This content is provided by Americans for Tax Reform Foundation.
Social Security was created in 1935 in order to provide a safety net to Americans without the ability to earn income. Over the past decades, the program has proliferated to the point of insolvency. In particular, Social Security’s Disability Insurance (DI) component has grown out of control and threatens the nation’s finances as well as the fundamental principle that citizens should not be reliant on government.
Like many government programs, DI grew rapidly in the years preceding the Reagan presidency. While benefits were collected by less than 800,000 individuals in 1960, 5.22 million people participated in the program in the final year of Jimmy Carter’s presidency, 1980.
Claiming accurately that there was “widespread abuse of the system which should not be allowed to continue,” President Reagan set about curbing the growth of the Disability Insurance program. He directed his Department of Health and Human Services to conduct reviews of DI claims. At the same time, the economy grew rapidly after the early 1980s recession ended.
The result was a significant departure from the upward trend in program participants of previous years. In the first two years of Reagan’s presidency, recipients of benefits fell from 5.01 million to 4.38 million, a 12.49 percent decrease. The demographic that saw the biggest drop in dependency was not disabled workers but rather able-bodied students ages 18 and 19 whose parents were classified as disabled. Between 1981 and 1983, the number of non-disabled adult beneficiaries of the DI program decreased by almost a full two thirds from nearly 150,000 to just over 50,000.
During the Obama administration, the DI program has grown at a rate similar to that at which it expanded before the Reagan presidency as the economy has struggled and eligibility has not been limited. Indeed, more Americans have gone on disability than have found jobs in the past three months. Between 2009 and 2011, total recipients are up over nine percent to 11.74 million, and the non-disabled adult subcategory has also risen. The average monthly benefit, which was $475.70 in 1985, became $1188.80 by 2011; the growth in average benefits has significantly outpaced inflation.
The problem of the DI program’s recent growth has rightly attracted congressional attention. Senator Jeff Sessions, Ranking Member of the Senate Budget Committee, recently requested a report on this topic from the Congressional Budget Office (CBO). The report came to several unsettling conclusions, including a finding that the number of beneficiaries as a percentage of the population age 20 to 64 has risen rapidly. A press release from the Senate Budget Committee Republicans also notes that the program’s trust fund is expected to be exhausted as early as 2016 and that known overpayments to beneficiaries are common.
What has happened to the DI component of Social Security is in line with a pattern of increasing reliance on government amidst a floundering recovery under President Obama that contrasts sharply with the drop in government transfer payments that accompanied the solid growth overseen by President Reagan. As weary Americans search for solutions that will return the nation to prosperity, they ought to look to Reagan’s legacy of concurrently expanding the economy by instituting market-based reforms and reducing dependence.