A last-minute congressional budget deal will spare 11 million
Social Security Disability beneficiaries from a 20 percent cut sometime in 2016 by transferring funds
from the retirement and survivors’ trust fund.
The agreement also lifts the debt ceiling until March 2017 and averts a
government shutdown – benefits which were enough for advocacy groups
to reluctantly accept the deal.
The bill comes with provisions that tweak Social Security Disability, and
eliminates a program that was allowing 20 states to award disability to
certain applicants without requiring an independent medical evaluation.
According to the Congressional Budget Office, the Social Security provisions
will save about $4 billion over the next decade. Congressional aides said
that the savings will come from the medical evaluation requirement that
slightly delays the receipt of new benefits for some applicants.
Paul Van de Water, of the Center on Budget and Policy Priorities, a liberal
think tank, said that they’re pleased that they no longer have to
worry about a big benefit cut at the end of 2016. Van de Water called
the package a “reasonable compromise” given where everyone
Reallocation of the Social Security Payroll Tax
Under the budget deal, a percentage of the revenue from the Social Security
payroll tax is being reallocated to the disability insurance program.
The reallocation is about one-half of percentage point of the 12.4% payroll
tax, counting the employer and employee shares from 2016 to 2018, which
will extend the disability reserve until 2022, if not longer.
Without the changes, disability recipients were facing about a 20 percent
benefit cut once the reserves ran out. Additionally, the deal expands
Social Security’s anti-fraud programs, namely a program that roots
out disability fraud.
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