Would the Bowles-Simpson Plan Cut Disability Benefits?

Submitted by Shane on

The Bowles-Simpson Deficit Plan is simply another name for the deficit reduction plan published in December 2010 by the National Commission on Fiscal Responsibility, a bi-partisan committee tasked with assessing federal debt and making recommendations on improving the overall financial outlook of federal government operations, including proposed changes to all federally funded and managed programs.

The committee’s report, which is actually titled The Moment of Truth: Report of the National Commission on Fiscal Responsibility and Reform, is commonly called the Bowles-Simpson Plan or the Simpson-Bowles Plan, after the commission’s co-chairs, democrat Erskine Bowles and republican Alan Simpson.

The 66-page report details the current federal budget crisis and lays out plans for reforms intended to balance the budget, reduce current and long-term spending, and create more stable and sustainable federal programs. Reforms were proposed in six primary arenas: Discretionary Spending, Tax Reform, Health Policies, Other Mandatory Policies, Social Security and Process Reform.

The deficit reduction plans were put to a vote on December 3, 2010, with only 11 of 18 commission members voting in favor. A majority vote of 14 was required for the plan to be formally recommended to the president.

How Will This Affect SSDI?

While the plan did not receive the votes necessary to become a formal recommendation, the detailed data contained within the report and the proposed reforms laid out in the document are still under consideration. The far reaching changes recommended will impact current and future debates on the subject of the federal budget, including specific debates on Social Security Reform.

The commission does recommend a sweeping redesign of the SSDI program, emphasizing the need to make it appropriate for contemporary America. The commission also states that the undertaking of such a redesign far exceeds the abilities of the commission and will require focused attention and effort.

The Bowles-Simpson Deficit Plan, like the majority of other deficit reduction and Social Security Reform recommendations to date, focuses more on Old Age (retirement) and Supplemental Security Income (SSI) and only briefly touches on topics related to SSDI.

The Plan’s Impact on SSDI Beneficiaries and Disabled Individuals on Medicare

While there are only a handful of direct recommendations in the Bowles-Simpson Plan related to SSDI, those which are present do not indicate the commission believes benefits should or will be reduced – that is, as long as future funding can meet beneficiary demands. In fact, the plan emphasizes the need to fix the current system in order to ensure that the most vulnerable members of society have access to the assistance they need, and that problems with funding SSDI should be immediately addressed in order to accomplish that goal. Recommendations of relevance to SSDI beneficiaries and disabled Medicare recipients are as follows:

  • A 5% increase in average benefits for those who are disabled for more than 20 years.
  • Reduce health care expenditures by freezing the rate for reimbursing physicians through Medicare and creating a more standardized Medicare plan in which all recipients have the same deductible and co-insurance rates.
  • Make adjustments to the current Social Security system, including funding methods, in order to prevent the projected decrease in SSDI benefits that will occur in 2037 or sooner.
  • Adopt a better inflation measurement tool in order to more accurately calculate cost of living adjustments to benefits.
  • Between now and 2050, gradually increase the payroll tax base through which SSDI is funded (taxable maximum earnings) and lift the cap on the portion of FICA that funds SSDI (currently at 1.8%). This would increase funding for SSDI, as well as Medicare.

While the Bowles-Simpson plan didn’t receive the necessary support to cause these recommendations to be immediately adopted, these proposals definitely represent a bi-partisan effort to help ensure the future of theSocial Security Disability programs in the face of this country’s changing economic conditions.

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