The Social Security disability program will run out of money in late 2016, a report issued Wednesday by the Social Security and Medicare trustees warned.
At that point, the 10.9 million beneficiaries of the program face an immediate 19 percent cut in benefits, unless Congress intervenes.
The combined trust fund for the retirement and disability programs is projected to run out by 2034, a slight improvement from last year’s estimate.
The trust fund for Medicare hospital insurance will be depleted by 2030, unchanged from last year.
Federal retirement programs face long-term fiscal problems largely because of demographics. Demographers expect that the number of retirees claiming Social Security benefits will rise from less than 50 million today to 71 million by the time the baby boomers are done retiring in 2029. The ranks of Medicare beneficiaries will grow from 56 million to 80 million.
The more immediate deadline, however, relates to the disability program, which provides income security for disabled workers, widows and widowers, and children.
Disability payments could be assured if Congress were to shift incoming payroll tax revenues in between the retirement and disability trust funds, as it has done in the past. President Obama supports such a change. Congressional Republicans, however, have said that they are not interested in redirecting revenues to the disability trust fund without addressing the underlying fiscal problems.
The Social Security retirement program, on the other hand, is set to see its trust fund exhausted in 2035, one year later than previously estimated. At that point, it would only be able to pay 77 percent of scheduled benefits.
Considering the retirement and disability trust funds together, they will not be depleted through 2034, giving Congress almost two decades to act before benefits would be cut by 21 percent. But the two trust funds are separated by law, and Congress will have to act before 2016 to avoid cuts to disability recipients.
“While the President will never support proposals that hurt current or future retirees, he is ready to work with Congress on a bipartisan basis to create serious solutions,” Treasury Secretary Jack Lew said at a press conference at the Treasury Wednesday.
Charles Blahous, the Republican-appointed public trustee, said that a reallocation of funds from the retirement trust fund to disability would be necessary. “There’s almost certain to be needed, at the very least, a temporary infusion of resources” into the disability trust fund, he said, explaining that there was no “realistic reform” to the program that could generate enough savings to avoid cuts to beneficiaries in the time remaining.
Blahous said that the lack of time should give Congress concerns about waiting to act to shore up the separate retirement program’s financing problems, even though the trust fund is not projected to be exhausted for years.
“By the time the trust fund depletion date arrives, in some senses it’s already too late,” he said.