Budget Options
December 8, 2016

Mandatory Spending Option 17

Function 600 - Income Security

Eliminate Supplemental Security Income Benefits for Disabled Children

CBO periodically issues a compendium of policy options (called Options for Reducing the Deficit) covering a broad range of issues, as well as separate reports that include options for changing federal tax and spending policies in particular areas. This option appears in one of those publications. The options are derived from many sources and reflect a range of possibilities. For each option, CBO presents an estimate of its effects on the budget but makes no recommendations. Inclusion or exclusion of any particular option does not imply an endorsement or rejection by CBO.

Billions of Dollars 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2017-2021 2017-2026
Change in Mandatory Outlays 0 -10 -11 -11 -11 -12 -12 -11 -13 -13 -42 -104
Change in Discretionary Spending 0 -1 -1 -1 -1 -1 -1 -1 -1 -1 -4 -9

This option would take effect in October 2017.

The Supplemental Security Income (SSI) program provides cash assistance to people who are disabled, aged, or both and who have low income and few assets. The Congressional Budget Office estimates that 15 percent of SSI recipients in 2016 will be disabled children under age 18, receiving an average monthly benefit of $664. Those children must have marked and severe functional limitations and usually must live in a household with low income and few assets.

This option would eliminate SSI benefits for disabled children. CBO estimates that making that change would reduce mandatory spending by $104 billion through 2026. Also, because annual discretionary appropriations cover SSI’s administrative costs, this option would generate $9 billion in discretionary savings over the same period so long as total appropriations were adjusted accordingly.

One rationale for this option is that providing SSI benefits to children may discourage their parents from working. Unlike Temporary Assistance for Needy Families, a welfare program that aims to help families achieve self-sufficiency, SSI imposes no work requirements on parents and does not explicitly limit how long they may receive benefits as long as the child remains medically and financially eligible. Furthermore, SSI benefits decrease by 50 cents for each additional dollar parents earn above a certain threshold, depending on household size and other factors. (For example, in calendar year 2016, for a single parent with one child who is disabled and with no other income, SSI benefits are generally reduced after the parent earns more than $1,551 per month.) Those program traits create a disincentive for parents to increase work and thereby boost earnings.

Another rationale for this option is that, rather than provide a cash benefit to parents without ensuring that they spend the money on their disabled children, policymakers could choose to support those children in other ways. For example, states could receive grants to make an integrated suite of educational, medical, and social services available to disabled children and their families. To the extent that funds that would have been used to provide SSI benefits for children were instead used for a new program or to increase the resources of other existing programs, federal savings from this option would be correspondingly reduced.

A rationale against this option is that this program serves a disadvantaged group. SSI is the only federal income support program geared toward families with disabled children, and SSI benefits reduce child poverty rates. Families with disabled children are typically more susceptible to economic hardship than other families because of both direct and indirect costs associated with children’s disabilities. (Direct costs can include additional out-of-pocket health care expenses, spending on adaptive equipment, and behavioral and educational services. Indirect costs for the parents of disabled children can include lost productivity and negative health effects.)