Andrew Biggs seems to share a problem endemic among the writers of op-eds. He is much better at stating the problem than at proposing solutions. In an op-ed in the Wall Street Journal he does a good job of outlining the problem faced by the Social Security Disability Insurance Trust Fund:
Sometime next year Social Security’s $150 billion disability-insurance program will become insolvent. The program, which offers income supplements to those who cannot work full time due to physical or mental disabilities, has buckled as the number of beneficiaries has soared to more than 11 million in 2014, from 3.8 million in 1984. The bipartisan Social Security Advisory Board has urged reforms.
Yet the Obama administration’s 2016 budget proposes the opposite of reform: an unconditional transfer of revenues from Social Security’s retirement program. The president’s proposal will likely be blocked thanks to a House budget rule that forbids unconditional revenue transfers. The question now is: Will serious reform be a reality under President Obama?
The Administration’s approach is to kick the can down the road past the 2016 election when it will be someone else’s problem, temporarily transferring the problem to the Social Security Retirement Income Trust Fund which has problems of its own the transfer will only exacerbate. Here’s his solution:
If the House sticks to the rule it passed in January—which allows revenue transfers only when coupled with other measures—the administration might be forced to accept substantive reforms. The administration’s budget proposes trial policies such as rehabilitative services for the disabled before they can claim benefits, along with incentives for employers to retain workers with disabilities. Turning those limited trial programs into broader requirements could form the foundations of lasting reform.
Using similar policies, countries such as the Netherlands—once a disability basket-case—reduced the inflow of disability beneficiaries by 60% in six years. The Netherlands lowered taxes for employers who can keep the disabled on the job. The Dutch reforms also required that all workers considering applying for disability first construct a rehabilitation plan with their employer and be able to show that they have followed through on it.
The U.S. should explore similar options. The country can’t afford to paper over the need for reform once again.
That might be a workable solution under conditions of full employment and rising incomes. Those are not the conditions we see today. The great question unaddressed and unanswered by the op-ed is how long were new applicants for disability benefits unemployed prior to applying? Here’s the story I would tell, very different from Mr. Biggs’s.
Disability is the unemployment insurance of last resort. People would rather work than go on disability but there just aren’t enough jobs available today. The real solution to the problems of the disability insurance trust fund is a robust economy that’s producing more jobs faster than people are coming into the workforce. That will either require reforms to our trade, fiscal, financial, transportation, healthcare, and/or immigration policies or a jobs program beyond anything that’s been dreamed of to date.
No wonder people are proposing short-sighted and unworkable patches to a serious problem.
Doesn’t the “real solution” to most of our economic, as well as social problems, involve creating an economy that thrives, producing competitive businesses which in turn require higher employment and better wages? If the answer is yes, why do people then settle for an economy stifled by ever-increasing rules and regulations which are the mainstay for our current business climate malaise?