The Obama administration set the stage for a fight with congressional Republicans Monday by proposing a temporary reallocation to shore up the Social Security Disability Insurance Trust fund.
The proposal, contained in the White House budget proposal for next year, would shift existing payroll tax deductions which support the Old Age and Survivors Insurance Program into the DI trust, "while a longer-term solutions to overall Social Security solvency is developed with the Congress," the White House said in its budget blueprint.
House Republicans passed a rule in January that would block the transfer — known as reallocation — unless Social Security's overall solvency was improved.
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Rep. Sam Johnson, R-Texas, chair of the House Ways and Means subcommittee and co-sponsor of the House rule, criticized Obama's proposal in a statement to the Huffington Post.
"With nearly 11 million people counting on the Social Security disability program, kicking the can down the road five years as the president proposes just doesn't make sense," he said. "All Americans deserve to hear answers from our president on how he will save the disability program that will go broke before he leaves office."
In its 2014 annual report, issued last July, the Social Security Administration projected reserves in the DI trust fund would be depleted by the fourth quarter of 2016.
At that time, the report said DI funds would only be sufficient to pay 81 percent of scheduled benefits. About 11 million disabled workers and dependents currently receive disability benefits.
Congress has redirected funds from one trust to the other throughout Social Security's history. The White House on Monday claimed that the proposed reallocation of funds into the DI trust will have "no affect on the overall health of the OASI and DI trust funds on a combined basis."
The latest forecasts say Social Security can pay full benefits until 2033.
The president's proposed budget included language spelling out what won't be negotiable in the remainder of President Obama's second term.
"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," it said.
The budget does call for $400 million in new spending for the SSA to test bipartisan initiatives that would help people with disabilities remain in the workforce, including incentives for employers to retain persons with disabilities.
It would also decrease wait times for disability claims appeals by hiring more administrative law judges. Currently, more than 1 million people are waiting for a claims hearing, a number expected to increase as baby boomers age.
The budget would also increase funding for Continuing Disability Reviews, to ensure only those eligible for benefits receive them. The SSA estimates that $9 is saved for every $1 spent on disability reviews.
This year marks the 50th anniversary of Medicare, Medicaid and the Older Americans Act, as well as the 80th anniversary of Social Security. Later this year, the administration plans to host the sixth White House Conference on Aging.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
