Lorenzen: Comprehensive Social Security Reform is Best to Address SSDI Insolvency

Without congressional action, Social Security Disability Insurance trust fund reserves will be depleted next year. The exhaustion of the DI fund, one of the upcoming fiscal speedbumps, would result in a roughly 20 percent across-the-board benefit cut. Ed Lorenzen, senior policy advisor, testified in front of the Ways and Means Subcommittee on maintaining the solvency. Click here to learn about common myths in the SSDI debate.

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Fiscal Speed Bumps: Challenges, Risks, and Opportunities

Lawmakers will soon face a number of important budget related deadlines, or Fiscal Speed Bumps, that require legislative action.  Addressed irresponsibly, they could cause serious disruptions and/or add as much as $3 trillion to the debt over the next decade. But if dealt with thoughtfully, they offer an opportunity to pursue reforms.

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SGR is the Next Major Fiscal Speed Bump

The next major Fiscal Speed Bump coming up is scheduled cuts to doctor’s payment in late March under the Sustainable Growth Rate (SGR). Our Research Director Loren Adler was highlighted in the New York Times, explaining that while Congress always averts this cut, it was almost always been paid for with other health savings.

 

 

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Report: CBO's January 2015 Budget and Economic Outlook

After falling to post-recession lows below $470 billion this year and next, CBO projects that deficits will again start to rise, exceeding $1 trillion by 2025. As a result, debt will rise over the next decade, from $13 trillion today to $21.6 trillion by the end of 2025. Watch CRFB President Maya MacGuineas discuss the long-term problem on Bloomberg TV here.

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CRFB's Blog: The Bottom Line

Congress approached and addressed the first impending "Fiscal Speed Bump" this week, cleanly funding the Department of Homeland Security (DHS) with appropriations through the rest of the fiscal year. The updated set of speed bumps now have two more approaching in March - the expiration of the "doc fix" for the Medicare Sustainable Growth Rate (SGR) and the reinstatement of the debt ceiling (though the Treasury Department's "extraordinary measures" will move the actual date for action to this fall). We wrote this week on both the prospects for the doc fix can getting kicked down the road until later this year or next and the hard deadline for the debt ceiling in the fall.

The Senate Finance Committee held a hearing Tuesday on how best to achieve "tax fairness" as a part of their larger focus on tax reform. Testifying before the committee included Steven Rattner, the chairman of Willett Advisors LLC and a current member of the steering committee for the Campaign to Fix the Debt. Rattner's testimony focused on using the tax code to address income inequality as well as the need to increase tax revenue to a level that makes the budget fiscally sustainable, principles shared by Fix the Debt's Case for Fundamental Tax Reform.

The Supreme Court ruling on the King v. Burwell case being argued before the Court today will have major policy and political ramifications that have been widely discussed. But a ruling for the plaintiff (King) could also have significant budgetary implications that could complicate action on a legislative response to the Court ruling as well as any legislation to repeal and replace the Affordable Care Act.

Repeating a story heard many times before, in a speech at a Federation of American Hospitals conference, House Ways And Means Chairman Paul Ryan (R-WI) indicated (subscription required) that a permanent replacement for the Sustainable Growth Rate (SGR) formula was not likely to pass by the March 31 deadline, and instead that lawmakers would do a short-term "doc fix" to buy more time.

 
June 4, 2013
CRFB's latest interactive tool "The Reformer" is a handy game that allows users to design their own Social Security plan. Users can select from a wide variety of benefit and revenue changes to make the system sustainably solvent. The tool then shows the effect on the program's finances and benefit and tax levels.
September 27, 2011
If you've ever wanted to design your own corporate tax reform, now you can with our new Interactive Tax Reform Calculator. There is no question that the U.S. corporate tax system is badly in need of reform, and leaders in both parties have been pursuing this goal.

CRFB Projects

The McCrery-Pomeroy SSDI Solutions Initiative is dedicated to identifying practical improvements to the Social Security Disability Insurance (SSDI) program. The SSDI Solutions Initiative is calling for academic papers on innovative ways to make the SSDI program better serve workers with disabilities, those who pay into the program, and the economy as a whole.

The Campaign to Fix the Debt is an unprecedented and bipartisan coalition that seeks to mobilize members of business, government, and policy communities to urge Congress and the President to enact a comprehensive debt deal.

The Moment of Truth (MOT) project is a non-profit, non-partisan effort that seeks to foster honest discussion about the nation’s fiscal challenges, the difficult choices that must be made to solve them, and the potential for bipartisan compromise that can move the debate forward and set our country on a sustainable path.