Social Security disability on verge of insolvency

WASHINGTON (AP):

Laid-off workers and ageing baby boomers are flooding United States Social Security's disability programme with benefit claims, pushing the financially strapped system toward the brink of insolvency.

Applications are up nearly 50 per cent over a decade ago as people with disabilities lose their jobs and can't find new ones in an economy that has shed nearly seven million jobs.

The stampede for benefits is adding to a growing backlog of applicants - many wait two years or more before their cases are resolved - and worsening the financial problems of a programme that's been running in the red for years.

New congressional estimates say the trust fund that supports Social Security disability will run out of money by 2017, leaving the programme unable to pay full benefits, unless Congress acts. About two decades later, Social Security's much larger retirement fund is projected to run dry as well.

Much of the focus in Washing-ton has been on fixing Social Security's retirement system. Proposals range from raising the retirement age to means-testing benefits for wealthy retirees. But the disability system is in much worse shape and its problems defy easy solutions.

Reallocating money

The trustees who oversee Social Security are urging Congress to shore up the disability system by reallocating money from the retirement programme, just as lawmakers did in 1994. That would provide only short-term relief at the expense of weakening the retirement programme.

Claims for disability benefits typically increase in a bad eco-nomy because many disabled people get laid off and can't find a new job. This year, about 3.3 million people are expected to apply for federal disability benefits. That's 700,000 more than in 2008 and one million more than a decade ago.