Friday, November 26, 2004

Boiled Down to Basics

Take the following two columns of Social Security years: what are the implications?

1996 2030
1997 2030
1998 2032
1999 2034
2000 2038
2001 2039
2002 2041
2003 2042
2004 2042
2005 2041

Okay, if you like you can ignore the stuff below, it was written before the release of the 2005 Report. But the recalculation to achieve 2041 required a couple of things, first some dirty work reconfiguring the mortality tables, second simple acceptance of a ridiculous growth number for 2005. Trust Fund exhaustion would have been pushed out under any realistic growth figure, 2.0 for 2005 is a joke.

The number on the left is easy, it is the Report Year of the Annual Reports of the Trustees of Social Security. But consider the second column. Something is being moved out twelve years, moreover it is moving out a rate of more than a year per year. If this number moves over the next nine years like it did the last we would expect it to be something like:

2013 2056 and the nine after that
2022 2068

In reality the second column represents the dates of exhaustion of the Social Security Trust fund under the Intermediate Cost alternative (the standard one reported in all coverage).

Without delving into the numbers and the reasons for the change, we can see that the outlook for the Trust Fund, in the absense of any reform at all, is improving nonetheless at an average of 1.33 years/year. In 2068 the youngest Boomer will be 104, the Trust Fund will have done the job assigned in 1982, it will have successfully handled the demographic bulge of the Baby Boomers.

It seems to be that it is up to the Privatizers to identify why this number is moving out in the way it has been, and make a case why it won't continue to improve. That will require actually grappling with the various Economic Assumptions under the Three Alternatives and examining their impact on Trust Fund health going forward Trust Fund Ratios under the Three Alternatives. And most importantly producing the economic projections underlying their own privatization models.

If Social Security Privatization is Necessary, it won't be Possible. If Social Security Privatization is Possible, it won't be Necessary.

Links a-plenty from the main page The Bruce Web or from the Intro page Social Security is not Broke: by the numbers

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