the bistro off broadway

MSN Money
Battle lines form in fight over Social Security payment reductions
Eric Pianin

With as many as 11 million Americans facing a 19 percent cut in their Social Security Disability Insurance (SSDI) benefits next year absent intervention by Congress and the White House, Republican lawmakers are suddenly moving to devise a plan to avert the crisis.

The Republicans are considering an approach that combines money-saving reforms to the   disability insurance program and a substantial “loan” from the much larger old age and survivors’ benefits fund (OASI) -- one that eventually would have to be repaid. The Obama administration favors a simple transfer of funds from the OASI fund to the cash-strapped disability fund and a series of experimental reforms to save money.

The controversy has received relatively scant attention until now, as Congress has focused on the U.S.-Iran nuclear deal, federal highway spending and bitter disputes over Planned Parenthood funding and overall spending levels for defense and domestic programs. Until recently, it looked like another problem that would be kicked to next year.

Neither party wants their finger prints on a reduction in Social Security benefits in the midst of the 2016 presidential and congressional campaigns, so there may be incentive for both parties to find common ground on this issue. But the Obama administration and Republican congressional leaders have been at odds for months over precisely how to address the looming spending crisis.

The problem shouldn’t come as a surprise. Social Security trustees and other financial experts have been sounding the alarm for years that Congress must act to staunch the hemorrhaging disability insurance trust fund, which is financed with federal payroll taxes and supplements the income of physically disabled workers.
Social Security card.© FreezeFrameStudio/Getty Images Social Security card.

With growing numbers of Americans seeking assistance -- and frequent reports of widespread fraud adding billions of dollars to the overall cost -- the latest Social Security trustees’ report warned last month that the disability insurance fund would be depleted by late 2016, with beneficiaries likely to lose on average $2,545 in benefits every year.

Although the program comes in for substantial criticism, the benefits it provides are relatively meager – an average of $1,165 per month, or $14,000 a year...

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