GOP plea on Social Security disability: Do something, Obama “I’m really tired of bailing out water,” Sen. Lindsey Graham says at a hearing.

The battle over Social Security’s future came back to the forefront Wednesday as top Republicans on the Senate Budget Committee challenged the White House plan to shift $330 billion between the program’s trust funds to avert deep cuts in disability payments, beginning at the end of 2016.

President Barack Obama’s new budget plan released last week would accomplish this transfer by temporarily adjusting the formula that distributes receipts from the 6.2 percent federal payroll tax, which workers and their employers pay to finance both the retirement and disability programs.


The administration estimates that a 0.9 percentage point change from 2016 through 2020 would put both trust funds on a path where neither would exhaust its reserves before 2033. But that’s one year earlier, in fact, than the 2034 deadline now predicted for Social Security’s much larger retirement fund. And Republicans argue that Obama must do more now in anticipation of the enormous problems ahead.

“I’m hoping that we don’t just kick the can down the road,” said Chairman Mike Enzi (R-Wyo.). “I’m hoping the president will take an active role in this.”

Carolyn Colvin, acting commissioner for the Social Security Administration, urged senators to act first to avert the crisis at hand and then begin serious negotiations on finding a longer-term solution. She said the threatened cut in disability payments — about 19 percent — would be a “death sentence” for many of the poorest recipients, but time and again, she refused to opine on more concrete options going forward.

When Colvin read aloud the president’s six principles for future reforms, Sen. Lindsey Graham (R-S.C.) was scornful. “That’s a set of principles that makes sure we do absolutely nothing meaningful,” Graham said. “If that’s the president’s plan, we’ll never get there.”

Graham, like many of the senators, seemed resigned that Congress ultimately must approve some change in the payroll tax formula to avert a crisis. But he warned: “I’m really tired of bailing out water when the boat has a hole in it a mile wide, and we’re using a very small pail.”

For this Congress, much still lies ahead. If Republicans believe they can win the presidency in 2016, they could adopt a short-term solution that would allow them to revisit the fight in 2017. In fact, House Republicans have already put in place a rules change allowing a smaller reallocation but making it harder for the president’s plan to be enacted — without additional steps to improve the combined balance for the two trust funds.

In the run-up to Wednesday’s hearing, Senate Finance Committee Chairman Orrin Hatch (R-Utah) took to the floor Tuesday to press Obama to do more. And in an apparent first step to engage the president, Hatch and House Ways and Means Committee Chairman Paul Ryan (R-Wis.) are expected to sign onto a bill this week sponsored by Rep. Sam Johnson (R-Texas) to narrow the window in which people who receive disability payments can also collect unemployment benefits.

Vermont Sen. Bernie Sanders, the independent who serves as ranking member on the Budget panel, angrily accused the GOP of “manufacturing a crisis” to hide its intent to resurrect past proposals to cut Social Security benefits and privatize the system.

But by the end of Wednesday’s three-hour hearing, Sanders seemed more confident that the threatened disability cuts will be averted next year. And however partisan the proceedings, they were largely polite with a touch of comedy.

Sanders, with his sometimes wild white hair, populist politics and potential presidential ambitions, cut a fiery figure. Enzi was invariably soft-spoken, polite, an accountant by training and also a problem solver in the vein of the late Sen. Henry Bellmon (R-Okla.), who was a major figure in budget debates in the late 1970s.

In the upside-down style of Senate hearings, most of the session was devoted to sparring back and forth with Colvin, as the lead administration witness. But this was not without real cost since the two expert witnesses — who had traveled great distances to appear — got to talk only when most senators had already left the room.

One of those, Philip de Jong of the University of Amsterdam and an expert on reforms in the Dutch disability system, gently chastised the committee when it finally came his turn.

“I come from a country which is not bipartisan, where governments are tri-partisan coalitions or even several-partisan,” de Jong said. “So what I learned here this morning is a lot about U.S. politics, and I’m sorry to say much less about the solutions to the looming problems with funding disability benefits.”

Certainly, the crisis has been building for a long time.

Established in 1956 under President Dwight Eisenhower, the disability program had grown to the point in the 1980s where it became a target for spending cuts backed by President Ronald Reagan. Those fights still echo today, and critics argue that in the backlash against Reagan’s cuts, Congress went too far in 1984 in liberalizing the standards for medical eligibility.

Awards for mental disorders and musculoskeletal disabilities like back pain increased significantly after those changes, and when the baby boom generation started to turn 50, enrollment took off in the mid-1990s. The number of workers getting disability payments has since doubled to 8.95 million in the space of 20 years. About $140 billion went out the door in fiscal 2013, twice the costs of just 10 years before.

Demographics and the economy surely explain a lot. Apart from the aging baby boomers, more women have worked long enough to qualify for benefits. The Great Recession accelerated the trend as workers turned to disability as a last resort after unemployment benefits ran out.

But testifying alongside de Jong, Mark Duggan, a Stanford University economist, said the more liberal medical eligibility standards have had a bigger lasting impact than many realize. He also pointed to changes in the formula used to calculate Social Security’s early retirement benefits — changes that saved money but then made the disability route more attractive for workers in low-wage jobs.

“Consider individuals between the ages of 50 and 59,” Duggan said in his written remarks. “In 1989, 1 out of 23 adults in this age group was receiving [Social Security disability insurance] benefits. But by 2013, this had almost doubled to 1 in 12.”

“There have been approximately 2.5 million ‘extra’ SSDI applications since 2008 as a result of the economic downturn,” Duggan told the committee. The rate of new applications has declined as the jobs picture has improved, he said, but many of those 2.5 million applicants “have withdrawn from the labor force, either because they have been awarded SSDI benefits or are still in the process of applying given the long lags in the process.”

It’s this loss of workers — and added cost to the government — that is a major concern for reform advocates in both parties. The big question is how far the government can go to intervene early and help a person — with back pain for example — to try to stay in the labor force.

The Netherlands’ example is one that intrigues many Republicans because it suggests a level of “privatization.” But that system rests on what amounts to what many in the U.S. would call “employer mandates.” Dutch law requires companies to be responsible for most costs for the first two years after a worker becomes ill. Moreover, the sick pay for workers is a much higher percentage of prior wages than what many workers in the U.S. would receive in similar circumstances.

“All Dutch firms are obliged to pay for sickness benefits, rehabilitation, accommodation, job mediation during the first two years of disablement” prior to any application for disability, de Jong said. Moreover, he said, Dutch firms “pay substantially higher rates if one or more of their employees” enter the disability program.

The results are impressive. The number of new disability awards fell by about two-thirds, de Jong said, from 2002-2012. At the same time, those already on the rolls who were younger than 45 were subjected to stricter standards, he said, and about 60 percent were back working three years after their benefit status was reviewed.

Sanders listened attentively but given his socialist leanings, having a witness from Europe was too much to resist.

“Mr. Chairman, I love that we have somebody from Europe. I think that’s a great idea, and I think we should do more of it,” he told Enzi. Soon after, he was off to the races, asking de Jong about health care and education benefits in the Netherlands.

“Everybody has health insurance,” de Jong answered.

“Maybe we should have a hearing here as to how that works,” Sanders said.