Another Busted Safety Net

I like to reflect upon the news about our vaunted safety net pension plans — the crowning jewels of our progressive paradise — as they head off a fiscal cliff. The latest report concerns a rather neglected jewel, the Social Security Disability Insurance (SSDI) program, created in 1957 during the Eisenhower presidency.

Under this perhaps well-intended program — assuming that any social program is truly well-intended, a dubious assumption, indeed — workers of any age who become disabled or unable to work because of health issues receive federal support. The idea is that all workers pay a small amount into the SSDI fund, so that the few workers stricken by health issues derive a small but reasonable stipend (on average, about $1,100 a month).

Well, the SSDI will have the dubious honor of being the first federal support program to go bust. It will likely run out of funds in four to seven years — which probably means four years. At that point, it will become a pure negative — an explicit draw on tax dollars collected by the feds from hapless taxpayers.

I can hear readers ululating dolorously, “Why? Why? Why?” The reason is this: during the last decade, there has been an explosion of disabled people. In the year 2000, there were 6.6 million people in the program—a remarkable number in itself. But by last year that number had swelled to 10.2 million, an increase of 55%.

That’s the nationwide figure. In a number of states, however, the rate of increase in disability recipients has been even higher. Examples are New Hampshire at 69% and Texas at 85%. But at the top of the list is Puerto Rico. It has nine of the top ten American zip codes for receiving SSDI disability checks. And it has the highest approval rate (63%!) for disability claims. It would appear that there is a large amount of abuse going on in the Commonwealth of Puerto Rico. As Ivan Gonzalez-Cancel, a local surgeon who is planning on running for governor in 2012, has put it, “The mentality is that it’s ‘big, rich, Uncle Sam’s money.’ ”

The consequence of the explosion of eligibility is that the SSDI program went negative in 2005, and by 2015, the earliest but most likely date, it will be spending $22 billion more in benefits than it takes in. At that point, all of its “reserves” will likely have been exhausted.

Naturally, the program’s advocates have a ready cure: raise SSDI taxes, or hide the deficit in the regular Social Security fund. Of course, what to do when the regular Social Security fund goes bust, they don’t say.