CBO's Curious Claims About Supplemental Security for Children with Severe Disabilities

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Written by Shawn Fremstad   
Friday, 15 November 2013 00:00
In a discussion about the budgetary impact of cutting federal expenditures by roughly .26% of the federal budget by completely taking Supplemental Security benefits away from working-class children with severe disabilities, the Congressional Budget Office makes a couple of curious claims:
  1. "One rationale for limiting SSI to adults is to refocus the program on replacing earnings for people who cannot work, which was the objective stated in the legislation that established SSI in 1974"; and

  2. "because SSI benefits are reduced by 50 cents for each dollar of recipients' monthly wage and self-employment income after the first $65, the availability of SSI reduces the incentive to work." 
 
No evidence is cited by CBO in support of either of these claims, which is not surprising because they're both wrong.
 
On the first claim, according to the purpose section of the legislation signed by President Nixon in 1972, the objective of Supplemental Security was to establish a "national program to provide supplemental security income to individuals who have attained age 65 or are blind or disabled...." See Section 301 of Public Law 92-603 (October 30, 1972).  SSI's purpose language remains unchanged to this day. It's been a long time since I graduated from law school, so my statutory interpretation skills may be a bit rusty, but I don't see anything in this language supporting CBO's claim that SSI's purpose is limited to replacing earnings of unemployed adults with disabilities.
 
On the other hand, there is some specific legislative history on the original decision Congress made to not restrict SSI benefits to unemployed adults. In its report on the legislation, the House Ways and Means Committee explained the legislative purpose behind providing SSI benefits to children: "Disabled children living in low-income households are among the most disadvantaged of all Americans and are deserving of special assistance in order to help them become self-supporting members of our society... [P]oor children with disabilities should be eligible for SSI benefits because their needs are often greater than nondisabled children."  See U.S. House of Representatives, Social Security Amendments of 1971, Report of the Ways and Means Committee on H.R. 1, H. Rept. No. 92-251, pp. 146-148. 
 
On the second claim, I'm not aware of strong empirical evidence to support CBO's unqualified statement that "the availability of SSI reduces the incentive to work." In fact, the leading published work on this question, by economists Mark Duggan and Melissa Kearney, concluded that a child's receipt of SSI had "little [negative] impact on parental labor supply." In December 2011, despite near record-high unemployment (8.5 percent), nearly 40 percent of children receiving SSI lived with a working parent, and a decade earlier, when we were near full employment, it was 55 percent of SSI children. In reality, as federal means-tested benefit programs go, children's SSI actually does a pretty good job of limiting work penalties on parents. Yes, it could do better, but I'd argue that SSI's penalties on family savings and holding even modest assets are a much more pressing immediate issue. For more on issues related to work and savings, see my NASI policy brief with Rebecca Vallas.