President Bush has a plan for “reform” of the Social Security system that, if enacted, would have serious negative consequences for people with disabilities.

Although most people think of Social Security as a retirement program, the fact is that about one-third of the 47 million Social Security recipients do not receive retirement benefits at all. Instead, 5.5 million recipients are disabled workers, 1.7 million are spouses and children of disabled workers, and nearly 7 million are survivors of deceased workers.

The Bush Plan

Under the current Social Security system, all workers pay into a common fund, which is then spent to pay benefits to anyone who has suffered a loss of wages due to retirement, disability, or death. It works, in other words, just like an insurance program: we all pay in, and people get benefits if and when they need them. In fact, Social Security is an example of what is called “social insurance.”

The Bush plan proposes moving away from a system of social insurance towards a system of private investment. Under his plan, a worker would save up money in a “voluntary personal account” during their working years, and that money, rather than going into a common pool to supply benefits for everyone, would be used solely to finance their own retirement. This would be similar to how a 401k, or an IRA works.

The money for these accounts would come from Social Security taxes, meaning that the basic Social Security benefit for everyone would have to be reduced. Proponents of this plan insist that the reduction would be more than made up by the income from the personal accounts, but that claim is questionable (as we’ll see below).

Social Insurance of Private Investment?

Understanding the implications of this major change—from social insurance to private investment—is crucial for people with disabilities. It all starts with the idea of a better “rate of return.”

The President’s talk of getting a “better rate of return” makes sense in the context of an investment system. A higher “rate of return” will leave one with more assets to draw from.

However, under the current system of social insurance, talk of a “rate of return” makes no sense. In an insurance system, the only “return” one gets is payment if a claim is made. For example, if you have a car accident, you get money back from your insurance company to compensate you. But if you never have an accident—or, in the case of Social Security, if you never suffer a loss of wages due to disability, death, or retirement—you will get no “return” because you don’t need it.

For people with disabilities, the problem with the President’s plan is that it is based on the accumulation of assets over time. For those lucky enough to rely on Social Security only for retirement financing—and, again, this leaves out fully one-third of beneficiaries—they can count on an average work-life of 40 to 50 years, during which they can expect their “voluntary personal account” to grow to a reasonable size.

However, not everyone will have all that time to accumulate assets, and this is particularly true for people with disabilities. In fact, a number of studies have concluded that such a plan will reduce overall benefits received by people with disabilities. A 2001 study by the Government Accountability Office, for example, looked at three different proposals for reform that include individual accounts, and found that, “The reform proposals would reduce insurance benefits while creating individual accounts, with the expectation that the income from an individual account would largely offset reductions in the insurance benefits. In our estimates, the income from the individual account was not sufficient to compensate for the decline in the insurance benefits that disabled beneficiaries would receive.”

In other words, under the President’s proposal, people with disabilities stand to get back less from their private accounts than they will lose in the reduction in their Social Security benefits.

President Bush is aware of the concerns of people with disabilities. In an April 28, 2005 press conference, he made a pronouncement on his plans for Social Security. The President said, “As we fix Social Security, some things won’t change: Seniors and people with disabilities will get their checks.” While this may be true, all the evidence so far suggests the size of those checks will be greatly reduced, an issue the President has not yet addressed.

Saving the System, or Protecting the People?

President Bush’s emphasis on the long-range fiscal problems faced by the system is that the criteria for evaluating the various reform proposals has been limited to their impact on the health of the system itself, as well as their impact on the federal budget and the overall economy.

Disability advocates are demanding that another criteria be added: How do the various proposals affect PEOPLE? The Consortium for Citizens with Disabilities says, “The disability community urges Congress to request a beneficiary impact statement on every major component of any serious proposal. In a program that affects millions of individuals of all ages, it is essential for policymakers to look beyond the budgetary changes to understand the actual impact on people’s daily lives.”

The CCDs call has been echoed by many activists and advocates for disability rights, including Justice for All, the National Council on Independent Living, the National Spinal Cord Injury Association, United Cerebral Palsy, the ARC, the American Council of the Blind, the Coalition on Human Needs, and others.

In conclusion, here are the words of Marty Ford, Co-Chair of the CCD Task Force on Social Security and on Long Term Services and Supports, in a statement made last December:

“Social Security as insurance is essential to the protection for people with disabilities. Individual contributions protect the worker and certain family members for life with inflation protection. Partially or fully privatizing the Social Security trust funds would shift that protection from the federal government back to the individual, in the form of individual risk. People with disabilities and their families will be paying close attention to this debate and will work to ensure that disability issues remain an important consideration in reform analysis and solution development.”

Jeff Nygaard publishes a newsletter on politics called Nygaard Notes, in which he discusses Social Security— and many other things—at much greater length. E-mail subscriptions are free; paper subscriptions are $25/year, which covers printing and postage. To subscribe, send a check to Nygaard Notes at P.O. Box 14354, Minneapolis, MN 55414, or visit the Nygaard Notes website at www.nygaardnotes.org

For more information about Social Security reform and its potential effects on people with disabilities,

check out these resources.

For an excellent overall review of the Social Security program and the current discussion about changing it, see “Social Security Reform: The Basics,” from The Century Foundation (58 pages). Find it on the web at www.tcf.org or call 212-535-4441.

The Consortium for Citizens with Disabilities has set up a Social Security Task Force, and their website has very useful information, including a set of basic “Fact Sheets.” Find it at www.c-c-d.org/tf-socialsec.htm or call (202) 783-2229.

The AARP put out a major report in 2001 called “The Effect of Social Security Reform Proposals on Social Security Disability Insurance, Supplemental Security Income, and Private Disability Insurance.” It’s somewhat lengthy, at 57 pages, but goes beyond Social Security Disability Insurance to give a broad picture of the larger context of income options facing people with disabilities. Find it on the web at: www.aarp.org

or call 1-888-687-2277.