If action is not taken, the Disability Insurance trust fund will not be able to pay full scheduled benefits by 2016.
Workers and employers pay for disability protection through FICA taxes, deducted from wages and matched by the employer. The total tax is 6.2 percent of earnings (with ceilings). 5.3 percent of that tax goes into the Old-Age and Survivors Insurance (OASI) trust fund, sometimes call the retirement fund. The remaining 0.9 percent goes into the Disability Insurance trust fund.
The Disability Insurance trust fund is expected to be depleted in 2016. After that date, taxes coming into the Disability trust fund would cover only about 76 percent of scheduled benefits. The trust fund has faced such emergencies before and Congress has never allowed the benefits to drop.
A typical fix would be to temporarily allocate more of the 6.2% tax from the OASI (retirement) fund to the Disability fund. That would mean that both funds could pay full benefits to the year 2033. After that, if Congress took no further action, present taxes would cover about 75% of scheduled benefits.
Congress has reallocated the Social Security tax rate 11 times in the past, most recently in 1994. In the past these adjustments have not caused major controversy in the Congress.
Also, most Americans do not know why there is a "crisis" in Social Security trust funds. The current crisis is because over the years Congress has "borrowed" money from the trust funds to pay other debts. The government has actually taken about $2.6 TRILLION out of the Social Security trust funds and used the money for other things. Now, Congress is faced with having to repay the $2.6 trillion it has borrowed or cut benefits.
Social Security was designed to be self-supporting. It is paid for with taxes deducted from workers' payroll, matched by their employers. The funds would be solvent and healthy if the Congress had not taken the tax money out and used it elsewhere. By the way, Social Security benefits are "off budget." They are not included in the US general budget, thus have no bearing on the US government debt.
Workers and employers pay for disability protection through FICA taxes, deducted from wages and matched by the employer. The total tax is 6.2 percent of earnings (with ceilings). 5.3 percent of that tax goes into the Old-Age and Survivors Insurance (OASI) trust fund, sometimes call the retirement fund. The remaining 0.9 percent goes into the Disability Insurance trust fund.
The Disability Insurance trust fund is expected to be depleted in 2016. After that date, taxes coming into the Disability trust fund would cover only about 76 percent of scheduled benefits. The trust fund has faced such emergencies before and Congress has never allowed the benefits to drop.
A typical fix would be to temporarily allocate more of the 6.2% tax from the OASI (retirement) fund to the Disability fund. That would mean that both funds could pay full benefits to the year 2033. After that, if Congress took no further action, present taxes would cover about 75% of scheduled benefits.
Congress has reallocated the Social Security tax rate 11 times in the past, most recently in 1994. In the past these adjustments have not caused major controversy in the Congress.
Also, most Americans do not know why there is a "crisis" in Social Security trust funds. The current crisis is because over the years Congress has "borrowed" money from the trust funds to pay other debts. The government has actually taken about $2.6 TRILLION out of the Social Security trust funds and used the money for other things. Now, Congress is faced with having to repay the $2.6 trillion it has borrowed or cut benefits.
Social Security was designed to be self-supporting. It is paid for with taxes deducted from workers' payroll, matched by their employers. The funds would be solvent and healthy if the Congress had not taken the tax money out and used it elsewhere. By the way, Social Security benefits are "off budget." They are not included in the US general budget, thus have no bearing on the US government debt.
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