Absent action from Congress, the Social Security Disability Insurance trust fund will run out of money in 2016. It might last into the beginning of 2017, if we're lucky. There is virtually no chance that the money in the trust fund will last any longer than that.

The date is so close that, unlike the shortfall in the regular Social Security trust fund (projected to run dry in 2036), it is useless to hope that the shortfall will be eliminated by an improving economy, by beneficiaries dying sooner than expected, or by any other factor. It is pure fantasy to believe that "cracking down" on fraud, waste, and abuse will even put a dent in a shortfall of the magnitude that is faced.

A look at the numbers from last year gives a clear picture of the reality. In 2012, the trust fund started the year with $153.8 billion dollars. During the year trust fund took in $109.1 billion-- including money contributed from the general fund to make up for the temporary payroll tax cut-- and disbursed $140.3 billion. So the trust fund ended the year with $31.2 billion less than it started with-- $122.6 billion.

Without even looking at the projections, it should be easy to comprehend that at a burn rate of over $30 billion a year, $122 billion disappears pretty quickly. Hence, in 2016, the trust fund will be empty.

At that point, SSDI can only pay benefits equal to what it takes in. Again, without even looking at the projections, it should be easy to comprehend that benefits will have to take a sharp cut, if no action is taken. In 2012, SSDI would have had to cut payouts by 22.2% in order to balance its intake with its disbursements. If you look at the trust fund's projections, that's pretty close to the benefit cut that SSDI projects in 2016. Benefits will be cut around 20%. Beneficiaries will only be paid 80% of their current benefit.

The time is past for half measures. The horse has left the barn. There is absolutely zero chance of the Social Security Disability Insurance Trust fund not running out of money if Congress does not take action-- and by action, I mean increasing revenues into the fund. There is no other action worth talking about at this point.

There are several things that Congress could do.

--It could reallocate some of the payroll tax from the regular Social Security trust fund to the SSDI trust fund. This has been done before. However, that would just worsen the projected shortfall for regular Social Security, and hasten the date when the same thing will happen to the much larger Social Security trust fund.

--It could increase the payroll tax rate and/or expand the tax to make up for the revenue shortfall. Currently, the tax is 1.8% of payroll. By my calculation, this would have to be increased to around 2.3%.

--It could "bail out" the shortfall with funds from the general fund. Congress could then either cut $30 billion or so per year from the budget to balance the books, or tack an extra $30 billion per year on to the deficit.

-or-

--It could do nothing, allowing the sharp cut in benefits.

Simply bailing out the SSDI trust fund from the SS trust fund or the general fund may be the best solution economically if the economy is still weak due to lack of demand-- tax increases will incrementally hurt the economy. However, if Congress does this, any pretense that SSDI is an "earned benefit" is severely weakened, and it starts to become questionable whether regular Social Security is truly an earned benefit, since the expectation will be that its fund will also be bailed out when the time comes.

A tough and likely unpopular action must be taken here. Disabled persons do not have the political clout that seniors do, especially with Republicans. So do not expect Republicans to lift a finger to solve this problem. They will be content to just let the problem become a crisis, and then point the finger at Democrats for bankrupting the country by giving cash to freeloaders. It will be up to Democrats, as the only adults in Washington, to fix this problem, as usual.

Democrats should be working to fix this problem now. To do anything less than to address this problem right away is to virtually guarantee that people who depend on their disability benefits to get by will have their benefits held hostage by right-wing Republicans. That is unacceptable.

The Social Security Trustees' annual report for 2013 is here, if you would like to learn more; the section on SSDI begins on page 29. It is not hard to read.

