The Democrats' brilliant plan for reforming Social Security

Since they won the 2014 midterm elections, Republicans have been pushing a sneaky plan to cut benefits for disabled Americans. The disability side of Social Security (SSDI) is projected to run short of funds in late 2016, and so Republicans have changed the rules to disallow transfers between SSDI and the better known retirement side of the program.

Transfers were common in the past, when legislators shuffled funds one direction or the other depending on which program needed the money. But conservatives are now angling to hold the disability program hostage to get cuts to Social Security in general. If the fund runs out, the SSDI will face immediate cuts in benefits of about a fifth, so Republicans figure Democrats will agree to some "reform" of traditional Social Security (read: cuts) to save the disabled.

Democrats have come up with an excellent counter-proposal: just merge the two accounts into one pot of money. Transfers will therefore be unnecessary, and Social Security as a whole will be fine until 2033. It's a clever political gambit, but also a great plan on the merits — one which could help clear up a lot of ideological fog.

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The question we should be asking when it comes to income transfer programs like SSDI is this: What are they for? Like a frightened cuttlefish, Charles Blahous raises a lot of complicated objections to the unification proposal that only obscure the issue at hand, including that we should honor the political wrangling that birthed SSDI 60 years ago and the made-up principle that each side of the program should be self-funding.

All that accounting gibberish clouds a very simple truth: Despite their complex funding and disbursement structure, both disability insurance and retirement benefits are simple cash handouts. Working people pay in, non-working people take out.

It makes perfect sense to combine the two because both are aimed at categories of people who are systematically failed by market capitalism. Eight out of 10 poor people, for example, are either students, children, elderly, disabled, or involuntarily unemployed, because those are people who have trouble working and the market gives you nothing if you can't work (and aren't already rich).

Therefore, both traditional Social Security and SSDI, despite many wrinkles, are doing fundamentally the same thing: protecting people who fall through the cracks of a market society. Funding them both out of the same pot of money would not just stop Republicans from using this particular break point to create fake funding crises, but would also be a logical consolidation of a system that is too fragmented. (Indeed, we could go further and consolidate our various parental benefits into a universal child allowance under the Social Security Administration.)

Such a development might also have a laudable effect on the general understanding of poverty and retirement. Because Social Security pays out benefits somewhat based on earnings, people often feel like they are getting only what they paid in, just like people who saved and invested.

In reality, all retired people, even savers, live off the production of those currently working. Even the giant gold horde of Scrooge McDuck would be worthless without someone to arrange for the current production of goods and services. Thus, retirees ought to get Social Security because they are disproportionately unable to work, just like disabled people, not because they had a good job years ago.

Finally, for future retirees, this is an excellent tactical move. You can bet that if the tables were turned — that if it were the retirement side running short of cash and SSDI with a surplus — Republicans would be trying exactly this same trick to get more cuts. Their endgame was on display a decade ago, when George W. Bush attempted to turn Social Security into a weird quasi-401(k) plan. We know how that would have turned out — just look at the 401(k) disaster today.