Bipartisan Cooperation to Battle Poverty

Bipartisan collaboration is all too rare these days. But Ohio’s two senators – the progressive Sherrod Brown and the conservative Rob Portman – are cosponsoring legislation to increase the asset limit to qualify for Supplemental Security Income (SSI) benefits for the first time in over 30 years, a step that would allow a greater number of very poor disabled and elderly Americans to access these benefits.

Supplemental Security Income is a means-tested program administered by the Social Security Administration that provides benefits to the blind, disabled and the elderly poor. SSI differs from Social Security’s retirement and disability programs in that SSI benefits are based on need, not up on the taxes that a worker has paid into the program, and SSI benefits are financed by general tax revenues rather than by dedicated payroll taxes. SSI benefits are subject to both income and asset tests that assure that only very poor households can qualify.

The SSI benefit and qualification formulas are complex. But, in simple terms, if a disabled or aged person has an income below the SSI federal benefit rate of $841 per month for a single individual and, importantly, lack assets that can be turned into such an income, they may qualify for benefits.

The Brown-Portman legislation, which now includes support from Oregon Democrat Sen. Ron Wyden, Louisiana Republican Sen. Bill Cassidy and South Carolina Republican Tim Scott, addresses SSI’s resource limits, which disqualify individuals with over $2,000 in assets or couples with over $3,000. Resources include pretty much anything a household could easily turn into cash, such as bank balances, retirement savings, or personal property. SSI does exempt the value of a person’s home as well as one vehicle, but nearly anything else is counted against SSI’s asset test.

Since 1972, SSI’s $2,000 asset limit for single individuals and $3,000 for couples has been adjusted just once, in 1989, and that adjustment did not fully account for inflation. If the 1972 value had been inflation adjusted to the present, it would currently be nearly $10,000. This means that the real value of the assets an SSI beneficiary can hold have been dramatically reduced over time. That reduces the number of Americans eligible for SSI benefits and complicates the lives of those who do qualify under the program.

There is a retirement savings angle here as well. At the time SSI was signed into law in 1972, retirement accounts such as IRAs and 401(k)s did not exist. The only real retirement plans were traditional pensions, which promised a fixed benefit at retirement but didn’t provide the worker with any account balance prior to then. As a result, a worker with a traditional pension who fell into need could qualify for SSI benefits at least until he or she started collecting pension benefits. Today, however, IRAs and 401(k)s are the predominant forms of retirement savings and even the lowest-income workers saving for retirement could be expected to easily exceed $2,000 in retirement account balances. In other words, not only has SSI’s resource limit been lowered in real terms, but an additional category of resources – retirement plan balances – has effectively been added to the mix, making it more difficult to qualify for benefits and effectively impossible to save for retirement while receiving SSI.

The Social Security Administration monitors SSI beneficiaries’ bank account balances, and SSI’s asset limit is something that beneficiaries must constantly watch out for. I have personally helped people on SSI manage their finances so that an unexpected check doesn’t end up disqualifying them for benefits. It’s complex and burdensome, both for the recipient who must worry about their finances and for the Social Security Administration, which manages the program. Compared to regular Social Security retirement and disability benefits, SSI benefits cost over 10 times as much to administer for each dollar of benefits paid.

Sens. Brown, Portman and their co-sponsors have proposed legislation to increase the asset limit for SSI benefits from $2,000 to $10,000 for individuals and from $3,000 to $20,000 for married couples. Going forward, those dollar limits would be automatically indexed for inflation. Last year, Social Security’s actuaries estimated that increasing SSI’s asset limits to these levels would cost around $8 billion over 10 years. Just for context, ordinary Social Security retirement and disability benefits total over $1.2 trillion per year.

In my view, lifting the SSI resource limit goes only partway to where we’d like to go, at least in terms of how we deal with income security in old age. And that’s where people who support the Brown-Portman legislation might start to disagree. But if we can agree on steps to improve an important federal program for the poor, we should take the opportunity to act on that agreement. Perhaps one bipartisan compromise can lead to more. We can’t have too much of that these days.