President Obama’s recently-released Fiscal Year 2016 Budget proposes a reallocation of payroll taxes to fix the anticipated shortfall in the Social Security Disability Insurance (SSDI) trust fund, along with increased employment assistance for people with disabilities and additional funding for the hiring of administrative law judges to handle disability benefit appeals.
The SSDI trust fund holds excess payroll taxes collected in years when the government was taking in more money than it was spending on SSDI benefits. However, in recent years, the government has collected fewer payroll taxes than it has paid out in SSDI benefits, forcing it to spend the trust fund reserve in order to fully fund the SSDI program. If changes are not made, the trust fund will run out in 2016 and SSDI benefits will be cut by approximately 20 percent in order to balance the program’s budget. (For more information on the mechanics of this problem, click here.)
The Social Security Administration has proposed solving this problem by reallocating a small percentage of payroll tax revenue away from the Social Security Old Age and Retirement trust fund and into the SSDI trust fund. However, the House of Representatives, in one of its first orders of business in 2015, passed a rule change that would prohibit it from reallocating money between the two trust funds, something that has been done frequently in the past, unless the reallocation does not affect the actuarial stability of either fund.
In his proposed Fiscal Year 2016 Budget, President Obama advocated the SSA’s position, calling for the temporary reallocation of funds in order to buy time for Congress to develop a permanent solution to the SSDI funding problem.
In addition to the trust fund reallocation, President Obama’s budget also contains several other items of note for people with disabilities. The budget requests $400 million to set up new programs such as supportive employment services and incentive programs for employers who hire people with disabilities, and it also requests additional funding to hire administrative law judges to handle the massive backlog of disability appeals.
To read the President’s budget in full, click here.