Amid all the rhetoric about the Social Security program’s finances, here is a nice simple explanation and graphs from the New York Times showing where we are and how we got there:

“Social Security is a pay-as-you-go program financed by payroll taxes on workers and employers. When its revenues fall short of the benefits it owes in a given year, it covers payments by drawing on a $2.6 trillion fund that is accounted for separately from the federal budget and invested in government bonds. It is estimated that unless changes are made to the system, the fund will be able to pay full benefits until the surplus is exhausted in 2036, and about three quarters of benefits after that….”
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Social Security has long had programs to help ease disabled people on its benefits rolls back toard employment. How is it faring in today’s challenging economy and job market? Today’s New York Times explores the topic in this well researched article:

“Programs intended to steer people with more moderate disabilities back into jobs have managed to take only a small sliver of beneficiaries off the Social Security rolls. Yet, at a time when employers are struggling to create spots for the 13.5 million people actively looking for jobs, helping people like Mr. Howard find employment — or keeping them working in the first place — is becoming increasingly important to the nation’s fiscal health…

“For the last five years, Social Security has paid out more in benefits to disabled workers than it has taken in from payroll taxes. Government actuaries forecast that the disability trust fund will run out of money by 2018…along with monthly checks that are based on the worker’s earnings history, beneficiaries generally qualify for Medicare — otherwise reserved for those over 65 — two years after being admitted to the disability rolls. There are reasons for the increase in beneficiaries.” Baby boomers are hitting the age when health starts to deteriorate, and there are more mental illnesses being claimed as disabling.

“About 8.2 million people collected disabled worker benefits totaling $115 billion last year, up from 5 million a decade earlier. About one in 21 Americans from age 25 to 64 receive the benefit, according to an analysis of Social Security data by Prof. Mark G. Duggan, an economist at the University of Maryland. See entire article here:
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From today’s New York Times:

…Unfortunately, at this point more than six million people have been unemployed for six months or longer. More than one million have already given up looking for work because they believe no job is available. And a drastic rise in applications for disability insurance suggests we may be headed for more long-lasting trouble. The number of disability applications has reached more than 750,000 a quarter, according to the Social Security Administration, an increase of more than 50 percent from four years ago.

The disability insurance program provides crucial support for people who can no longer work because of a disability. But once someone begins receiving benefits, the likelihood that he will re-enter the work force is almost nonexistent; recipients become permanently dependent on the program.

The result is not only lost economic productivity, but also a fiscal burden for the federal government: disability benefits now cost more than $120 billion a year, and Medicare benefits for those on disability add $70 billion. http://www.nytimes.com/2010/12/10/opinion/10orszag.html See Op Ed piece here:

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The New York Times Reports today:

“The Social Security Administration is about to terminate cash assistance for thousands of indigent refugees who are severely disabled or over the age of 64.

“You will lose your Supplemental Security Income on Oct. 1,” the agency says in letters being mailed to more than 3,800 refugees.

“All fled persecution or torture. Many are too old or infirm to work and are not yet eligible to become United States citizens.

“Federal law sets a seven-year limit on payments to refugees. The maximum federal payment is $674 a month for an individual and $1,011 a month for a couple. In 2008, Congress provided a two-year extension of benefits for elderly and disabled refugees, asylum seekers and certain other humanitarian immigrants, including victims of sex trafficking.

“The extra eligibility period is now ending, and Congress has not taken action to extend it.”
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For impact on the overall Social Security system, this new statistic is significant for several reasons. It impacts the maturity of the workforce, it demonstrates the desperation of people who are exhausting their unemployment benefits. But more importantly for disability claimants, it adds one more factor to the delays already plaguing Social Security,
The LA Times reports today: “Instead of working longer as the economy worsens, more Americans are calling it quits before age 66. The ramifications could be profound for the retirees, families, government and social institutions.

Reporting from Washington — Instead of seeing older workers staying on the job longer as the economy has worsened, the Social Security system is reporting a major surge in early retirement claims that could have implications for the financial security of millions of baby boomers.

Since the current federal fiscal year began Oct. 1, claims have been running 25% ahead of last year, compared with the 15% increase that had been projected as the post-World War II generation reaches eligibility for early retirement, according to Stephen C. Goss, chief actuary for the Social Security Administration.: See full article here:

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The New York Times reports that there will be no cost of living (COLA) increase in checks for 2010. Another impact of the bad economy for recupients of disability and retirment income. The Times says ” for the first time in more than three decades, Social Security recipients will not get any increase in their benefits next year, federal forecasts show.

“The absence of a cost-of-living adjustment, calculated under a formula set by law, will be a shock to older Americans already hit by plummeting home values, investment losses and rising health costs. More than 50 million people receive Social Security.
http://www.nytimes.com/2009/05/03/us/politics/03benefits.html?_r=1&hp See article here:

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In Today’s New York Times, a litany of problems created by the economy. Budget cuts now for health care will create deeper costs later:
“Battered by the recession and the deepest and most widespread budget deficits in several decades, a large majority of states are slicing into their social safety nets — often crippling preventive efforts that officials say would save money over time.

“President Obama’s $787 billion stimulus package is helping to alleviate some of the pain, providing large amounts of money to pay for education and unemployment insurance, bolster food stamp programs and expand tax credits for low earners. But the money will offset only 40 percent of the losses in state revenues, and programs for vulnerable groups have been cut in at least 34 states, according to the Center for Budget and Policy Priorities, a private research group in Washington.: See Times story here:

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