Social Security Risks For Disabled

Social Security Risks For Disabled

Critics charge that people with AIDS will have to compete to maintain incomes

Advocates for people with AIDS charge that the Bush administration’s plan to privatize Social Security could reduce the benefits paid to people who are disabled and receive financial support from the Social Security Administration (SSA)—including people with AIDS.

“I think it’s clear that Pres. Bush’s privatization proposals pose a threat to continued and adequate benefits to people who are disabled,” said Michael Kink, legislative counsel at Housing Works, an AIDS service organization. “Every serious estimate of what the president is going to propose includes benefit cuts.”

Though the Bush administration has yet to come forward with a complete proposal, the broad outlines would allow workers, who are 55 or younger, to divert four percent of their gross income into private investment accounts.

Currently, employees pay 6.2 percent of their gross income into the Social Security system and employers match that amount. Those dollars are used to pay benefits to retired and disabled workers. The system has been pay-as-you-go since its inception in 1935.

There have always been more workers paying in than beneficiaries getting benefits and Social Security has run large surpluses. In 1950, there were 16 workers for every beneficiary and, today, there are 3.3 workers for each beneficiary. Congress has typically spent that extra cash and handed the SSA U.S. Treasury bonds.

The current estimates are that by 2018, the number of workers paying in will have fallen so low that the SSA will have to start selling those bonds to pay benefits. Then by 2042 or 2052, depending on the estimates, those bonds will be gone and the system will have revenues to cover only 75 percent of benefits due.

The privatization plan could create a number of problems for people who are disabled and getting Social Security checks, a category that includes tens of thousand people with AIDS.

The benefits of one class of disabled workers, those receiving Social Security Disability Income (SSDI), are tied to their work history. These workers must have worked for a minimum of ten years, five out of the last ten years before becoming disabled, and then the amount of their benefit is linked to how much they paid in.

Advocates warn that diverting a portion of those dollars into private accounts will reduce the government benefit they receive because they will have paid less into the system and that the cash in the private account could run out before the disabled worker dies.

“People who are disabled can be disabled long before any private account would be there to bail them out,” Ann Hilton Fisher, executive director of the AIDS Legal Council of Chicago, also warned.

Fisher has clients who are in their 20s, 30s and 40s who simply have not lived long enough to create a work history that would garner them a significant benefit.

“That’s just not enough time to build an account that can then support you for the rest of your life,” Fisher said.

People who either did not work at all or worked too little to qualify for SSDI can qualify for Supplemental Security Income (SSI). They get $579 a month, though some states add other benefits such as Medicaid, the health insurance plan for the poor and disabled.

Leslie F. Kline-Capelle, a benefits attorney for the HIV and AIDS Legal Services Alliance in Los Angeles, said that the private accounts could end one of the best elements of the current system—lifetime coverage.

“Probably the best advantage of the program, with all of its faults, is that you cannot outlive it,” she said. “You can outlive a private investment.”

In 2005, nearly 48 million retired or disabled workers and their dependents and survivors will receive roughly $509 billion in benefits. Seventeen percent of those benefits will go to disabled workers and their dependents. The SSA estimates that 30 percent of today’s 20-year-olds will become disabled before they reach age 67.

While the Bush administration has portrayed its plan as an effort to rescue Social Security, the plan will have the opposite effect. As funds are moved into private accounts—and are not used to pay benefits—the date at which the SSA will have to sell bonds to pay for benefits will arrive sooner as will the date at which it will have to use current revenues to cover benefits, and not at 100 percent of the guaranteed level.

“It won’t work because you have to have the dollars to fund the other pieces,” Fisher said. “If people are diverting money from Social Security, you don’t have the dollars to pay for today’s benefits.”

The funds to pay benefits to disabled recipients will have to come from another source, presumably general federal tax revenues. SSI and SSDI recipients will be fighting other interest groups for a share of the federal pie instead of getting their benefits from a dedicated revenue stream.

“It’s a political calculation,” Kink said. “It’s not only not a plan to save Social Security now, it’s creating an artificial crisis now and provoking a real crisis in Social Security a few years down the line and forcing people with disabilities into competition with a lot of other powerful constituencies.”

The transition costs of moving to private accounts, which are estimated to be in the trillions of dollars, would add additional financial pressure on the federal budget and to SSDI and SSI recipients.

The federal government has $7.6 trillion in debt, $4.4 trillion is owned by the public and $3.2 trillion is held by government agencies, including the SSA. The federal government paid $322 billion in interest on that debt in the 2004 fiscal year.

In published and broadcast reports, the president and administration officials have said that they have no plans to cut benefits for the disabled, but advocates do not see how that is possible.

“The official line is that there is going to be no change to SSDI,” Fisher said. “That is simply not credible.”