Sunday, March 27, 2005

The 2005 Report

(Aug 08 edit: I have left the original text untouched. But as it turns out my exuberance was a little premature, productivity in fact fell off a cliff in Q4 2005 with the result that year end productivity came in pretty much in line with Intermediate Cost projections. But it was fun while it lasted, during the interval between the release of this Report and the BLA release of Q4 it seemed that full solvency of Social Security would have to be recognized by all at latest by 2008. Well that is reality for you.)
Pardon the incoherency, I am running around the room high-fiving myself. But first the numbers:

Entry Page
Table of Contents
List of Tables
List of Figures

Economic Assumptions Under the Three Alternatives
Trust Fund Ratios Under the Three Alternatives

Social Security is not broke. Exactly no one expects the economy to perform down to the levels of Intermediate Cost. I was stunned to see that the Trustees chose to take the whole hit in 2005. They chose to stick to their guns and return a Low Cost projection that showed the Trust Fund fully funded, but not over funded, consistant with past practice What is the Low Cost Alternative? In so doing they were constrained by definition to keep Intermediate Cost somewhere below Low Cost. Which yielded the following result: productivity growth slowing to 60% of 2004 rates in the face of a strong 1st quarter 2005.

According to the Trustees' own numbers the economy returned 3.3% in 2004. Now they would have us believe that 2.1% is an optimistic number and 2.0% a realistic number for 2005. Who are they trying to kid?