October 2 2012

Yes America, Your Fellow Citizens DO Abuse Federal Aid Programs

Forbes.com

Carrie L. Lukas

The media pounced on Governor Romney for implying that the nearly half of Americans who depend on government assistance enjoy being free riders.  More than just political poison, such a presumption ignores how devastating the jobs crisis has been for so many Americans who yearn to be productive, independent, successful contributors to society.

Yet Americans shouldn’t make the mistake of ignoring how aid programs can be abused.  Sadly, a not-insignificant portion of those receiving benefits do exploit assistance programs.  This more than just wastes taxpayer dollars and leaves less for those who truly need it; perhaps most importantly, it enables a dependency that might be temporarily attractive, but limits someone’s life prospects and chances for long-term fulfillment.

Governor Romney—and any candidate who wants to move us back toward a balanced budget—shouldn’t shy away from calling for the reform of such ill-conceived aid programs.

Social Security’s disability insurance program would be the place to start.  The number of Americans receiving Social Security Disability Insurance (SSDI) payments—which average $1,111 per month for disabled workers—has increased substantially in recent years, from 9.3 million in January 2009 to 10.8 million Americans today.  As the number of enrollees has climbed, so has SSDI spending.  In 2011, payments through SSDI totaled nearly $129 billion.

That’s a lot of money, even by Washington’s standards.  For some perspective, the federal Department of Transportation spent far less ($77 billion), and the entire Department of Labor used roughly the same budget ($132 billion).  Yet SSDI’s official price tag dramatically understates the real costs associated with SSDI determinations, since those who qualify for disability payments automatically become eligible for Medicare after two years.  According to Dr. Andrew Biggs of the American Enterprise Institute (the former principal deputy commission of the Social Security Administration (SSA)) Medicare’s annual expenditures on SSDI beneficiaries now exceed $70 billion.

Americans overwhelmingly support the idea of a safety net, and might not object to even SSDI’s large bill if those payments all went to those truly unable to work because of disability.  Yet a recently released report by Senator Tom Coburn, the ranking member of the Permanent Subcommittee on Investigations, suggests that’s not the case.  His committee examined 300 cases of Americans who were awarded Social Security disability benefits and determined that more than one quarter received benefits based on “insufficient, contradictory, or incomplete evidence.”

Those tempted to dismiss the report of a leading conservative Senator known for being unforgiving of government waste should note that the SSA also concluded in an internal review that 22 percent of disability awards made by Administrative Law Judges had errors and used incomplete evidence.

Eliminating all fraud within programs like SSDI may be impossible, and reasonable people can disagree about when a case reaches the threshold of complete disability.  Yet it is clear that SSDI’s problems go beyond different shades of grey.  Senator Coburn’s report notes that in three years, one judge in Oklahoma City decided 5,400 cases, approving more than 90 percent of them, and granted what will amount to more than $1.6 billion in lifetime federal benefits.

The sloppy process used to determine Social Security disability eligibility should alarm taxpayers given that the lifetime cost of each award averages $300,000.  The life-time costs are so high because once on, few leave the program’s rolls.  More than half of those matriculating from SSDI in 2011 left because they had reached full retirement age, and therefore transferred onto traditional Social Security benefits.  Just 3.6 percent left because of medical improvement, and 6.1 percent returned to work.

This last finding—that few ever return to work—is particularly concerning.  When the disability program was launched in 1956, President Eisenhower described its purpose as “to help rehabilitate the disabled so that they may return to useful employment,” as well as to “advance the economic security of the American people.” Yet SSDI falls sorely short on that first measure.  Even the progressive think tank, Center for American Progress, criticized SSDI for providing “strong incentives to applicants and beneficiaries to remain permanently out of the workforce.”

Most Americans want more than to live on government’s dime.  Most want good jobs so they can support themselves and start climbing the economic ladder.  Safety net programs like SSDI should be reviewed and reformed so that they aid in that process, providing support for those truly in need, while protecting the interests of taxpayers and encouraging independence.

Carrie Lukas is the managing director of the Independent Women’s Forum.

 

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