More than a Third of Social Security Beneficiaries are Disabled Americans and Other Non-Retirees. House Rule Released Today Would Prevent Clean Reallocations of Social Security to Fund Social Security Disability Insurance (SSDI)
WASHINGTON, D.C. — Today, U.S. Sen. Sherrod Brown (D-OH) condemned a dangerous new rule in the House of Representatives that would undermine Social Security by attacking Social Security Disability Insurance (SSDI). The unprecedented rule change would prevent the House of Representatives from passing clean reallocations of the Social Security Trust Fund.
“Today, House Republicans are trying to change rules that have been in place for decades as a way to attack social insurance,” Brown said. “Rather than solve the short-term problems facing the Social Security Disability program as we have in the past, Republicans want to set the stage to cut benefits for seniors and disabled Americans.”
Reallocation is a simple procedure used by Congress to rebalance how Social Security payroll tax revenues are apportioned between the two trust funds - the equivalent of transferring money from a checking to a savings account. Reallocation is commonsense, bipartisan policy that has been utilized by both parties 11 times since 1957– most recently in 1994. At that time, it was projected that reallocation would keep the trust fund solvent until 2016.
“Reallocation has never been controversial, but detractors working to privatize Social Security will do anything to manufacture a crisis out of a routine administrative function,” Brown continued.
“Reallocation is a routine housekeeping matter that has been used 11 times, including four times under Ronald Reagan. Modest reallocation of payroll taxes would ensure solvency of both trust funds until 2033. But if House Republicans block reallocation, insurance for disabled Americans, veterans, and children could face severe cuts once the trust fund is exhausted in 2016.”
In July, Brown attended a Senate Finance Committee hearing to examine SSDI and its importance to the entire Social Security system. The hearing was entitled “Social Security: A Fresh Look at Workers’ Disability Insurance.” That same month, Brown delivered a keynote speech on SSDI at the Center for American Progress (CAP) where he outlined future threats that Social Security faces from those who seek to privatize and cut the program. Brown warned how undermining SSDI represents an effort to siphon public support from the entire Social Security program and urged Social Security advocates to organize to prevent detractors from “dividing and conquering” the program.
With more than a third of Social Security beneficiaries being non-retirees, SSDI now more than ever needs to be protected. SSDI is one of our nation’s most successful insurance programs and helps millions of disabled Americans, children, and veterans. Further, SSDI is the sole source of income for one in every three beneficiaries. Without SSDI, half of all beneficiaries would be below the poverty line.
In December, Brown announced that he will introduce the Strengthening Social Security Act – championed by retired U.S. Sen. Tom Harkin (D-IA). The bill would extend the solvency of the Social Security Trust Fund, which nearly two in three Americans rely on for at least half of their income in old age.
Brown’s prepared opening remarks from the July hearing on SSDI can be found below.
Senator Brown Prepared Opening Remarks for Finance Subcommittee Hearing on “Social Security Disability Insurance”
Thursday, July 24, 2014
I want to begin today’s hearing on Social Security Disability
Insurance (SSDI) by talking about 52-year-old Sheila in Youngstown.Sheila works in a steel factory along the Mahoning River. She punches a time clock each day on her way into the factory and again on her way out – the same routine every day for the last 18 years.
Sheila has no union strong enough to demand a defined pension, retirement savings account, or even a fair wage, and it’s a grueling job – standing on her feet all day.
But in a town that’s seen far too many factory gates closed and more plants shuttered than most will ever see in a lifetime, Sheila knows that she is fortunate.
One day before heading out the door to work, Sheila decides to throw a load of laundry in the washer before her shift.
She hoists the laundry basket onto her hip and opens the basement door with the other hand. But as she reaches to turn on the lights, Sheila loses her footing and falls down the hard, wooden steps to the concrete floor.
The accident leaves her permanently paralyzed.
Sheila can no longer work.
She doesn’t know how she is going to pay her mounting medical bills, let alone her regular bills now that she has lost her income. Then, Sheila finds out that she has been paying into Social Security Disability Insurance (SSDI) her entire working life.
This insurance is now Sheila’s lifeline.
She always thought Social Security would be there for her once she retired, but now – Social Security is all she has.
She is now one of the nearly one-third of Social Security beneficiaries who are not retirees.
Nearly nine million disabled workers are SSDI beneficiaries – and 4.4 million children also receive assistance.
One in five SSDI beneficiaries lives in poverty, and nearly half of disabled workers younger than 50 are poor or near poor.
Social Security – as a whole – is a plan that offers working families a bundle of insurance products: retirement, life, and disability insurance – social insurance that most working families couldn’t afford to buy on their own.
That’s why most Americans do not support making cuts to Social Security. In fact, overwhelming majorities are willing to pay more to preserve this program.
Detractors of Social Security know this so they seek backdoor ways to dismantle the program.
That backdoor?
SSDI.
Detractors divide Social Security into “good Social Security” and “bad Social Security.”
They say “bad Social Security” is disability insurance and that the program is bankrupt and rife with fraud, which in turn, undermines Social Security as a whole.
We will address these claims in today’s hearing.
Disability insurance is not bankrupt. The disability trust fund simply needs to be reallocated.
Reallocation is commonsense, bipartisan policy. Since 1957, it has been done 11 times– most recently in 1994.
At that time, it was projected that reallocation would keep the trust fund solvent until 2016 – which it did.
Rebalancing the fund ensures there is adequate funding so that SSDI is there for all of us, if the worst should happen.
Many in this town claim to sympathize with low-income workers.
But when it comes to supporting disability insurance – a program that provides a modest safety-net to the most vulnerable Americans – they dismiss beneficiaries as lazy scammers looking to game the system.
They’re wrong.
Keep in mind, the average SSDI check is about $300 a week.
In my home state of Ohio, the typical annual SSDI benefit for a disabled worker was $11,988 in 2012.
That’s barely over the federal poverty level for an individual.
Go back to Sheila. She worked 18 years in a factory, standing on her feet all day.
More than half of disability insurance beneficiaries are like her – they too worked in jobs that demanded physical labor.
To call people like Sheila lazy – to prey upon the most vulnerable in society – is wrong and unacceptable.
Where fraud exists, we can address it to maintain the protections that SSDI affords us all.
But to divide Social Security into good parts and bad parts is not how we will solve this issue.
I want to share a letter with you from the grandfather of one of my staff.
He received this letter from his employer, the Pennsylvania Gas and Electric Company, on December 24, 1936.
The letter reads:
“On August 14, 1935, Congress passed the Social Security Act. Under the provision of this Act, the company is required to deduct 1% of your wage beginning on January 1, 1937. These deductions, which are matched by your company, are designed to provide for a retirement at age 65.”
Imagine receiving this letter and being told your wages would start being taken away, and that you would get it back when you reached the age of 65.
This was a time when most people didn’t know anyone who lived to 65, so to receive a letter telling you this was controversial to say the least.
When Social Security began, it was an untested idea that was met with a great deal of misunderstanding and resistance.
Today, it is woven into the fabric of our country.
A few years ago, the idea that we would expand Social Security seemed unlikely. All of the conventional Washington wisdom was that we would have to cut the program.
Today, not only are cuts to Social Security deeply unpopular, we are now debating how much we need to expand Social Security to make sure the program continues to be there for all of us.
In today’s hearing, we will examine ways to strengthen Social Security by protecting disability insurance.
We will examine why reallocation is a simple and commonsense administrative function.
And, we will examine the need to cut fraud so the program continues to safeguard against fraud.
Thank you, Mr. Chairman.
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