Privatization: What about the Disabled?

In light of El Jefe Maximo's State of the Union speech, where he discussed Social Security privatization, I've dredged from the archives this very short post about a side of Social Security that is completely ingored in the whole debate.

Roughly one-third of all Social Security payouts go to the disabled. One thing I haven't heard in all of the discussion about private Social Security accounts is how these accounts would work for the disabled. Suppose you're 45, middle class, and unable to work anymore. How much could your private account be worth? Maybe the privatizers haven't answered this, because the answer is straightforward: not very much.

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That is a very good point. Social Security isn't a good retirement investment precisely because it is also an insurance policy. Unless we want to partition those two functions into seperate programs this is unavoidable.
But of course our political discourse has been dominated by partial truths for so long that this sort of attack is difficult to defeat.

Also, Social Security pays benefits to widows and orphans. There too the pay-off would probably be larger than any private saving account. That's the point people tend to miss. Social Security isn't a public retirement fund. It's meant to provide finacial security for the most vulnerable.

Actually, a friend of mine wrote me (when I echoed this) saying that SocSec Disability payments come out of the general fund, not the trust fund, and so they wouldn't be directly impacted by the privatization plans proposed so far.

By Joe Shelby (not verified) on 12 Feb 2007 #permalink

To clarify from someone actually receiving income through those programs:

The Supplemental Security Income (SSI) program is funded by taxes from the general fund. This program is based on individual financial need and is designed to assist those who have limited income and resources.

Social Security Disability Insurance (SSDI) is paid for by FICA deductions from wages. This is a social insurance program that pays benefits based on contributions made by a wage earner.

A person can get both combined, but it doesn't make the amount more -- just a difference in where the payments come from.

--

So SSDI IS managed through FICA (if that is correct), which means that how it is handled (along with medicare) when FICA is shrunk in favor of privatization may still be an issue.

By Joe Shelby (not verified) on 12 Feb 2007 #permalink

Final note: Where SSDI ends, SSI picks up, so hypothetically it is then a non-issue as if SSDI is effectively reduced then the general fund has to pick up the slack through SSI.

By Joe Shelby (not verified) on 12 Feb 2007 #permalink

Disabled person must get incentives but not this much. Even they are disabled, they can still work. I wish that orphanage and centers should have this kind of benefits.