Social Security is, for millions of Americans, a financial foundation during retirement. The March 2017 snapshot from the Social Security Administration (SSA) shows that 61.26 million people were receiving a check each month – two-thirds of which were retired workers. Of these retired workers, a tad over 60% count on their monthly check to provide at least half of their monthly income.
Long story short, without Social Security income, millions of seniors would probably be struggling to make ends meet during retirement, and the senior poverty rate would likely soar.
Donald Trump just reneged on his Social Security pledge
Understanding the correlation between Social Security income and a comfortable retirement, Donald Trump made numerous pledges during his presidential campaign and after his election that Social Security would be off-limits in his budget discussions. However, according to Trump's recently released 2018 federal budget proposal, which looks to cut $3.6 trillion worth of spending over the next decade, Social Security wasn't spared.
Some of the cuts in Trump's budget were widely expected. A steep 2018 haircut to the State Department and Environmental Protection Agency, and the expectation of an $800 billion haircut over the next decade from Medicaid (which is derived from the expected passage of the American Health Care Act), were considered givens. But few expected Trump to renege on his campaign pledge to leave Social Security alone.
According to the proposal, the federal government would look to cut $72 billion out of Social Security disability payments over the next decade, or around $7 billion a year. This works out to about 4% of Social Security Disability's expected payouts between 2018 and 2027. As a whole, U.S. disability spending has grown by 160% since 2000, to $142.7 billion as of 2016.
In the words of Mick Mulvaney, Trump's right-hand man when it comes to the budget proposal:
Not a single thing in here [the budget] touches Social Security retirement or Medicare. If you ask 999 people of out of 1,000, [they] would tell you that Social Security disability is not part of Social Security. It's old-age retirement that they think of when they think of Social Security."
News flash: Social Security disability is part of Social Security
There's just one major problem with this statement, other than the ridiculous statistic being floated by Mulvaney: Social Security disability is a part of Social Security -- and it's actually a pretty notable component.
As of March, 10.58 million people were being paid an average of $1,171.52 per month, which works out to about $14,058 per year. That may not sound like a lot, but it's enough to push the average disabled individual above the poverty level. These 10.58 million disabled beneficiaries account for more than 17% of all Social Security beneficiaries as of March, and the $10.92 billion paid during the month accounted for 14.3% of Social Security benefits distributed (not counting Supplemental Security Income).
But it's also worth noting that Social Security disability payments aren't solely intended for qualified disabled workers. There are about 132,000 spouses of disabled workers who receive an average of $324.46 each month, and another 1.67 million children of disabled workers who are receiving a monthly check averaging $357.30 as of March. A benefits cut to disability means a potential long-term payout reduction for the spouses and children of these folks as well.
Social Security disability coverage also extends to roughly 96% of employed adult workers in the United States. To qualify (fully) for disability benefits, a worker needs to have collected 40 lifetime work credits. A worker can earn a maximum of four credits per year, with each credit equating to $1,300 in earned income as of 2017. In short, it's pretty easy to qualify as long as you work at least part-time for 10 years.
Lastly, even though you probably don't realize it, the average disabled worker is nearing retirement age. According to data from the SSA, the average age of disabled workers as of 2015 was 53.9 years old, up from 49.8 years in 1995. Though we've seen a rise in the number of disabled workers this century, we're also seeing the age of these workers increase, too. Chances are that these older disabled workers are going to be reliant on their disability income to make ends meet.
Not set in stone
Generally, budget proposals from the president are a starting point for Congress to begin debate. I can't recall a time in recent history where an initial budget proposal looked anything like the final product, meaning there's plenty of room for compromise from both parties at this point.
The question is, will Social Security disability cuts be a sticking point? I'm inclined to think so, given Democrats' adamant opposition to Social Security cuts of any form. Furthermore, public pressure from constituents could coerce select members of Congress to remove any possible cuts to Social Security's Disability Insurance Trust.
If Trump's budget has done some good for Social Security, it's that it's raising awareness of the need to find a bipartisan long-term fix to the program for future generations. After all, according to the Social Security Board of Trustees' 2016 report, we're just 17 years away from exhausting the program's spare cash and staring down what could be across-the-board benefit cuts of up to 21%. That does retirees, the disabled, and survivors of deceased workers, absolutely no good.
Perhaps Trump's budget proposal will light a fire under Congress to begin taking Social Security reform seriously -- but don't hold your breath.