The Fastest Growing, Tax-Hogging Entitlement

Job growth under President Obama may have inched along at a snail's pace, but one entitlement scheme has enjoyed an epic boom.   Federal spending on Social Security disability benefits has skyrocketed, eclipsing taxpayer funding of welfare and food stamps combined.

Today there are 10.9 million people receiving disability benefits under the age of 65.  A total of 8.8 million are former workers.  The remainder are spouses of the disabled and their children.  They collect an average of $10.6 billion every month.  That's more than $127 billion dollars annually.

Spending on disability programs has grown at an annual rate of 5.6 percent, compared with 2.2 percent for the remainder of Social Security.  Those figures were developed by David Autor, an economist at Massachusetts Institute of Technology.

As the economy has soured, disability applications have soared.  From 2001 to 2010, applications ballooned 123 percent.  A staggering 2.8 million disability cases were approved in 2012, double the number in 2000.  Currently one in 18 adults of working age receives disability payments.

As more employees opt out for disability, the labor force shrinks. Without this decline, the current unemployment rate would be 10.8 percent, according to calculations by the American Enterprise Institute.

There are two factors spurring the explosive growth:

• Disability eligibility standards have been liberalized. Congressional Democrats passed new standards in the 1980's making it easier to qualify for benefits and more difficult to be removed. Less than one percent of disability recipients in 2011 returned to the workforce.  In the 1960's the top cause of disability awards was heart disease.  Today it is back pain and mental illness, which are infinitely more difficult to dispute on a medical basis.
• As job prospects dim, more workers claim disabilities. Several studies have established the linkage between the economy and disability applications. One research project correlated the price of coal with worker disability claims.  As coal prices fell, applications in Appalachia for disability rose.  An increasing "faction of discouraged and displaced workers are seeking" disability benefits, found another study co-authored by MIT's Autor.  

Dire warnings about an approaching financial storm for Social Security disability have gone unheeded in Washington.  Politicians from both sides of the aisle are terror-stricken over tackling the issue, fearing backlash in the media and from genuinely disabled voters.  

Yet Social Security chief actuary Steve Goss has forecast that disability program reserves will run out of money in 2016, a mere three years from today.   A recent government report predicted by 2018, one in 14 working age adults will receive disability payments under current growth rates.

Like so many federal entitlement programs, the Social Security disability system is unsustainable. The longer the president and Congress dither on reform, the time horizon for solutions grows shorter and impending financial disaster looms larger.