrupt’.”