Thank you Mr. Chairman.
Workers earn their Social Security disability protection. Nearly 160 million Americans contribute to Social Security, earning protection for themselves and their families when they retire, or if they should die or become severely disabled. Over its lifetime, Social Security has taken in $13.9 trillion in contributions, along with $1.6 trillion in interest earned on those contributions, for a total of $15.5 trillion altogether.
At the same time, it has paid out only $12.8 trillion -- $12.7 trillion in benefits, and $0.1 trillion in administrative costs.
This leaves an overall Trust Fund surplus of $2.7 trillion. It’s not easy to qualify for Social Security’s disability benefits. Disability benefits are only available to those who have paid in, and who have the most severe, long-term impairments - Americans who are dying, or who genuinely can’t earn even a poverty-level wage at any job in the national economy because of their disabilities. About 1 in 7 women and 1 in 5 men die within a few years of being awarded DI.
The Social Security Disability Insurance Trust Fund’s challenge is modest, stable, and less immediate than the danger from the sequester.
The DI shortfall is relatively modest. Over the next 75 years, the financing shortfall is equal to about one-tenth of one percent of GDP. To put it in context, that is about 3.6% of the cost of the Defense Department’s annual budget. Over the long-term, the DI funding gap is similar to the funding gap for the retirement and survivors program, in proportion to the amount of benefits paid. The DI shortfall is not a surprise.
When Congress last rebalanced the allocation of payroll taxes going into the two Social Security Trust Funds, it did so knowing that the amount allocated to DI would result in a shortfall in 2016.This is the same date as projected in the most recent Trustees Report.
The recent growth in DI also is not a surprise, since it is due primarily to demographic changes and other predictable factors, in combination with the recession. The biggest factor is demographic:
* The Baby Boom generation has reached its most disability-prone years,
* More women have worked long enough to be protected in the event they become severely disabled and can no longer work.
Also, Congress raised the retirement age, so people receive DI for more years (and draw upon its separate Trust Fund) before converting to retirement benefits.
Finally, the economic downturn has also made it more difficult for people with disabilities to obtain work. As we talk about risks to taxpayers and disabled American workers, we should also note a threat even more immediate than the 2016 insolvency dates: the budget sequester, which went into effect Friday. As a result of the sequester:
* Disabled workers, who already wait nearly four months for their benefit applications to be processed, will wait an average of two weeks longer.
* Workers waiting for a judge to decide their cases, who already wait an average of a year for a hearing, will see their waiting time grow by a month.
* The Social Security Administration will have fewer staff to conduct reviews of whether individuals continue to be disabled, though taxpayers save $9 for every dollar we invest in this important program integrity work.
Our first goal in addressing DI’s challenges should be to do no harm. The severely disabled workers who receive Social Security already face very serious challenges. Many of them waited a long time to receive their earned benefits. They are contending with very serious health conditions. DI benefits aren’t especially generous. A typical worker receives about $13,500 a year, substantially less than they were making when they were able to work. Even with Social Security benefits, 50 percent of families with a disabled worker receiving Social Security are below the poverty line.
Through Social Security, millions of Americans with disabilities have earned hope, dignity, and, when it’s possible, a chance to return to work. Over 70% of workers receiving DI are over 50. They have spent long years working hard to support their families and paying in to Social Security. They’re not looking for handouts.
In fact, despite their severe disabilities, recent studies show that about one in five DI recipients who didn’t die or reach retirement age tried to return to work. Unfortunately, less than 4 percent of DI recipients were ultimately able to return to work, despite their best efforts and support from SSA. And of those who succeeded, about a fourth had to return to DI when they became too sick to work again.
Because DI recipients are usually too sick to work at all, the modest benefits are a lifeline for these Americans and their families. For nearly half of DI recipients, Social Security provides 90 percent or more of their total income. 1.7 million children were lifted out of poverty by their parents’ DI benefits.
As for the small number of DI beneficiaries who are able to attempt work despite their severe impairments, we must be sure to help them, too. I was very disappointed that Congress let two work-support programs lapse instead of passing my bill to extend WIPA and PABSS. And I am pleased to hear the Administration has found a way to restore access to these supports.
Mr. Chairman, I look forward to hearing from our witnesses about Social Security’s Trust Funds. But as we hear about the numbers, I hope we’ll keep in mind the people who contribute to Social Security with every paycheck, knowing that Social Security will protect them and their families if disaster strikes.
Finally, before we turn to our witnesses, I wanted to make some personal comments about my friend, Sam Johnson.
As many of you know, Sam and his wife Shirley recently experienced the devastating loss of their son Bob. Please know that our thoughts and prayers are with you and your family.
This loss also comes at an especially bittersweet time, as it is the 40th anniversary of Sam’s freedom from seven years of confinement as a prisoner of war in Hanoi - more than half of which was spent in solitary confinement.
Sam flew 62 combat missions during the Korean War, and 25 missions in Vietnam, before being shot down.
Sam, I take this occasion to honor your service to our country. You are a tribute to the dedication of our nation’s service members, and your courage and strength in the face of unimaginable adversity continue to inspire us all.
