More About Kathy Ruffing

Kathy Ruffing

Kathy Ruffing is a Senior Fellow at the Center on Budget and Policy Priorities, specializing in federal budget issues.

Full bio and recent public appearances | Research archive at CBPP.org


Mapping Disability Receipt

January 8, 2015 at 3:31 pm

Disability programs are in the news due to the controversy over replenishing Social Security’s Disability Insurance (DI) trust fund.  While people who receive disability payments from DI or Supplemental Security Income (SSI) live in every state, county, and congressional district, some areas have much higher rates of disability receipt than others — a fact that critics sometimes cite as evidence of problems with the programs.  In reality, this “geography of disability” mostly reflects a few key demographic and economic factors, as our new paper explains.

States with high rates of disability receipt — especially in the South and Appalachia, and (less dramatically) in parts of New England and the Great Lakes region — tend to have populations that are less educated, older, and more blue-collar than other states, and to have fewer immigrants.  In contrast, states along the Washington-to-Boston corridor, on the West Coast, and in the Great Plains and Mountain West have relatively few disability beneficiaries.

Here’s briefly why those patterns make sense (see our paper for details):

  • A less-educated workforce. This is by far the most powerful factor; states with low rates of high-school completion, chiefly in the South and Appalachia, generally have high rates of disability receipt (see map).  That’s not surprising.  The law requires applicants for disability benefits to show not just that they can’t do their past work anymore, but that they can’t realistically switch to other, less demanding work.  That adjustment is harder, or even impossible, for severely impaired people with little education.
  • An older workforce. The risk of disability rises sharply with age.  New England and Appalachia have higher median ages than most of the rest of the country, which boosts their rates of disability receipt compared with the “young” West.
  • Fewer immigrants. Immigrants, especially recent arrivals, are far less likely than native-born citizens to collect disability benefits.   That’s largely because of program rules that make it harder for immigrants to qualify.  There’s also some evidence that immigrants are healthier than their U.S.-born counterparts, although that advantage shrinks with age.  States with large foreign-born populations, like California and New York, tend to have fewer disability recipients than we’d expect based solely on their age and educational characteristics.
  • Industry-based economy. States where much of the workforce is employed in forestry, some types of mining, utilities, construction, and manufacturing — such as the industrial Midwest and many southern and Appalachian states — tend to have more disability recipients than states with more service-oriented economies, all else being equal.  Such jobs are often physically demanding and involve skills that don’t transfer readily to other, less arduous types of work.

Examining the geographic pattern of disability receipt gives a valuable perspective on how these programs, even with their strict eligibility rules and modest benefits, protect some of the nation’s most vulnerable people.  Policymakers should bear these facts in mind as they deal with the need to replenish DI’s finances by 2016.

Getting It Wrong on Disability Insurance

January 7, 2015 at 4:45 pm

I’ve explained that a new House rule will make it harder to reapportion payroll taxes between Social Security’s retirement and Disability Insurance (DI) trust funds to avert a one-fifth cut in benefits to severely impaired DI recipients in late 2016.  In a revealing statement, co-sponsor Representative Tom Reed (R-NY) says the change is designed to prevent Congress from “raiding Social Security to bail out a failing federal program.”  He’s doubly wrong.

First, far from “failing,” DI has grown mostly in response to well-understood demographic and program factors like the aging of the baby boom, and the program’s trustees have long anticipated the need to replenish the trust fund next year, as I noted yesterday.  Second, DI isn’t distinct from Social Security; it’s an essential part of Social Security.

Social Security is much more than a retirement program.  It pays modest but guaranteed benefits when someone with a steady work history dies, retires, or becomes severely disabled.  A young person starting a career today has a one-third chance of dying or qualifying for DI before reaching Social Security’s full retirement age  (see graph, excerpted from our DI chart book).

Though they might not even know it, more than 150 million workers have earned DI protection through their payroll tax contributions in case they suffer a severe, long-lasting medical impairment.  Nearly 9 million of them, mostly in their 50s and 60s, receive disabled-worker benefits from DI.  In fact, most DI recipients are close to or past Social Security’s early-retirement age of 62.

Statements like Representative Reed’s implicitly attempt to pit Social Security retirement and disability beneficiaries against each other.  It’d be far better to do a straightforward reallocation of payroll taxes — a noncontroversial step that Congress has taken 11 times to shore up whichever trust fund needed it — while crafting a sensible plan to restore overall solvency to this popular and vital program.

House Rule Could Hurt Vulnerable Disability Beneficiaries

January 6, 2015 at 2:07 pm

Buried in the new rules that the House Republican majority plans to adopt for the 114th Congress is a provision that could threaten Disability Insurance (DI) beneficiaries — a group of severely impaired and vulnerable Americans — with a sudden, one-fifth cut in their benefits by late 2016. The provision bars the House from replenishing the DI trust fund simply by shifting some payroll tax revenues from Social Security’s retirement trust fund.

Its drafters state that the rule “would protect the Old-Age and Survivors Insurance (OASI) Trust Fund from diversion of its funds to finance a broken Disability Insurance system.” But DI — a vital part of Social Security — isn’t broken. Its recent growth stems primarily from well-understood demographic and program factors, chiefly the aging of the baby boom into their 50s and 60s, the growth of women’s role in the labor market and hence their eligibility for DI, and the rise in Social Security’s full retirement age. And the Social Security trustees have long anticipated the need to replenish the fund in 2016.

Reallocating some taxes between the retirement and disability trust funds is a historically noncontroversial measure that Congress has taken 11 times, in both directions depending on which trust fund was running short. Another reallocation to replenish the DI trust fund wouldn’t threaten seniors, contrary to the rule’s implicit attempt to pit retirement and disability beneficiaries against each other.

More specifically, here’s what people need to know:

  • The last two reallocations have shortchanged DI, underfunding it compared with the retirement program.   Congress redirected a big chunk of payroll taxes from DI to OASI in 1983 and only partly offset that in a 1994 law. (See graph.) If DI’s tax rate had remained at its pre-1983 level, we wouldn’t need to replenish the fund today. Yet nobody claims that the 1983 reallocation, which helped stave off OASI’s imminent depletion, “robbed” DI … nor could they reasonably claim that reallocating in the other direction would “rob” OASI.


  • A reallocation would have only a tiny effect on the retirement program’s solvency. Reallocating taxes to put the two trust funds on an even footing would prolong the DI trust fund by 17 years (from 2016 to 2033), while advancing the OASI fund’s depletion by just one year (from 2034 to 2033). The reason is simple: OASI is much bigger than DI, so a modest reallocation barely dents OASI. And before then, policymakers will almost surely address Social Security solvency in a comprehensive fashion.
  • Most DI recipients are older people, so helping DI helps seniors. The risk of disability rises with age, and most DI beneficiaries are older. Seventy percent of disabled workers are age 50 or older, 30 percent are 60 or older, and 20 percent are 62 or older and would actually qualify as early retirees under Social Security.

Neutral experts like the American Bar Association and the National Academy of Social Insurance, as well as retiree advocates like AARP and the National Association to Preserve Social Security and Medicare, agree that reallocating payroll taxes is necessary and reasonable.

By barring the House from approving a “clean” reallocation in 2016, the rule will strengthen the hand of lawmakers who seek to attach harsh conditions (such as sharp cuts in eligibility or benefit amounts) to such a measure. Instead, policymakers should enact a clean and sensible reallocation to avert an unacceptable cut in DI benefits while working on the main goal: ensuring solvency for all of Social Security.

Boosting Disability Share of Payroll Tax Wouldn’t Threaten Retirees

December 2, 2014 at 12:44 pm

Policymakers need to replenish funding for the Disability Insurance (DI) program — a vital part of Social Security — by late 2016 to avert a sudden, one-fifth cut in benefits to a group of severely impaired and vulnerable Americans.  Some critics claim that replenishing DI by reapportioning payroll taxes between the DI and retirement trust funds would jeopardize retirees, but that’s not the case, as our new paper explains.

Reallocating the shares of payroll taxes that go to the separate DI and Old-Age and Survivors Insurance (OASI) trust funds is a traditional and noncontroversial way to even out the programs’ finances.  Lawmakers have enacted 11 such shifts, in both directions.

Here’s why another reallocation wouldn’t hurt retirees:

  • The last two reallocations have shortchanged DI, underfunding it compared with the retirement program.  Congress redirected a big chunk of payroll taxes from DI to OASI in 1983 and only partly offset that in a 1994 law.  If DI’s tax rate had remained at its pre-1983 level, we wouldn’t need to replenish the fund today.  Yet nobody claims that the 1983 reallocation, which helped stave off OASI’s imminent depletion, “robbed” DI — nor could they reasonably claim that reallocating in the other direction would “rob” OASI.
  • A reallocation would have only a tiny effect on the retirement program’s solvency.  Reallocating taxes to put the two trust funds on an even footing would prolong the DI trust fund by 17 years (from 2016 to 2033), while advancing the OASI fund’s depletion by just one year (from 2034 to 2033).  The reason is simple: OASI is much bigger than DI, so a modest reallocation barely dents OASI.  And before then, policymakers will almost surely address Social Security solvency in a comprehensive fashion.
  • Most DI recipients are older people, so helping DI helps seniors.  The risk of disability rises with age, and most DI beneficiaries are older.  Seventy percent of disabled workers are age 50 or older, 30 percent are 60 or older, and 20 percent are 62 or older and would actually qualify as early retirees under Social Security.  (See graph.)

Neutral experts like the American Bar Association and the National Academy of Social Insurance, as well as retiree advocates like AARP and the National Committee to Preserve Social Security & Medicare, agree that reallocating payroll taxes is necessary and reasonable.

Policymakers should do so by 2016 to avert an unacceptable cut in DI benefits while working on the main goal:  ensuring solvency for all of Social Security.

Happy 79th Birthday, Social Security!

August 13, 2014 at 2:04 pm

Social Security marks its 79th birthday tomorrow.  This highly successful program pays benefits to more than 58 million Americans.  It’s the single most important source of income for its elderly beneficiaries, contributing on average two-thirds of income for recipients over age 65.  For more than one-third of them, Social Security constitutes at least 90 percent of income (see graph).

Reliance on Social Security is especially high among the oldest — those who can no longer work and may have outlived their savings — and elderly blacks and Hispanics. Without Social Security, nearly half of elderly Americans would live below the official poverty line; instead, fewer than 10 percent do.

But Social Security isn’t just for the elderly.  It protects workers who suffer a severe medical impairment and children whose breadwinner dies, retires, or becomes disabled. We estimate that in 2012 — the latest year for which we have data — it lifted more than 22 million Americans of all ages above the official poverty line (see table).

Social Security benefits are modest.  The average retired worker or elderly widow collects only $1,300 a month, and disabled workers even less.  Nobody gets rich from Social Security: only 10 percent of retired workers get more than $2,000 a month (and fewer than 2 percent get more than $2,500).  Social Security benefits are low by international standards, too.

With the continued decline of the traditional defined-benefit pension, Social Security is the only retirement income most Americans will collect that’s indexed to inflation and guaranteed to last as long as they live.  And because it’s not means-tested, Social Security encourages people to supplement their retirement income by working part-time or by saving money.

Social Security faces a long-term shortfall that’s predictable and manageable, as our new paper on the trustees’ latest annual report explains.  Those who fear that Social Security won’t be around when today’s young workers retire misunderstand the trustees’ projections.  Even if policymakers did nothing, the program could still pay three-quarters of scheduled benefits after the trust funds run out in 2033.

Of course, policymakers should act well before then to place this extremely popular program (see here and here) on a sound long-term footing.  The best proposals would protect vulnerable workers and beneficiaries and give all participants ample notice of future changes.  A well-crafted package would also make targeted improvements to Supplemental Security Income, which is distinct from Social Security but has important overlaps.

Social Security is the most effective and successful income-security program in the nation’s history.  The President and Congress should design reforms judiciously so that it remains that way.