Which entitlement program will go broke first? Prepare to be surprised

Which entitlement program will go broke first? Prepare to be surprised

What federal entitlement program is closest to fiscal collapse?

Medicare? No.

Social Security? Negative.

Medicaid? Uh-uh.

While the three above are in peril, the “award” goes to the Social Security Disability Insurance Fund (SSDI), which is expected to run out of money in 2016.

In the Wall Street Journal, economist Michael Boskin notes the explosion in the people using it and SSDI’s costs:

The number of people collecting disability benefits has soared, especially in recent years, to almost 11 million in June, up from 2.7 million in 1970. The 2012 price tag was $140 billion, up eightfold, adjusted for inflation, from 1970.

In a 2011 paper, MIT economist David Autor put these costs in the context of the rest of the federal budget [h/t Reihan Salam]:

In 2010, SSDI cash transfer payments totaled $124 billion, while the cost of Medicare for SSDI beneficiaries was $59 billion. These outlays, exceeding $1,500 for every U.S. household, comprised 7.3 percent of federal non-defense spending last year—a sum that is larger than interest payments on the federal debt. In the last two decades, outlays grew at 5.6 percent in real terms, compared to just 2.2 percent for all other Social Security spending. As a consequence SSDI’s share of total Social Security outlays has risen from one in ten dollars in 1988 to almost one in five dollars at present. Perhaps most ominously, SSDI expenditures now exceed by 30 percent the payroll tax revenue dedicated to funding the program.

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