Tampa, FL (Law Firm Newswire) March 20, 2015 – Obama’s call to redirect money from the Social Security retirement fund to its disability fund is facing resistance in Congress.
On February 2, President Obama unveiled his budget proposal for the upcoming fiscal year. The $4 trillion budget includes more than $1 trillion in proposed new tax measures. Prominent among the president’s fiscal proposals is an increase in the Social Security Disability Trust Fund’s share of funding from payroll taxes – an attempt to shore up the finances of an entitlement program that is facing a major shortfall.
Under the president’s proposed budget, 0.9 percent more of the 6.2 percent payroll tax paid by both employers and employees would go to the disability fund. Earmarking a larger portion of the payroll taxes for the disability fund would redirect $330 billion from the current retirement fund. The measure would result in a depletion of both trust funds in 2033.
The proposed reallocation would exhaust the retirement fund one year earlier than otherwise projected. The Social Security chief actuary has estimated that, absent some form of financial boost, the disability fund will run out of sufficient money by late 2016, which would result in a 19 percent cut in disability benefits.
Should Congress authorize the reallocation, it would represent the twelfth time money has been transferred between the two funds. The last transfer occurred in 1994.
For their part, Republicans, who now control both houses of Congress, passed a rule in the House barring a transfer of money from the retirement fund into the disability fund unless measures are adopted to stabilize Social Security’s overall finances.
“Financial transfers between the two Social Security funds have occurred under both Democratic and Republican presidents,” said David W. Magann, a prominent attorney in Tampa, Florida who specializes in Social Security disability law. “However, it looks as though this president and Congress are at political loggerheads, and at the worst possible juncture as far as the disability fund’s fortunes are concerned.”
Republicans have not indicated what measures they would like to see enacted to fix the finances of the two funds, but some lawmakers in the party have raised concerns over growing enrollment in the disability fund. From 1980 to 2010, the number of disabled workers drawing benefits has increased from 2.9 million to 8.2 million.
Meanwhile, Democrats in Congress have put forth their own proposals to improve the two funds’ balance sheets. The most prominent proposal from the minority caucus on Capitol Hill has come from Senator Bernie Saunders, I-Vt., who has called for a higher cap on income subject to payroll taxes. The current limit is $118,500.
“Working Americans who are suffering from a severe physical or mental impairment and who are no longer able to perform substantial work need the financial lifeline that the disability fund provides,” Magann said. “Any way one looks at the issue, the looming disability funding crisis will have to be addressed with some sort of fiscal remedy.”
Learn more at http://www.floridasocialsecurity.com/
David W. Magann, P.A.
156 W. Robertson St.
Brandon, FL 33511
Call: (813) 657-9175
4012 Gunn Highway #165
Tampa, Florida 33618
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