As President Obama faces pressure on the left to defend federal entitlement programs from the benefit cuts that the Republicans say are necessary to keep the programs solvent decades down the road, one part of Social Security could fall short of paying out full benefits within a few years — even while Obama is still president.
Over the long term, Social Security and Medicare have promised tens of trillions of dollars more in benefits than the nation can pay for under current policies. But Social Security’s disability trust fund is in even worse shape, and current estimates say by 2016 it won’t have enough money to pay full benefits.
“That’s three years from now,” Jim Capretta of the Ethics and Public Policy Center said. “And given the president’s rhetoric and his posture, it’s quite clear that he has no intention of doing anything about it.”
The fiscal security of the disability trust fund got rapidly worse as the unemployment rate rose. The number of applications has almost doubled in the last 10 years, from 1.5 million a year in 2001 to more than 2.8 million a year in 2012.
Obama has said little about how he would fix the fund’s finances.
“President Clinton talked about ‘mend it, don’t end it,'” Nicholas Eberstadt of the American Enterprise Institute said. “To judge by (Obama’s) remarks, there’s nothing that needs mending in our entitlement systems.”
In his first term, Obama took steps to make it easier for people to apply for disability payments, but nothing was changed to help the program pay even bigger bills as it accommodated more beneficiaries.
Even so, Obama took a swipe at Republicans in his inaugural address by saying, “the commitments we make to each other — through Medicare, and Medicaid, and Social Security — these things do not sap our initiative; they has strengthen us.”
Republicans have proposed reining in federal entitlement spending as a necessary step toward cutting the federal deficit, but Obama’s critics note that no one is opposing the programs themselves.
“It was sort of a straw man argument,” Eberstadt said. “I mean, I don’t know who wants to scrap Medicare, Social Security and Medicaid.”
Because the programs are funded through payroll taxes, money will continue to pour in as long as the country has workers. But with the country’s large aging population expected to collect more and more from the programs than younger workers are contributing, analysts are worried that at some point the programs will no longer be able to pay full benefits as promised — unless changes are made, presumably either raising taxes or cutting benefits.
“If we don’t work together to strengthen our entitlement programs, they will go bankrupt,” Senate Republican Leader Mitch McConnell said in a floor speech. “Automatic cuts will be forced on seniors already receiving benefits, rendering worthless the promises that they built their retirements around.”
Capretta faults Obama.
“Ironically, the president’s course, which is to essentially ignore the problem, is the course that will endanger these programs rather than protect them,” Capretta said.
Senate Democratic Leader Harry Reid, however, has argued that entitlement programs are much stronger than Republicans portray them to be, partly because of measures contained in Obama’s health care law.
Under that law, “savings from cutting wasteful spending and fraud will extend the solvency of the Medicare trust fund by an additional eight years,” Reid said in October in a Washington Post op-ed.