UCP Representative Speaks Out on Social Security

United Cerebral Palsy Associations
Monday, 11 June 2001

Statement by Judy Chesser, UCP's Director of Public Policy, at press conference at Willard Hotel during the first meeting of the President's Commission on Social Security

Washington, DC (June 11, 2001) - Judy Chesser: "People with disabilities and their families must be able to rely on the guaranteed benefits provided by the Social Security insurance program. Individual private accounts may be attractive for some individuals but any diversion of funds from Social Security to pay for those accounts undermines the guaranteed benefit. Social Security is an insurance program that protects families, including family members with disabilities.

In the documents before the Commission today there is no plan to include an assessment of the impact of various proposals on people with disabilities. This is a glaring omission, which in all fairness must be remedied.

As of December 2000 there were 6.7 million Social Security disability beneficiaries, including workers, their spouses and children. In addition, there were 7 million beneficiaries who are survivors of deceased workers, including disabled surviving spouses. Together these groups account for almost one-third of the 45.4 million total Social Security beneficiaries.

The recently enacted tax cut has severely reduced the amount of general revenues available to support different options for Social Security. In addition, the government's ability to budget for Social Security has been limited by the tax bill. This sets the stage for the plan that President Bush has supported to set aside for private accounts part of the existing revenue stream (FICA) currently dedicated to the Social Security Trust Funds. The goal must continue to be 75-year solvency. Yet such a diversion to private accounts doubles the shortfall in the trust funds and puts disability benefits at grave risk of reduction.

I am not alone in coming to these conclusions. On January 24, 2001, at the request of Senator Harkin (D-IA), the General Accounting Office (GAO) released a study of several plans to divert FICA dollars to Individual Accounts (IAs). The GAO concluded that such "reform proposals would reduce insurance benefits while creating IAs with the expectation that the income from an IA would largely offset reductions in the insurance benefits. In our estimates, the income from the IA was not sufficient to compensate for the decline in the insurance benefits that disabled beneficiaries would receive." Many of the bills analyzed by the GAO did drastically reduce disability benefits and then tried to paper it over by promising a study.

If funds are diverted from the Social Security Trust Funds for private accounts, the current 2038 date for exhaustion of the trust funds will accelerate. (In fact, if 2 percent of payroll, which is 16 percent of FICA, were diverted, as has been proposed by this Administration, general revenues would be required to pay interest to the trust funds starting in 2007, well within the current budget window.) To achieve 75-year solvency, benefits would have to be reduced substantially from current levels.

In 2000, the average monthly benefit for a disabled worker was $786 per month. If nothing is done under current law, an unlikely scenario, benefits would be reduced approximately 20 percent. A diversion of 2 percent of payroll, which is 16 percent of FICA, as suggested by President Bush during the campaign, would require an approximate reduction in benefits of 40 percent to achieve 75-year solvency. This would mean a reduction of the average disability benefit from $786 per month to $472 per month. Try living on $472 a month and find the money to pay for rent, food, clothing and medicine. As the GAO has said, individual accounts would not make up the difference for people with disabilities.

Such a reduction is unacceptable. This would undermine the most important anti-poverty program ever established by the federal government. The individuals who receive disability benefits under the Social Security program were either workers themselves or the children of workers. To receive benefits they must be severely disabled with a disability expected to last at least 12 months or expected to result in death.

Many beneficiaries became disabled at an early age. Approximately 6 percent of those awarded benefits in 1999, the most recent year that statistics are available, were under the age of 29. Approximately 20 percent were under the age of 39. Even if private individual accounts offered a substitute for some individuals when their guaranteed benefit must be cut under the President's proposal, for these individuals the onset of their disabling condition at an early age will end their contributions to any private account. Even during their working years, their youth will probably mean that their salaries were low and their private accounts would be extremely small with only a few hundred dollars maximum added each year.

People with disabilities rely on the guaranteed benefit to support both themselves and their children. Any one of us can become disabled. A 20 year-old today has a 1 in 6 chance of dying before retirement and a 3 in 10 chance of becoming disabled before retirement.

Social Security is an insurance program that protects families. It is the only program that protects families when a breadwinner becomes disabled. No disability insurance exists today that is indexed for inflation and covers family members, as is the case with Social Security insurance. For those who already have disabilities such private insurance is nonexistent.

Social Security has been one of the great successes of the federal government. Today, 18 percent of disability beneficiaries and their families are living below the poverty line. Without Social Security that figure would climb to 55 percent."

UCP was founded in 1949 and has 115 affiliates in 43 states. UCP provides programs and services to advance the independence, productivity and full citizenship of children and adults with cerebral palsy and other disabilities and the families.

For more information, or to contact United Cerebral Palsy Associations, see their website at: www.ucpa.org