How does the new Budget Deal affect Social Security?

On Monday (October 26) evening news leaked out about the tentative Federal Budget/Deb Ceiling agreement. Rachael Maddow reported that the rumors of alfred_e_neumanthe deal had been trickling in, but nothing was confirmed.  The New York Times used congressional aides as sources. Finally, around midnight the House posted a 144 page document they called a “discussion draft.

The Bipartisan Budget Act of 2015 was approved by the House of Representatives yesterday, and is expected to be passed by Senate before the November 3  default deadline.

Not only News Agencies, but lobbyists, political parties and other organizations (bias and un-bias) read  and analyzed the discussion draft. Not surprisingly they reported their conclusions with their own particular spin.    This was especially true about how the new budget deal affects Social Security. When I first heard that Social Security Disability benefits had been cut I, and probably others, thought the worst. A little research brought out the facts.

This legislation reallocates money from the Old-Age and Survivors Insurance Fund (aka Retirement Fund) to the Disability Insurance Fund. This will save the Disability Fund from becoming insolvent in 2016.  We will still have 6.2% of our salary deducted from our paychecks (and the employers will also pay 6.2%) goes to Social Security but the money will be distributed differently. Presently the 5.3% of our salary goes to the OASI fund and 0.9% goes to the Disability Insurance (DI) Fund. With the passing of the new budget, 5.015% will go to OASI and 1.185% to the DI. That rate will continue for 3 years, then revert back to rate we now use. At that point workers’ payroll deductions will keep the Disability Fund solvent for another 3 years (2022). Then we either go through this crisis again, or, Congress and the President will find ways to increase Social Security funding (or cutting benefits).

According to  Social Security News and Bipartisan Budget Act of 2015 Section-by-Section Summary  the agreement also affects Social Security in the following ways:

  • Thirty states, including New York, have those who are applying for Disability Benefits be examine by Social Security physicians, psychiatrists or psychologists. Every applicant has a physical examination and a mental examination.  The other 20 states uses only the applicants’ personal physicians reports and comments to determine if he/she has reached the standard to be considered disabled. This is expected to save $5 billion. (Section 832)
  • Closing Unintended Loopholes  about the filing process, duel entitlement benefits and benefit suspensions.  (Section 831)
  • Stiffer penalties for Social Security fraud. (Section 813)
  • Updating electronic reporting procedures. (Section 826)
  • Disabled clients are presently able to earn up to $780  per month with no affect on their benefits. Those who earn more  lose $1 of benefits for every $2 they earn.  This legislation has the Social Security Administration developing demonstration projects to test how different earning thresholds affect both the clients and the DI budgets (Section 823).

There are other changes to Social Security in the budget legislation; most deal with streamlining operations or reporting requirements.

The changes this Act brings to Social Security will keep  the Disability Fund solvent for six years. Other changes will need to happen to strengthened  the Social Security for the long haul.

Paul Ryan, the new Speaker of the House, complained about the top-down secretive process a small group of negotiators went through to get the Budget/Debt Ceiling Deal hammered out. He states that he will run congress differently; there will be more bottom-up input and time for open discuss on major issues. Ryan seems to agree with  Secretary of the Treasury Jack Lew when he told our congressman that “Long term policies take a long time to have an effect.” When looking to change Social Security all possible options should be examined to see their long term affects.

 

other articles:

A Temporary Outbreak of Sanity in Washington

Bipartisan Budget Act of2015 Taxpayer TCS Analysis (Taxpayers for Common Sense)

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About pystew

Retired Teacher, political science geek, village trustee. I lean a little left, but like a good political discussion. My blog, the New NY 23rd (http://newny23rd) is about discussing the issues facing the people of our new congressional district. Let's hear all sides of the issues, not just what the candidates want us to hear.
This entry was posted in 2016, Congress, Economics, Reed's Views, Sequester/Fiscal Cliff, Social Security and tagged , , , , . Bookmark the permalink.

4 Responses to How does the new Budget Deal affect Social Security?

  1. Deb meeker says:

    Thanks for these clarifications. The first item listed : “Thirty states, including New York, have those who are applying for Disability Benefits be examine by Social Security physicians, psychiatrists or psychologists…..” seems to be bigger government than those other states who’s applicant’s own doctors are making the call. Would this change result in the need for many more government paid physicians, psychiatrists or psychologists – or would that mean applicants could expect even longer waits for this program? In many cases, it already takes years, not months.

    • pystew says:

      I don’t know who pays for the physicians, psychiatrists and psychologists. This makes sense if the states are responsible to pay for them. They must expect disqualify a lot of applicants. The Social Security News is a blog written by a Social Security Lawyer that is read, and commented on by well informed Social Security professionals. I find it very informative.

  2. josephurban says:

    Great explanation of the Social Security situation. Let;s hope our Congressman reads it and learns something.

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