Disabled, Survivors Lobby on Bush Plan
Disability rights groups have been quietly lobbying Members of both parties to consider the impact of President Bush’s proposed changes to Social Security on beneficiaries who are disabled and survivors. But the complexity of figuring out whether either group would receive lower guaranteed payments has produced what amounts to a “he said, she said” debate.
Democrats have seized on the issue in their quest to prevent Congressional Republicans from pushing through Bush’s plan, which would allow workers to divert some of their Social Security taxes into private investment accounts in exchange for a lower government-funded benefit.
But Republicans say they have gone out of their way to make sure that the disabled, widows, widowers and surviving children do not get hit with deep benefit cuts.
The Consortium for Citizens with Disabilities — a coalition of about 100 nonprofit groups including AARP, the influential seniors’ lobby — recently visited all 535 Member offices on Capitol Hill to drop off educational materials about the potential adverse impact that the Bush proposal might have on Social Security payments for the disabled and survivors.
“We’re asking Congress to request a beneficiary impact statement … that shows what this proposal will do to each category of Social Security beneficiaries,” said Marty Ford, who works for The Arc, a disability rights group that belongs to the coalition. “We should not move forward until we do that. We’re pushing pretty hard on that message.”
Ford and others said the gist of their message is that the president’s apparent desire to move Social Security retirement benefits to a “progressive indexing” scale would force dramatic cuts for all beneficiaries — and that, they say, would be particularly rough on disabled workers.
Progressive indexing is a mix of wage indexing and price indexing, designed to make sure that lower-income workers receive more in benefits than wealthy workers do. Current Social Security benefits are set by averaging workers’ wages over a lifetime and providing beneficiaries with a percentage of that average, generally about a third. By linking high-income workers’ benefits to price increases, which rise about 1.1 percent slower than wages, the Social Security system could stay solvent longer, proponents argue.
“Anytime you are cutting regular benefits to allow private accounts, you set it up to cut disability and survivor benefits,” said Jason Furman, a senior fellow at the Center on Budget and Policy Priorities, a liberal think tank that is part of the disability rights coalition that’s lobbying on the issue.
Furman said that disability and survivor benefits would decline 28 percent by 2075 if progressive indexing is implemented.
Disability groups base their assumptions on a variety of sources, from the Social Security Administration’s actuary to reports from the president’s 2001 commission on Social Security, which first drew up plans for private accounts.
The president has not put out a specific plan for allowing private accounts, but his chief economic adviser Allan Hubbard said recently that “the president is very attracted” to the notion of progressive indexing.
While most Republican plans to allow private accounts do not directly address disability or survivor benefits, they say the current wage-indexing formula for disability payments would stay the same.
“I don’t know of any current legislation that affects survivor or disability benefits,” said an aide to Sen. John Sununu (R-N.H.), who last week introduced a bill to provide private accounts under Social Security.
The aide noted that because the disabled and survivors make up a comparatively small percentage of the Social Security system — 31 percent combined — “we can still use a pay-as-you-go system for that kind of thing.”
“It’s the retirement system that’s being pushed into insolvency,” the aide said. Retirees make up the remaining 69 percent of Social Security beneficiaries, and under the Republican plan, the private-account option would only apply to retirement benefits, though the proceeds could be passed on to survivors at death.
Sen. Jim DeMint (R-S.C.) said he took special care to make sure his private accounts bill did not adversely impact the disabled and survivors.
“It stays exactly the way it is,” he said. “In some cases, survivors actually fare better.”
But disability groups dispute that notion, saying that even if you do not change the formula for disabled workers, those beneficiaries will eventually have to take a steep cut when they reach retirement age.
Indeed, the Social Security system switches disabled workers into the retirement and survivors’ trust fund once they reach retirement age, currently at 65 years old. There is a separate disability insurance trust fund, though the two trust funds in the past have borrowed money from each other and are often assessed as a single trust fund.
One Senate Republican aide acknowledged that some GOP Social Security plans don’t account for the disabled being pushed into the retirement system, “which could be and would be a lower benefit,” especially since the disabled — as non-workers — would not have supplemental private accounts as large as non-disabled workers.
But the aide noted that other plans, such as one proposed by Sen. Lindsey Graham (R-S.C.), recommend giving disabled workers a lift by tagging their retirement benefits to both wages and prices, so that they would not see such a dramatic dip in their benefits at retirement age.
Still, the aide said the hybrid benefit plan “could be less” than what they would get under the current system.
Furman said the hybrid plan “is not the best policy decision … because abruptly you wake up one day and get a much smaller check,” and because it could “create disparities between people with disabilities and other beneficiaries.”
Furman noted that a worker who was disabled at age 61 would get a much fatter check than a worker who simply retires at 65, or 67, which is the likely new retirement age Congress will choose.
Survivors could also see a reduced benefit if their spouse’s or parent’s wages were high enough to fall into the price indexing portion of progressive indexing, the Senate GOP aide said. But the private-account option is intended to make up for any such shortfall, the aide added.
In addition, several GOP plans, including Sununu’s and DeMint’s, guarantee that all Social Security beneficiaries in the future will get the same benefits they have been promised, making the government responsible for covering any stock market losses.
No Republican plan that has been floated would change benefits for people who currently receive them — only for future beneficiaries.