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'Disabled' outnumber workers in U.S. manufacturing

John Bennett

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April 11, 2013

Bankruptcy now looming for another social help program

The stories are many, and this is just one:

It seems there was a psychiatrist who reported about a woman who was “disabled” when a casino money cart fell on her leg in Reno.

She still managed to play basketball, crawl about under her car, carry heavy groceries and tote luggage around. But she developed a limp and used a cane just in time for a hearing on her disability benefits.

There currently are 14 million Americans on disability payments, up from 4.3 million in 1990.

The program is paying out $200 billion per year, and according to the Congressional Budget Office, as of 2009, Social Security Disability Insurance pays out more than it takes in from payroll taxes.

SSDI is slated to go broke in 2016.

Now from across the political spectrum, experts are warning of problems ahead, not just economic but societal, as one of the products of the decades-old SSDI system is that it has fostered a standard of long-term dependency.

MIT economist David Autor tells WND, “As currently designed, the SSDI program spends too few societal resources helping individuals with disabilities to remain employed and too many resources supporting the long-term dependency of individuals who could be self-sufficient with the appropriate accommodation and support.”

Autor is sympathetic to the plight of those on disability, noting that many workers with non-medical problems have turned to SSDI as a “last resort” in the face of a dismal economy.

Mary C. Daly, an economist with the Federal Reserve Bank of San Francisco, tells WND, “Disability insurance has turned into a long-term unemployment benefit program, which taxpayers have to pay for.

“SSDI is reducing the nation’s potential workforce as people move onto the program,” Daly says.

She “doesn’t like the word dependency because it is pejorative,” and instead criticizes the structure of the disability system for incentivizing continued use without any constructive route into work for those who are able.

Others are less sympathetic: SSDI “has become a voluntary life sentence to idle poverty,” concludes the Washington Examiner.

And a consensus is emerging that SSDI is not being used for its intended purpose, which was to support those who are unable to work.

Cornell Professor Richard Burkhauser, a disability policy expert, warns, “SSDI is increasingly being used as a long-term unemployment program for workers who, given the appropriate rehabilitation and accommodation, could work.”

The sheer number of people on disability is staggering, without even considering the policy’s other consequences. The number of people on disability, 14 million, is “more than the total number of employees in the manufacturing sector of the economy,” observed Nicholas Eberstadt of the American Enterprise Institute.

The government spends more on disability than it does on both food stamps and welfare combined, according to a blockbuster NPR report. The dependency trend and fiscal trajectory continue their death spiral, unmoved by the supposed economic recovery.

The recession officially ended in 2009. Since the recession ostensibly ended, the number of SSDI enrollees is double the number of jobs created, as Investor’s Business Daily reported.

The current unemployment rate would necessarily be higher if some of those on disability were instead seeking work. Aside from the economic consequences, SSDI could lead to a destructive self-fulfilling prophecy.

Self-fulfilling prophecy

Going on to SSDI creates a self-fulfilling prophecy, according to Dr. Marvin Fischbach, a psychiatrist who works directly with patients on disability.

Fischbach generated controversy with a powerful opinion piece, charging that the disability system creates “a vested financial and psychological interest in not getting better while still applying for disability.”

He told WND, “The system is a crisis for the individual,” and “many should never have applied for disability.”

He describes a pattern that deeply concerns him: “Patients come to me with mild to moderate symptoms of depression, that will get better, and do get better. But they get on disability and many are lost forever to gainful employment, lose their self-sufficiency, and lose their self-esteem.”

He acknowledges, “Some beneficiaries are severely mentally ill and truly disabled, but I’m not talking about them.”

He describes a pattern of generational dependency that is reminiscent of pre-reform welfare.

“People on disability develop a lifestyle, then their children are acculturated into the disability way of life.”

And “the child begins to see this as normal.”

From Fischbach’s vantage point, “once you’re on the program, the government doesn’t encourage you to work, and there seems to be no verification that you are still disabled.”

He believes “abuse is common, and the system is enabling people to abuse themselves.”

His conclusion is stark. “The effect of the system is destructive to individuals and society.”

Even for those who are psychologically unaffected, SSDI may encourage undesirable aspects of human nature. The Wall Street Journal described a truck driver with herniated disks who got on disability and then thought about seeking work.

But, he said, “I don’t know anything but driving a truck.”

Crisis long time coming

SSDI began in 1956. Most media coverage has placed the SSDI controversy in the context of the recent recession. However, the growth of SSDI was a clear problem well prior to the recession. Autor and Mark Duggan have been warning about the growth of SSDI since 2003. Between 1984 and 2001, the number of working-age adults receiving disability rose 60 percent to 5.3 million people.

Also, the fiscal crisis in SSDI is nothing new. Autor and Duggan warned in 2006 of a “fiscal crisis unfolding” in SSDI.

While economists tend to focus strictly on the incentive structure of the system itself, there are reasons to begin scrutinizing individual claims, and the ethical and moral components of individual dependency.

Autor and Duggan point to three reasons for SSDI’s growth. First, Congress decided in 1984 to relax eligibility standards. Second, the ratio of disability insurance to income has shifted over time so that disability is more and more attractive. Third, the increase in the number of women in the workforce increased the number of potentially insured.

The recession added a fourth major reason for the current explosion: As NPR reports, SSDI is now “a de facto welfare program for people without a lot of education or job skills.”

Abuse in program

While it is impossible to say what percentage of SSDI cases are fraudulent or abusive, a British program analogous to SSDI has just been discovered to be rife with fraud.

A British program named Employment and Support Allowance is designed to support those who are allegedly unfit to work. However, recently, an incredible one third of all of those on ESA voluntarily left the program instead of facing a test that would require genuine proof of disability.

Nearly 880,000 people, one third of the total number of British receiving the ESA benefit, simply dropped their claims and left the program. They left rather than submit to a test that would determine whether they were actually fit to work. On top of that, another 837,000 took the test and were determined to be “fit to work immediately,” according to the Telegraph. An additional 367,300 were found able to perform “some level of work.”

Ultimately, only one in eight of those tested were deemed by doctors to be “too ill to do any sort of job.”

America has a far more liberal standard for receiving disability than the British system. The American test to verify disability is called the Continuing Disability Review.

But Autor points out that “Congress does not provide SSA sufficient funds to perform the CDRs it’s already mandated to conduct.”

Autor notes that “CDRs should be done to eliminate beneficiaries who have made a medical recovery.”

Based on his research, he believes tightening those standards alone will not correct the long-term dependency problem, or the “fiscal dire straits” that the program is currently in. Instead, he advocates for more incentives that encourage work on the part of disabled people.