Like Mrs. O’Leary’s cow, House Republicans kick-started a bigger fire than many imagined with an opening day rules change that revived Social Security as a hot issue for this Congress — and the 2016 presidential elections.

The GOP’s immediate target is Social Security’s sprawling disability insurance program, which has grown at a pace far beyond its revenues and will exhaust its trust fund reserves by December 2016, threatening a 19 percent cut in benefits.


In the past, Congress has simply shifted revenues from Social Security’s larger retirement account to fill holes in the disability fund. But the new House rule throws up a roadblock by creating a point of order against any such bill that does not improve the “actuarial balance” of the combined funds.

“What we want to do is not kick the can down the road anymore,” said Rep. Sam Johnson (R-Texas), who promoted the change as chairman of the Social Security panel on the House Ways and Means Committee. “The rule is intended to get the Congress to at least take a first step toward solving the Social Security problem. If we continue the way we are, it’s a go-broke operation.”

“If all they’re doing is rob-Peter-to-pay-Paul, that’s going to be subject to a point of order, and rightly so in my opinion,” added Rep. Thomas Reed (R-N.Y.). “We have to protect the retirement fund and the retiree.”

It all sounds like “good government,” but the politics are rich.

House Democrats were not consulted on the rules change, and liberals accuse the GOP of trying to cull the weak from the herd, pitting the disabled against pensioners to undermine the larger Social Security coalition.

In fact, the new rule’s fine print leaves an escape hatch for Republicans to move tens of billions into the disability fund if this gambit fails. Still, the upshot could be a one-two punch Democrats most fear: a first-round debate over disability funding in 2016 followed by a bigger battle over all of Social Security in 2017, when Republicans hope to control both Congress and the White House.

“They’re looking for a new weapon,” said Michigan Rep. Sander Levin, the ranking Democrat on Ways and Means. “What they’re doing in this rule is to use any problems within disability as a way to attack the whole system. It’s dangerous doubletalk when they have been the problem, not the answer.”

Adding to Levin’s fears was testimony last week before Ways and Means, in which Harvard economist Martin Feldstein promoted the idea of Congress gradually raising the eligibility age for full Social Security benefits to as high as 70. That would increase labor-force participation among people older than 65, expanding the economy, Feldstein said. But raising the retirement age would add to the strain on the disability fund, which has had to cover more workers longer since the retirement age was raised from 65 to 67.

These tensions fueled a separate uproar last week over remarks by 2016 presidential hopeful Sen. Rand Paul about the disability program.

Testing the waters in an appearance in New Hampshire, the Kentucky Republican suggested that half the people on Social Security disability had no more to worry about than achy backs and anxiety in the morning. “Join the club. Who doesn’t get up a little anxious for work and their back hurts,” Paul said disparagingly.

After video of his remarks went online, Paul quickly backtracked: “We absolutely should take care of those truly in need of help,” he said in a statement.

At this stage, the White House and Treasury show no sign of backing down from their intent to pursue a straight reallocation of funds from the retirement account, formally known as the Old Age Survivors Insurance or OASI trust fund. Given all the divisions already in Washington, adding a new procedural hurdle is “unhelpful,” an administration official said icily.

Indeed, transfers between the two Social Security funds have gone on for years. Each relies on a percentage of the same payroll tax, and the disability program helped the retirement trust fund in the 1980s by reducing its own share of the tax revenue.

What’s most changed now is that critics are singling out the disability fund as the profligate partner — and a harbinger of bad times ahead for all.

Without doubt, the growth of the disability program has been explosive.

In the past 20 years, the number of workers getting disability payments has more than doubled to 8.95 million last month. About $140 billion went out the door in fiscal 2013, double what the costs were just 10 years before. And like food stamps in the Farm Bill debate, disability payments are common enough now to be a whipping boy for conservatives like Paul, playing on resentment toward people receiving government aid during hard economic times.

At one level, this is all political catnip for Democrats, eager to be seen as defenders of Social Security and its New Deal heritage. But given their history, Republicans don’t come to the table with clean hands.

For example, the GOP’s 2011 budget deal with President Barack Obama held out the promise of millions in appropriations to help the Social Security Administration fight precisely what Republicans complain about in the disability program: medical fraud. But for 2012 and 2013, House Republicans failed to approve the money, thereby adding to Social Security’s woes.

Moreover, an analysis by Social Security’s chief actuary, Stephen Goss, suggests there’s less to the new House rule than meets the eye. That’s because the point of order is triggered only if lawmakers exceed a “0.01 percent” threshold, which equates to a $38.6 billion cap on what any one Congress can move from the retirement fund, Goss told POLITICO.

That leaves too little room for some long-term, multiyear reallocation of payroll tax revenues but it is enough to get past 2016, by Goss’ calculations.

“We’re projecting [disability] trust funds will be depleted in December of 2016. … The shortfall for the ensuing 12 months would come to about $29 billion,” Goss said. “What that means is that we could have a tax rate reallocation that could apply in 2016 or 2016 and 2017 that would generate up to $30 billion or even $35 billion transferred to the [disability] trust fund, which would at least extend its reserve depletion date for one more year.”

It’s a stop-and-go scenario that serves neither party’s goals in the end. Much depends in the interim on Johnson and new Ways and Means Committee Chairman Paul Ryan (R-Wis.).

Ryan has boasted that Ways and Means will be “command central” for the GOP’s agenda, and he has installed his own staff in Johnson’s Social Security subcommittee. In the previous Congress, the disability debate among Republicans was shaped by flamboyant personalities such as the now-retired Sen. Tom Coburn (R-Okla.) and Rep. Darrell Issa (R-Calif.), who has had to surrender his platform as chairman of the Oversight and Government Reform Committee. But now, Ryan would like to be the architect for reforms in the social safety net.

There is room for compromise. The crisis is no surprise — as long ago as 1995, Social Security’s actuaries were predicting 2016 as a breaking point for the disability fund. And multiple academic papers from the center-left and center-right outline changes Congress could consider.

Three potential areas of agreement: First, find a dedicated source of money for Social Security to expedite so-called continuing disability reviews, which have been shown to generate savings. Second, limit recipients’ “double-dipping” among disability and other government benefits. And third, experiment with ways to help people with disabilities to stay in the workforce or return more quickly.

The past year has seen some turnaround on funding for the disability reviews. In the fiscal 2014 and 2015 Social Security budgets, House Republicans finally agreed to the extra “program integrity” appropriations that the budget deal had called for. The Social Security Administration says every dollar spent here can lead to $9 in long-term savings, and in 2013 — the latest year for which data are available — more than 17,000 workers were disqualified as a result of these medical reviews.

The administration estimates that as many as 790,000 continuing disability reviews will be conducted this year, a 50 percent increase over 2014 and double the annual average from 2009-2013. To maintain this effort, the 2016 budget that Obama proposes in February is expected to ask again for close to the $1.4 billion provided in 2015.

The White House is also expected to come back to Congress with a set of demonstration programs to test and gather data on the effectiveness of early intervention — with workers and employers — rather than individuals simply surrendering to going on disability. The omnibus bill approved in December provided $35 million for this purpose, far less than what the administration had hoped for.

“I think it’s clear that the system needs to be improved,” said Jeffrey Liebman, a Harvard professor who served in the Office of Management and Budget during Obama’s first term. “I also think it’s clear that we don’t yet know enough about the cost and benefits of specific proposals to make wholesale changes.”

Part of the challenge for policymakers is the unique nature of disability insurance.

Unlike many other disability programs, Social Security’s covers only total disability — not partial or short term. Benefits are a function of how much a worker previously earned and put into the system, but on average these run under $1,200 per month. On top of this, a worker is allowed to earn some outside income, but this is capped at less than $1,100 a month.

The result is that many households can be locked in at 200 percent of poverty or lower once the decision is made to go on disability. That’s why early intervention can help both the government and the worker. But how early to intervene — and at what cost — remain big questions.

“They are really only biting at the outer edges of the issue. Their idea of early intervention is way too late,” said Richard Burkhauser of Cornell University and the University of Melbourne. Burkhauser argues that the U.S. must look to European countries like the Netherlands that “have really done major things that have fundamentally altered their system.”

The Dutch model, for example, requires employers to cover more of the first two years of disability costs, thereby encouraging more management involvement in trying to help employees rehabilitate themselves and stay in the workforce. Yet selling this to a pro-business Republican Congress may take more than a little doing.

“The Dutch still spend more of [gross domestic product] than we do on disability benefits,” Liebman said. “They came from spending a lot more than we do to spending more than we do.”

Johnson is certainly not eager for big new expenditures. But for all his famous crustiness, the Texas conservative was not unsympathetic to people who depend on the current system.

“We want to work to protect the disability program, but we want to consider how to help those who can and want to work,” Johnson said. “And those who can or want to work ought not to be sentenced to a lifetime of near poverty with no way out.”

For all the partisanship now, the disability insurance program was born in the mid-1950s under a Republican president, Dwight Eisenhower. Ronald Reagan triggered bitter fights 25 years later when he sought cuts in the early 1980s. That sparked a backlash from Democrats in Congress, which led to changes making it easier for more people to qualify.

But the enrollment numbers really took off in the mid-1990s, as more baby boomers moved into their late 40s and began applying during an otherwise strong economy. The Great Recession accelerated this trend as workers turned to disability as a last resort after unemployment benefits ran out. But the prime mover for the past 20 years has been demographics — changes set in motion generations ago.

These include not just the baby boom, but the fact that women have worked long enough now to qualify for disability benefits. All this comes, most importantly, at a time when the drop in birth rates has left fewer younger workers to help absorb the costs.

If all these forces make disability insurance the black sheep now, it will soon have company: The retirement side of Social Security is feeling the same forces, while new enrollment numbers suggest the spike in disability has peaked. Data show a steady drop in the number of new disability awards since their high in 2010.

“The increasing effects of [disability insurance] are over. We’re done with that,” Goss said. “The bad news is now the boomers are moving to the higher ages and once they get there, they’ll have the lower-birth-rate generation below them. … This is unfortunately kind of like the tide.”

As the waters recede, rural low-income states like Kentucky, Arkansas, Mississippi and Maine face a larger concentration of disability cases as a percentage of the population. Workers complain of a slow, almost Dickensian application process that can put their lives on hold for months. This same environment can attract aggressive attorneys, who boast in phone book ads that this is their briar patch — just call.

Fresh indictments this past week in Puerto Rico are a reminder of the risk of fraud — and collusion among doctors, lawyers and administrative judges. Government Accountability Office reports have raised questions about workers double-dipping, by stringing together payments from Social Security disability along with jobless benefits or non-combat-related disabilities covered by the Department of Veterans Affairs.

None of this alters the 2016 deadline.

“The trust fund programs really are special because they cannot borrow. The reserves deplete. Congress has to act,” Goss said. “We’ll still have revenue come in, but our projection is we’ll only have 81 cents of tax revenue coming at that time for every dollar of benefits.”

But under the new House rule, Goss said, any single piece of legislation can give the program at most “a one-year or slightly more than a one-year extension of the reserve depletion date.”

Does that mean Congress should do more than one year?

The actuary chuckled. “The good news,” he said, “is that given we have 535 members of Congress, we’ll hear lots of arguments and that will likely be one.”