It is true the Disability Insurance Trust Fund is projected to be fully funded only until 2016, after which tax revenues paid into the fund would cover about 80% of scheduled benefits. In the past, Congress has on 11 occasions reallocated funds from the Old-Age & Survivors Insurance trust fund to the DITF to cover projected shortfalls.
Temporarily reallocating payroll taxes from the OASI fund to DITF would mean both funds could pay full benefits until 2033. In the alternative, imposing a modest 0.2% increase in the payroll tax rate would ensure that DITF would remain solvent for the next 75 years. See Virginia P. Reno, Elisa A. Walker, and Thomas N. Bethell, “Social Security Disability Insurance: Action Needed to Address Finances”, June 2013, at http://www.nasi.org/research/2013/social-security-disability-insurance-actionneeded-address-f.
An alternative to raising payroll taxes modestly across the board is to raise or eliminate the cap on earnings subject to the Social Security tax. For 2013, payroll taxes for Social Security apply only to the first $113,700 of earnings. A 2010 study by the Congressional Research Service concluded that eliminating the payroll-tax cap (while also paying out increased benefits to wealthier Americans in accordance with their new taxes) would eliminate 95% of the trust fund’s shortfall over the next 75 years (www.fas.org/sgp/crs/misc/RL32896.pdf).
Keeping Social Security solvent for future generations is achievable, if the political will to do so exists. President Reagan worked in the 1980s with Democratic House Speaker Tip O’Neill to keep Social Security fully funded for a generation. It’s time for our current leaders to step up and keep this valuable program healthy and available for decades to come.
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