When the White House unveiled its 2018 budget on Monday, plenty of Democrats were quick to characterize it as stingy and cruel. Among the exhibits for the prosecution was the plan for Social Security Disability Insurance, whose projected outlays the administration would cut by 5 percent by 2027.
White House budget director Mick Mulvaney started the argument in March. “It’s the fastest growing program,” he asserted. “It grew tremendously under President Obama. It’s a very wasteful program, and we want to try and fix that.” He was promptly accused of factual sloppiness and heartlessness, and some of the criticism was justified. But Mulvaney is onto a real problem that demands attention.
The critics pointed out that since 2014, the number of Americans on disability has not risen but fallen. That’s true, but not entirely reassuring. The figure didn’t begin to come down until five years after the end of the Great Recession, and the total remains considerably bigger than it was when that downturn began.
Some of the increase came about because of demographic changes. As the oversized baby-boom generation ages, it boosts the number of people suffering from physical and mental afflictions that make it difficult to hold a job. With more women in the paid labor force than a generation ago, there are more people who can qualify for disability.
But these facts are not enough to fully explain the long and sustained expansion of the program. The number of disabled workers on the rolls has doubled over the past two decades, and outlays have doubled as well, after accounting for inflation. Additional growth is expected over the next decade. Last year, the Social Security trustees projected that the fund is likely to run out of money in 2023.
This picture is the opposite of what might be expected given other changes. It would have been reasonable to expect those numbers to decline as medicine has produced better treatments for a variety of debilitating ailments, from arthritic knees to chronic depression. Fewer jobs require backbreaking labor than in the past. The Americans with Disabilities Act was designed to facilitate the employment of people with various limitations.
But the number of people getting disability benefits has climbed anyway. As economists David Autor of MIT and Mark Duggan of the University of Maryland note in a report for the Center for American Progress, the program “is supporting a rising rate of dependency and a declining rate of labor force participation among adults with disabilities.”
That dry analysis doesn’t capture the real-world consequences. “Across large swaths of the country,” The Washington Post reports, “disability has become a force that has reshaped scores of mostly white, almost exclusively rural communities, where as many as one-third of working-age adults live on monthly disability checks.”
It’s no surprise that when the economy tanks, more people apply for and get disability benefits. In good times, people with significant impairments may be able to find suitable positions that disappear in hard times, leaving them no option but to leave the workforce. But the disability program deters many beneficiaries from going back to work even when jobs become more plentiful.
Mulvaney stresses the need to return those disability recipients who can work to productive employment, which is in their interest as well as that of taxpayers. The administration wants to try experiments such as requiring applicants to look for jobs before their disability applications are considered, and making more use of vocational services to help prepare them for jobs. Lawmakers ought to welcome new ideas to improve the disability program, which has no shortage of flaws.
Qualifying in the first place can take several months, and recipients typically lose all their benefits if they earn more than $1,170 a month — which is barely above the poverty line. The all-or-nothing threshold in the disability program, combined with the trouble of re-applying if a job doesn’t last, serves to mire people in a dependency they may badly want to escape.
Some other programs, by contrast, reduce benefits incrementally as income rises, which gives beneficiaries a bigger financial incentive to work. Shifting to that model would raise disability outlays in the short run, but over time it would save money by enticing people who are capable of working to return to paid jobs. And the change would pose no risk to those whose severe disabilities make employment impossible.
A lot of people getting disability would rather be engaged in productive activity that helps pay their bills and enhances their sense of self-worth. A program that hinders them from doing so is a program in need of reform.