No, Virginia, There Is No ‘Lock-box’
So this year’s estimate of when the Old Age, Survivors and Disability Insurance (OASDI) trust fund will run out of money is 2033, the Social Security trustees reported July 28
— roughly the same as last year’s estimate. There’s just one problem: There is no such thing as an OASDI trust fund.
There is an Old Age and Survivors Insurance (OASI) trust fund and a Disability Insurance trust fund, but they’re legally separate entities and their funds can’t be commingled. So the solvency of one has nothing to do with the solvency of the other. In fact, as an instructive Fiscal Times
article points out, the Disability Insurance trust fund will run dry in 2016, while the OASI trust fund can last until 2034.
If David Letterman ever lists the top 10 things Americans don’t understand, the Social Security and federal disability insurance trust funds just might top the list. And it’s not just regular folks, either — remember presidential candidate Al Gore vowing to protect the “Social Security lock-box”? That doesn’t exist either.
As the article notes, there’s a relatively simple solution for the shortfall that exists between income tax revenues both programs collect and the benefits they pay out: Congress could adjust the flow of tax dollars into the two trust funds to put the disability insurance fund on firmer footing and avoid emptying its trust fund. (By the way, even without the trust fund, the disability program could still pay out indefinitely, but at about 81% of today’s benefits.)
But neither program has a “lock-box” and neither is headed for a “train wreck.” Tell all your friends.