By Jack Naudi Of the St. Louis Post-Dispatch
As politicians and special interest groups wrestle with saving Social Security from insolvency, a huge bloc of beneficiaries has been virtually ignored.
The fate of about 18 million people on Social Security - more than a third of all beneficiaries - remains a mystery.
Those people, including 6 million disabled Americans and nearly 4 million children, share a common trait: They don't work. That puts them beyond the reach of major proposals to partially privatize Social Security.
Under those proposals, including one promoted by President George W. Bush, workers could privately invest a share of their Social Security payroll taxes. But the plans are silent about benefits for those who can't or don't work.
"Waving your hands on disability and survivor benefits is really failing to address the harshest questions that arise," said economist Peter Orszag of the Brookings Institution; he opposes personal accounts.
Andrew Imparato is among those worried about what a revised Social Security system might mean for disabled people.
"The rhetoric seems to be, if you're young and healthy, take your money and put it in a private account and you'll make more money," said Imparato, president and chief executive of the American Association of People with Disabilities.
The president's proposal appears to be based on Plan 2 recommended by his 2001 Commission to Strengthen Social Security. Even commission members acknowledge that Plan 2 falls short of addressing benefits to disabled people.
"It's complicated," said commission member Jeffrey Brown, an assistant professor of finance at the University of Illinois at Urbana-Champaign.
"The commission was working under a very tight timeline and did not feel they had time to adequately address the disability problem," Brown said.
The commission's report warns that its proposals on the disabled should not be accepted as is.
Plan 2 calls for deep rollbacks in guaranteed benefits - more than 50 percent for retirees in the latter half of the century. Under Plan 2, those cuts would be offset by private account investments.
But critics say private accounts won't help disabled people, dependents and survivors who don't work and won't have private accounts.
Consider, for example, a worker who opens a private account but early in his career becomes disabled, said Marty Ford, director of legal advocacy for the Arc of the United States, which represents children and adults with mental impairments.
"At the point of your disability, would there be anything in your account that would mean anything?" Ford said.
While the president has said any plan must not harm survivors and disabled people, a fully formed proposal remains elusive.
"I did see that the president made a statement about preserving the disability aspects, but I don't know how that can be done very easily," Ford said.
The conservative Heritage Foundation, a strong supporter of private accounts, said the dilemma for disabled people and survivors isn't difficult to solve. It advocates two benefit levels.
Part A benefits would be for those who don't participate in personal accounts or those who can't work, including disabled people and children.
Part B would exist for retirees with private accounts. For those workers, Social Security benefits would consist largely of funds in their private accounts.
But the benefit level for Part A recipients has not been determined.
"That's one of the very important details that needs to be worked out," said Alison Fraser, director of economic policy studies for the foundation.
What complicates the benefits issue is a little understood fact about Social Security: It has two distinct components.
The old-age and survivor insurance program - the original Social Security system - was created in the late 1930s. The disability insurance program was started in 1956.
The programs are funded separately through dedicated payroll taxes. Despite that, the two essentially are run as a single program.
Both include disabled people as well as children and spouses. In some cases, beneficiaries move from one program to another without any change in benefits.
Although the benefit formulas are the same, for a complicated set of reasons, disability insurance generally pays lower benefits per recipient than old-age benefits.
Despite the lower benefit levels, disability insurance provides a "critical benefit," Imparato said. "That's the money people use to pay their rent, to buy food, to basically survive."
Those who have received survivor benefits say the same thing.
"I think that was our only income," said Marian Hartung, an adjunct social policy professor at St. Louis University, whose father died in 1972 when she was 15.
"We weren't rich or even upper middle class. But in those days, it felt, like, regular," she said. "And there wasn't the stigma that was attached" to welfare programs.
Some proponents of personal accounts call for creating a more definitive split between the old-age and disability programs.
Old-age retirement benefits would be tied to personal accounts. A guaranteed benefit would either be reduced or eliminated.
"I think changing to a system that has an ownership component is really the thing to do," Fraser said.
The disability program would continue as a true insurance program with guaranteed benefits.
Disability insurance is "a separate tax, and it's off the table," said Derrick Max, executive director of the Alliance for Worker Retirement Security, a pro-business group pushing for personal accounts.
The Cato Institute, a libertarian research foundation, wants to allow workers to invest half of the 12.4 percent Social Security payroll tax on their own. The returns on those investments would be workers' sole retirement benefit under Cato's proposal.
The other half of the tax, said Michael Tanner, Cato's director of health and welfare studies, would be set aside for guaranteed benefits for survivors and the disabled.
But Ford said it's dangerous to split the programs and to get away from the existing insurance-oriented program that pays a defined benefit. Workers, she said, cannot plan for a death or a disability.
"It's the kind of thing that people can't save enough for, like your house burning down," Ford said. "The death of a breadwinner is something that people cannot easily pay for on their own."
Social Security benefits are available to three broad groups of people who are not retired:
Disabled: Those whose disabilities prevent them from earning more than $830 a month can receive benefits. For blind people, the threshold is $1,380 a month.
Survivors: Widows and widowers of workers can collect benefits at age 60. Children of deceased parents can receive benefits through age 17, or 19 if they're still in high school. Widows and widowers with children younger than 16 or with disabled children of the deceased also are eligible.
Dependents: Children of disabled workers, disabled children of retired workers and some spouses of retired workers can receive benefits.