Noted by Ticker in a column calling Issa what he really is: a lying huckster.
By 2016, before the next president is sworn into office, the Social
Security Disability Insurance trust fund will be depleted, affecting
millions of deserving Americans for whom the program is intended.
That's perhaps the only truth Issa emitted in his bloviation.
Payroll taxes will be reallocated from OASI to SSDI to keep both funds fully funded until around 2033. Congress has done so a dozen times before and they'll do it again. They'll be no debt downgrade in 2016 but we shouldn't care anyway.
ReplyDeleteActually, the only time one "trust fund" has been used to fund another was the temporary borrowing from the Medicare Hospital Insurance Fund by OASI in 1983, repaid by 1986.
ReplyDeleteAlso, FICA/SECA tax revenue was retroactively moved from OASI to DI in November and December 1994 to reflect a retroactive rallocation of that tax to the broke DI fund. Reallocation of the FICA/SECA tax won't work this time because both DI and OASI (and also the related HI) are running primary (cash) deficits.
Other than those two instances, the "big three" "Trust Funds" have been operated as entirely separate entities. Indeed absent new authority, the "Trust Funds" cannot borrow from each other or (beyond the expected tax revenues for a particular month) the Treasury.
As for the timing of the death of DI "Trust Fund", the "intermediate case" is, at last check, approximately July 2016, with the "high-cost case" in late 2015. I do need to recalcuate that using the 2013 Trustees' Report, but it is all but certain that DI will either die or be merged with OASI before we see the 2016 national conventions.
There is no reason that payroll tax reallocation wouldn't work the same as it did in 1994. Congress was well aware of having to re-address this issue around 2016 when they addressed it back then. Current payroll tax revenues already cover about 80% of benefits being distributed so any long term fixes would be minimal. Yes, I'm aware that this would involve tax increases. So be it.
ReplyDeleteYou do realize that, assuming federal taxes do rise to 19% of GDP (higher than any level that hasn't immediately preceeded a recession post-WWII), by 2025, SocSecurity, health care and interest on the publicly-held portion of the debt will eat every penny of federal tax revenue, right?
ReplyDeleteSteve, your facts are racist.
ReplyDeleteNope. The topic is SS, Steve. If you want to debate the health care crisis, you won't have much of an argument from me. If you think that SS benefits are a long term crisis, then you are incorrect.
ReplyDeleteBTW Steve, it would be beneficial for you to recalculate the "low-cost case" as well. I'm not saying this you should buy into this scenario but it might be productive for your readers to know that there's another possibility out there. It also might be beneficial for you to incorporate your future projections in terms of future GDP projections. Throwing around big numbers while using words like "collapse" when discussing a program with a constant revenue stream reads like scare tactics to people who don't know any better.
ReplyDeleteCorrection: people who know better.
ReplyDeleteActually, the topic is SSDI.
ReplyDeleteAnd "collapse" is as good a choice as "stagger." Either one will be another crisis.
You need to provide facts to make the accusation that DI is a "crisis". Just throwing it out there isn't enough.
ReplyDelete