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Treasury Secretary proposes a simple SSDI fix

Treasury Secretary Jacob “Jack” Lew was born a stone’s throw from Newark. The New York City native recently made headlines when he said Congress could fix Social Security Disability Insurance funding shortfalls with a simple shifting of payroll tax revenues.

The plan would not raise taxes and would not raise spending, but it would help secure the benefits needed by millions of Americans prevented by illness from working. 

Before Lew described his fix to Congress, he outlined the problem. The SSDI trust fund is currently running a deficit of about $32 billion per year. If present trends hold, the fund will exhaust the approximately $90 billion it holds in reserve at some point in 2016.

If Congress has not fixed the problem before that day arrives, some observers say the Social Security Administration would be unable to pay full SSDI benefits, forcing the federal agency to slash by 20 percent monthly checks to millions of Americans dependent on the assistance.

Lew noted that Social Security retiree benefits and disability benefits are both funded by payroll taxes. He said if the taxes collected for the two are merged, and benefits paid from a mingled pool of assets, Social Security could afford to pay full benefits to both retirees and workers with disabilities for about another 20 years.

For many people, the most important issue in their lives today is finding the path that leads from applying for SSDI to approval of benefits. Because SSDI approval standards are high, most claims are rejected, forcing applicants to find the path winding through an appeal. Fortunately, applicants are allowed by law to get the help of an experienced SSDI attorney who can help them navigate the appeals process.  

Source: Wall Street Journal, "Lew Supports Funding Change for Disability Program," Damian Paletta, July 28, 2014

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