Social Security Administration's projections on various Congressional Proposals

[dkf]

The last 5 Trustees Reports have indicated that Social Security's Old-Age, Survivors, and Disability Insurance (OASDI) Trust Funds would become exhausted between 2036 and 2041 under the intermediate set of economic and demographic assumptions provided in each report. If no legislative change is enacted, scheduled tax revenues will be sufficient to pay only about three fourths of the scheduled benefits after trust fund exhaustion. Many policymakers have developed proposals and options to address this long-range solvency problem.

We have prepared memoranda for many of these proposals and options. Each memorandum provides an actuarial analysis showing the estimated effect on the financial status of the OASDI program.

These memoranda are provided in Portable Document Format (PDF), which we recommend for printing (requires Adobe Acrobat Reader). Some of the memoranda are also available in HTML format.

The memoranda are listed below in chronological order, most recent first. To search the list, use the search forms at left.

http://www.ssa.gov/OACT/solvency/index.html

Here are some of the proposals scored

Memorandum subject and related information
Sept. 7, 2011 Bernard Sanders Estimated Financial Effects of the Proposed Bill to be Named "Keeping Our Social Security Promises Act," Requested by Senator Bernard Sanders (PDF version
July 18, 2011 Tom Coburn Preliminary Estimates of the OASDI Financial Effects of a Proposal Requested by Senator Tom Coburn (PDF version)
June 21, 2011 Xavier Becerra Effects on Social Security Financial Status and on Benefit Levels of Two Potential Modifications to the Automatic Annual Cost of Living Adjustment (COLA) Requested by Representative Xavier Becerra (PDF version)
June 9, 2011 Kay Bailey Hutchison Estimated Financial Effects of a Proposal to Restore 75-Year Solvency for the Social Security Program Requested by Senator Kay Bailey Hutchison (PDF version)
April 14, 2011 Kay Bailey Hutchison Estimated Financial Effects of Three Proposals to Improve the Actuarial Status of the Social Security Program Requested by Senator Kay Bailey Hutchison (PDF version)

[customerserviceguy]

1. How many of their guesstimates

already figure in a quick and total recovery of the economy? They've always depended on it in the past, but I don't think we're going to get there this time around.

[dkf]

2. I'm not sure but there is one member who keeps protesting the projections use lower than historical

Growth estimates and discounts projections based on that.

Personally I can't help but think they have correctly assessed lower growth in the coming years.

[customerserviceguy]

3. I don't have as much faith in them as you do

I think they've overestimated a recovery, both in terms of number of jobs and what those jobs are going to pay, and I think they've underestimated how quickly the baby boomers are heading for the exits.

[JHB]

4. The under-projection of the economy has been going on for a long time...

...it's part of what is used to make dire warnings of a crisis for SS.

Here's a link to a post of mine from last year quoting the first source I'd seen point this out, back in 1994:

http://journals.democraticunderground.com/JHB/10

From Dec. 1994:
Of some interest is the news, for example, that the higher the rate of immigration, the sounder the system is, since immigrants (legal or not) tend to be young, and swell the ranks of those paying into the system rather than drawing it down. Immigration, however, won't make or break the Social Security's finances. GDP growth will, since the size of the economy decades hence will determine how much money is available to pay retirees. The bankruptcy scenario is based on an assumption that GDP will grow at a rate seen only in depression decades.

As is common in the work of official seers, the trustees present three sets of forecasts, an official guess, an optimistic one, and a pessimistic one. The official scenario assumes the economy will grow an average of 1.5% a year over the next 75 years half the rate seen in the last 75 (2.9%), and a rate matched only in one decade of the last century, 1910-20's 1.4% rate. The economy grew more quickly even during the 1930s, 1.9% (1930-40). The growth rate for the trustees' optimistic vision, 2.2%, is only slightly bouncier than the 1930s rate. The pessimistic guess is 0.7%, slower than population growth, and a rate so torpid as to guarantee a war of each against all. As the graph shows, the system will go bust only if you assume decades of stagnation. If the economy grows in line with the 197394 average of 2.4%, still slower than the 75-year average of 2.9%, it will run a big surplus.

Either the trustees are deliberately projecting slow growth to feed the pension-cutting mania, or they're expressing a deep pessimism about the U.S. economy's future. Big news, whichever it is.

more at the link

[dkf]

5. How does immigration increase growth if there are no jobs?

I can see if we are at full employment yes that would follow. But in this environment? Nope.

Maybe I can see your point if the immigrants come legally with capital or are uniquely entrepreneurally disposed. But anyone who does not fill those gaps just add to people looking for work.