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Monday, 12 January 2015 00:00

House rule sets up election-year battle over Social Security

Written by STEPHEN OHLEMACHER | AOL

Buried in new rules that will govern the House for the next two years is a provision that could force an explosive battle over Social Security's finances on the eve of the 2016 presidential election.

Social Security's disability program has been swamped by aging baby boomers, and unless Congress acts, the trust fund that supports it is projected to run dry in late 2016. At that point, the program will collect only enough payroll taxes to pay 81 percent of benefits, according to the trustees who oversee Social Security.

To shore up the disability program, Congress could redirect payroll taxes from Social Security's much larger retirement fund - as it has done in the past. However, the House adopted a rule Tuesday blocking such a move, unless it is part of a larger plan to improve Social Security's finances, by either cutting benefits or raising taxes.

Long the third rail of American politics, tinkering with Social Security has never been easy. Throw in election-year politics and finding votes in Congress to cut benefits or raise taxes could be especially difficult.

But if Congress doesn't act, benefits for 11 million disabled workers, spouses and children would be automatically cut by 19 percent. The average monthly payment for a disabled worker is $1,146, or a little less than $14,000 a year.

Rep. Tom Reed, R-N.Y., said he sponsored the provision in an effort to force Congress to find a long-term solution to the disability program's financial problems.

"By putting this rule into effect, we are sending a clear indication that we're not just going to allow the raid of retirement Social Security to be used to bail out the disability trust fund," Reed said. "We need real reform. This makes that real reform that much more likely."

Advocates for older Americans are warning that the rule could be used to help push through benefit cuts, especially since House Republicans have opposed raising taxes.

"It is difficult to believe that there is any purpose to this unprecedented change to House rules other than to cut benefits for Americans who have worked hard all their lives, paid into Social Security, and rely on their Social Security benefits, including disability, in order to survive," said Max Richtman, president of the National Committee to Preserve Social Security and Medicare.

David Certner of AARP said it would be a mistake to eliminate the option of redirecting money from the retirement fund, which Congress has done in the past.

"Otherwise, we could be facing a deadline, and certainly over the last couple of years, we've seen Congress seemingly unable to pass bills, even with deadlines in front of them," Certner said.

Tuesday started off as a day of pomp and ceremony on Capitol Hill, the first day of a new Congress. Republicans assumed control of the Senate for the first time in eight years, making Sen. Mitch McConnell of Kentucky the majority leader.

Republican John Boehner of Ohio was re-elected speaker of the House. Relatives filled the public galleries and small children dotted the House chamber as their parents were sworn in as members of the 114th Congress.

But the partisan rancor that has dogged Congress for years returned when the House debated its new rules. The 36-page set of rules passed by a vote of 234-172, with all Democrats opposed and almost every Republican in favor.

On page 32 is a provision that allows any representative to raise a point of order if the House tries to pass a bill redirecting tax revenue from Social Security's retirement fund to the disability fund. The House could vote to overcome the objection, but that could be difficult, with almost every Republican supporting the rule that passed Tuesday.

Social Security's long-term financial problems are well-documented, as millions of baby boomers approach retirement, leaving relatively fewer workers to pay the payroll taxes that support it.

Social Security has more than $2.7 trillion in reserves, but the retirement program has been paying out more in benefits than it collects in payroll taxes since 2010.

The disability program has been paying out more than it collects since 2005.

Social Security is supported by a 12.4 percent tax on wages up to $118,500. Half is paid by workers and half is paid by employers.

Most of the payroll tax - 10.6 percent of wages - goes to the retirement fund. The remaining 1.8 percent of wages goes to the disability fund.

Social Security's retirement trust fund is projected to run dry in 2034. At that point, it would only collect enough payroll taxes to pay about 75 percent of benefits.

If the retirement fund and the disability fund were combined, they would have enough money to pay full benefits until 2033, giving lawmakers more time to address their long-term finances.

Reed, the sponsor of the new rule, said his goal is to address the disability program well before the trust fund runs dry.

"As we get through the initial concerns raised by the various groups," Reed said, "I hope the dust will settle and they'll see that this is a sincere effort to put a long-term solution together that works for everybody."

Link to original article from AOL

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