The ABA urged the Senate Finance Committee leadership Feb. 19 to reject recent House action and support the ability of the government to reallocate payroll tax revenues between the Social Security Old-Age and Survivors Insurance Trust fund (OASI) and the Disability Insurance Trust fund (DI) as needed to prevent depletion of either of the trust fund reserves.
The Social Security Trust Fund comprises the OASI and the DI trust funds, which are funded through the Social Security tax and employer match as a primary source of income for the vast majority of retired Americans and an essential source income for persons unable to work due to severe disabilities.
Over the years, Congress has passed legislation 11 times as the need arose for reallocating revenue for both trust funds and has never allowed a reduction in benefits to occur. The Social Security trustees have notified Congress that the payroll taxes allocated to the DI trust fund will be inadequate to pay full disability benefits starting as early as 2016, which would result in a cut in DI benefits to less than 80 percent of current levels if Congress fails to act.
The president’s fiscal year 2016 budget proposes reallocation of existing payroll tax collection while a longer term solution to overall Social Security solvency is developed with Congress. The proposed reallocation, according to the president’s budget, will have no effect on the overall health of the OASI and DI trust funds on a combined basis and is critical to ensuring that workers who have paid into the Social Security system and become disabled get the benefits they need.
The House, however, in approving its rules Jan. 6 for the 114th Congress, included a rule that would effectively limit options to reallocate funds by setting conditions that would require either new revenues or benefit cuts for beneficiaries.
The ABA, which strongly opposes the recently passed House rule, urged Senate Finance Chairman Orrin G. Hatch (R-Utah) and Ranking Member Ron Wyden (D-Ore.) to work to develop a plan for making sure that both trust funds continue to be adequately financed.