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SSDI faces a 20 percent benefit cut

Congressional inaction on the matter of Social Security Disability Insurance (SSDI) is approaching a crisis. While SSDI has faced similar funding crises before, this time is different. Congress has been so disabled by partisan bickering and gridlock, that while many predict Congress cannot allow the exhaustion of the SSDI trust fund to cripple benefits to the programs recipients, the experience of the last few years is not reassuring.

Social Security, both the retirement program and the disability program have faced funding problems over the last few decades. As the demographics of the population have changed, Congress has been slow to react. Critics of the program are constantly attempting to move the billions that the Social Security Administration (SSA) controls into “market” based investments. 

They suggest this will allow better returns on the dollars invested, but as the various stock and real estate crises of the last few years have shown, such investments are fraught with peril in an era of financial innovations that often mean billions of dollars in losses for millions of average investors.  

Social Security retirement and SSDI are essential elements of the nation’s social safety net, and if Congress fails to act it will substantially undercut their crucial support for millions. With an average payment of $1,100, few people are living extravagantly on SSDI. If the benefit were cut, the reduction would drop the average payment to less than $900 a month.

In previous years, Congress would dither around, but eventually would make the changes necessary. Given the current makeup of Congress, and its unwillingness to raise taxes to pay for genuine expenses, it is no longer unthinkable that they will allow the cuts to occur.

Source: NBCNews.com, “Disabled Recipients of Social Security Fund Face Hefty Benefits Cut,” Martha C. White, June 10, 2014

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