President Obama’s 2016 Budget Relatively Good on Social Security

While President Obama’s proposed Medicare policies leave a lot to be desired, he gets it right on Social Security. The president proposes to move tax revenue from the Social Security retirement fund to the Social Security disability fund, which would otherwise not be able to pay full benefits towards the end of 2016. And, he has dropped his proposal for a reduction in benefits through a chained CPI.

But, over the long term, the president’s budget proposal leaves some cause for concern. There is no mention of the need to increase Social Security benefits. There is only general language against “slashing” benefits: “The Administration will oppose any measures that privatize or weaken the Social Security system and will not accept an approach that slashes benefits for future generations or reduces basic benefits for current beneficiaries.” This language leaves him wiggle room to reduce Social Security benefits and raise the age of eligibility.

We need the president to be calling for strengthening Social Security for all Americans.Social Security benefits in the United States are far stingier than in other countries. Eliminating the cap on Social Security payroll contributions ($117,000 today), just as with Medicare payroll contributions, would ensure Social Security’s solvency for the next several decades. To the president’s credit, his budget proposal recognizes the value of Social Security for Americans most at risk: “Any reforms should strengthen retirement security for the most vulnerable, including low-income seniors, and should maintain robust disability and survivors’ benefits.”

Under the president’s current plan, both the Social Security retirement fund and the disability fund would be able to pay full benefits until 2033. Without a reallocation, Social Security disability benefits to 11 million Americans would be cut by almost one-fifth (19 percent). Since the typical benefit is about $1,150 a month, many severely disabled individuals would see their incomes fall well below poverty.

Under the president’s plan, both the Social Security retirement fund and the disability fund would be able to pay full benefits until 2033. Without a reallocation, Social Security disability benefits to 11 million Americans would be cut by almost one-fifth (19 percent). Since the typical benefit is about $1,150 a month, many severely disabled individuals would see their incomes fall well below poverty.

But, there will likely be a big fight on this proposal since the House Republicans passed a rule in January that would hold a transfer between the two funds hostage unless there is a plan in place to cut Social Security benefits overall. They are prepared to put millions of vulnerable Americans at risk. Notwithstanding how difficult it is to get disability benefits, they incorrectly argue that many of the people receiving benefits do not deserve them.

Reallocating money from the retirement fund to the disability fund should be a simple process. And, in fact, such transfers have happened 11 times in the past with a bipartisan vote.

Of note, there’s a very easy fix to the solvency of the Social Security Disability Trust Fund that does not require a transfer. Raising the payroll tax by just two-tenths of a percent for both workers and employers would ensure people continued to receive their full Social Security Disability benefits for the next 75 years. And there is strong evidence that Americans would support a far larger payroll tax increase to strengthen Social Security overall.


Diane Archer is the founder and president of JustCare, a new digital media enterprise promoting the health and economic security of boomers and older adults. She is also the founder and past president of the Medicare Rights Center. This post has been updated since it was first published.

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