Congress Veers Closer to Social Security Cliff

Bipartisan support exists to prevent benefit cut for 9 million workers, but a proposal in the works may drive Democrats away.

Representative Paul Ryan, a Republican from Wisconsin and chairman of the House Ways and Means Committee.
Bloomberg AFP/Getty
Sept. 7, 2015, 8 p.m.

Paul Ry­an has em­phas­ized re­form­ing the So­cial Se­cur­ity dis­ab­il­ity pro­gram so that dis­abled work­ers have more in­cent­ive to go back to work. Sources on and off Cap­it­ol Hill, lib­er­al and con­ser­vat­ive, say that House Re­pub­lic­ans are now shap­ing a pro­pos­al in pur­suit of that goal.

But de­pend­ing on the fi­nal form it takes, the policy could be­come a polit­ic­al flash point between Re­pub­lic­ans and Demo­crats—and com­plic­ate Con­gress’s ef­forts to avert a 20 per­cent be­ne­fit cut to 9 mil­lion dis­abled work­ers and their fam­il­ies next year.

The stick­ing point is how ex­actly to change the dis­ab­il­ity pro­gram to en­cour­age work. Un­der dis­cus­sion is a plan to gradu­ally phase out be­ne­fits, sources said, while al­low­ing dis­abled work­ers to earn more money than they cur­rently can. But if the pro­pos­al hits those mak­ing the least amount of money, as some fear it might, Demo­crats are ex­pec­ted to balk.

Ry­an’s of­fice em­phas­ized that noth­ing has been fi­nal­ized and that ne­go­ti­ations are on­go­ing. “We con­tin­ue to work with stake­hold­ers and mem­bers to de­vel­op the policy, and none has been set,” said Brendan Buck, a Ry­an spokes­per­son, in an email.

A cliff awaits in late 2016, at which time the So­cial Se­cur­ity dis­ab­il­ity in­sur­ance trust fund is pro­jec­ted to be un­able to pay full be­ne­fits. That means money will likely need to be moved from the much big­ger re­tire­ment pro­gram, either as a loan or as a shift in tax rev­en­ue, to avert the cut.

Re­pub­lic­ans on Cap­it­ol Hill have pledged to pre­vent the cut, but they also passed a rule in Janu­ary stip­u­lat­ing that they must im­prove So­cial Se­cur­ity’s over­all solvency be­fore agree­ing to shift any funds around. Smal­ler changes to the ad­min­is­trat­ive side of the pro­gram and anti-fraud meas­ures are likely to get a look, but mul­tiple sources fol­low­ing the is­sue said they thought Re­pub­lic­ans were look­ing to make a more sig­ni­fic­ant change.

And top con­ser­vat­ives like Ry­an have been pretty trans­par­ent about want­ing to over­haul the dis­ab­il­ity pro­gram to en­cour­age people to work more if they can.

“A dis­ab­il­ity should in no way di­min­ish a per­son’s right to fully par­ti­cip­ate in all as­pects of so­ci­ety, and that should be the spir­it of [dis­ab­il­ity in­sur­ance],” Ry­an said at a Ways and Means hear­ing re­view­ing the is­sue on Ju­ly 9. “It will be there for you if you can’t work. But if you want to work, we won’t get in the way. We should re­cog­nize every­body has something to of­fer. Every­body can con­trib­ute, and we should en­cour­age that.”

The gen­er­al idea, sources said, would be to in­crease the amount of money that dis­abled work­ers can make without risk­ing the loss of their So­cial Se­cur­ity be­ne­fits. The cur­rent threshold is $1,090 per month, and Re­pub­lic­ans have cri­ti­cized the so-called cliff as a dis­in­cent­ive to work. (The av­er­age So­cial Se­cur­ity check for dis­abled work­ers is $1,165 per month.)

“The rules ac­tu­ally make it harder for people to work more,” Ry­an said at the Ju­ly hear­ing. “If you make just one dol­lar more than you’re al­lowed, you get kicked off the pro­gram. In oth­er words, it’s a lot safer to stay on the side­lines. No sur­prise then that only one half of 1 per­cent earn enough to get off the pro­gram.”

But a straight in­crease in the cap would cost the fed­er­al gov­ern­ment money be­cause more people would re­ceive dis­ab­il­ity in­sur­ance. The pro­pos­al un­der dis­cus­sion would help off­set the costs by in­tro­du­cing a tiered sys­tem, sources say. At the bot­tom threshold, people would start to lose some of their be­ne­fits, but be­ne­fi­ciar­ies would be able to keep re­ceiv­ing at least a small dis­ab­il­ity check while mak­ing more than the cur­rent $1,090 cutoff. The be­ne­fit losses would pro­gress on a gradu­al scale up the in­come lad­der

The dev­il is as al­ways in the de­tails, and one in par­tic­u­lar sticks out: Where do be­ne­fits start to de­crease? A pos­sible bot­tom threshold be­ing floated, as de­scribed by mul­tiple sources, would be $300 per month. Once people start mak­ing more than that, their checks would shrink.

That’s where the GOP pro­pos­al could start to run in­to some prob­lems with the oth­er side. Most fol­low­ing the is­sue be­lieve that Re­pub­lic­ans want Demo­crat­ic sup­port for whatever they pro­pose, to avoid mak­ing changes to So­cial Se­cur­ity along par­tis­an lines in a pres­id­en­tial elec­tion year. But Demo­crats seem un­likely to vote for a policy that, its op­pon­ents would ar­gue, gives the poorest people a dis­in­cent­ive to work.

“Such an off­set would re­ward work among be­ne­fi­ciar­ies who can earn more than (the cur­rent cap). It would pen­al­ize work, however, among people with earn­ings between the new threshold and” the cur­rent cap, wrote Kath­leen Romig at the lib­er­al Cen­ter for Budget Policy and Pri­or­it­ies last week. “Such a change would es­sen­tially shift be­ne­fits from more severely im­paired work­ers who are not able to earn more to less im­paired work­ers who can.”

Oth­er de­tails will also be watched closely: Would the policy be im­ple­men­ted na­tion­ally and per­man­ently, or with a lim­ited au­thor­iz­a­tion? Or does Con­gress ap­prove pi­lot pro­jects, with the ex­pect­a­tion that if it proves suc­cess­ful, it will be taken na­tion­wide? Everything is said to be on the table.

The gen­er­al concept isn’t in­her­ently par­tis­an, and there might be a way to struc­ture the policy so that it doesn’t de­volve in­to par­tis­an in­fight­ing. A work­ing group from the Bi­par­tis­an Policy Cen­ter, which looked at op­tions for im­prov­ing the So­cial Se­cur­ity dis­ab­il­ity pro­gram and put out a re­port last month, said that there was “wide­spread in­terest” in over­haul­ing the pro­gram so that be­ne­fits start to de­crease gradu­ally as people earn more money but people would be al­lowed to earn more than the cur­rent $1,090 cap.

The pre­ferred start­ing point for the taper, the au­thors wrote, would be $700 or $800. But they found that would be pro­hib­it­ively ex­pens­ive. The bi­par­tis­an group re­com­men­ded in­stead that Con­gress ap­prove gradu­al be­ne­fits for the roughly 1.6 mil­lion people eli­gible for both dis­ab­il­ity in­sur­ance and the So­cial Se­cur­ity sup­ple­ment­al in­sur­ance pro­gram. They also pro­posed a na­tion­al pi­lot pro­ject for people un­der 50 who have only dis­ab­il­ity in­sur­ance. The pi­lot would test dif­fer­ent thresholds, above which every $2 in earn­ings would be off­set by $1 in be­ne­fit cuts.

What We're Following See More »
AVOIDS SHUTDOWN WITH A FEW HOURS TO SPARE
Trump Signs Border Deal
1 weeks ago
THE LATEST

"President Trump signed a sweeping spending bill Friday afternoon, averting another partial government shutdown. The action came after Trump had declared a national emergency in a move designed to circumvent Congress and build additional barriers at the southern border, where he said the United States faces 'an invasion of our country.'"

Source:
REDIRECTS $8 BILLION
Trump Declares National Emergency
1 weeks ago
THE DETAILS

"President Donald Trump on Friday declared a state of emergency on the southern border and immediately direct $8 billion to construct or repair as many as 234 miles of a border barrier. The move — which is sure to invite vigorous legal challenges from activists and government officials — comes after Trump failed to get the $5.7 billion he was seeking from lawmakers. Instead, Trump agreed to sign a deal that included just $1.375 for border security."

Source:
COULD SOW DIVISION AMONG REPUBLICANS
House Will Condemn Emergency Declaration
1 weeks ago
THE DETAILS

"House Democrats are gearing up to pass a joint resolution disapproving of President Trump’s emergency declaration to build his U.S.-Mexico border wall, a move that will force Senate Republicans to vote on a contentious issue that divides their party. House Judiciary Committee Chairman Jerrold Nadler (D-N.Y.) said Thursday evening in an interview with The Washington Post that the House would take up the resolution in the coming days or weeks. The measure is expected to easily clear the Democratic-led House, and because it would be privileged, Senate Majority Leader Mitch McConnell (R-Ky.) would be forced to put the resolution to a vote that he could lose."

Source:
MILITARY CONSTRUCTION, DRUG FORFEITURE FUND
Where Will the Emergency Money Come From?
1 weeks ago
THE DETAILS

"ABC News has learned the president plans to announce on Friday his intention to spend about $8 billion on the border wall with a mix of spending from Congressional appropriations approved Thursday night, executive action and an emergency declaration. A senior White House official familiar with the plan told ABC News that $1.375 billion would come from the spending bill Congress passed Thursday; $600 million would come from the Treasury Department's drug forfeiture fund; $2.5 billion would come from the Pentagon's drug interdiction program; and through an emergency declaration: $3.5 billion from the Pentagon's military construction budget."

Source:
TRUMP SAYS HE WILL SIGN
House Passes Funding Deal
1 weeks ago
THE DETAILS

"The House passed a massive border and budget bill that would avert a shutdown and keep the government funded through the end of September. The Senate passed the measure earlier Thursday. The bill provides $1.375 billion for fences, far short of the $5.7 billion President Trump had demanded to fund steel walls. But the president says he will sign the legislation, and instead seek to fund his border wall by declaring a national emergency."

Source:
×
×

Welcome to National Journal!

You are currently accessing National Journal from IP access. Please login to access this feature. If you have any questions, please contact your Dedicated Advisor.

Login