SS Trustees say SS is broke by 2041, Wrong, ....read the truth here

Analysis: 2007 SS report: "We're good past 2085"

I'm sure you've seen the headlines recently, that Social Security will be broke by 2041. I also remember similar headlines after the Social Security Trustees report came out in 2004, I found the report online and read it. I realized a number of things about the doomsday year of 2042.

1) The 2004 Social Security Trustees report was predicated on not counting interest on the roughly 12 trillion in the various trust funds, represented by bonds.
2) The 2004 Social Security Trustees report relied on 1.8% growth in the GDP. To my eye 1.8% growth in GDP represents a "Mad Max scenario", an economic collapse on the order of the "Great Republican Depression" of the 1930's.
3) Apparently the 2004 Social Security Trustees report factored in the Boomer generation retiring and drawing checks from the system, but did not factor in what happens when the Boomers died.

My gut level assessment (not based on any actual economic knowledge) of the 2004 Social Security Trustees report was that assuming 3.6% growth in GDP, Social Security would be fine until 2062. Since it's not likely that many Boomers would be around in 2062 to collect checks, the big drawdown of funds would be over. The 2004 Social Security Trustees report was easy to navigate, easy to find the fine print. About an hour of poking around got me to all the details I sought. The 2007 Social Security Trustees report is a wee bit more complicated and not so easy to navigate. Never the less, I think I found the dirt in the details.

The 2007 Social Security Trustees Summary makes a most compelling statement:

Social Security could be brought into actuarial balance over the next 75 years in various ways, including an immediate increase of 16 percent in payroll tax revenues or an immediate reduction in benefits of 13 percent or some combination of the two.


And what data was used to come to this assertation? I found it organized here. Many of the interesting titles linked to huge charts that quite frankly were overwhelming. But slowly a picture of the basic assumptions behind the doomsayers words became clear. Looking at the "Principal Economic Assumptions" I noted that the Trustees had developed 3 scenarios, Intermediate cost, low cost & high cost. But which scenario was the one the trustees relied upon for their date of 2041?

Additional Economic Factors and Selected Economic Variables lead to some interesting information which could lead one to think the Trustees used some faulted economic assumtions, but these tables did not present to me, a smoking gun. I found what I was looking for, titled Estimated Trust Fund Ratios.

On the Estimated Trust Fund Ratios table I found where Social Security went broke in 2041. This was listed under the "intermediate" scenario. Looking at the "High Cost" scenario made things look worse, Social Security would go broke in 2030. While looking at the "Low cost" scenario showed Social Security would still be solvent in 2085.

I wish I had that audio clip from the Rachel Maddow show, the one where the prospecter shouts "Eureka"!

It is interesting to note that under Additional Economic Factors the "intermediate" scenario assumes GDP growth of 2% or under after 2020. While the "Low Cost" scenario assumed GDP growth of 2.5% to 3% in the outgoing years. IIRC the US has averaged 3% or 3.5% GDP growth over the last 100 years. While during the Clinton years the US saw growth in GDP between 2.5% and 4.4%.

xxxx

Feel free to leave a comment...all sources cited here:

http://rdanafox.blogspot.com/2007/04/2007-ss-report-were-good-past-2085.html

And if you could, please REC this up

But there really isnt anything to be alarmed by. We're good past 2085.

Republican ideologues made it up for him.

The bit of truth is that people are living longer; but global warming may take care of that.

Remember, he hit the trifecta.

:thumbsup:

D-KOS

http://www.dailykos.com/story/2007/4/24/16844/3334

and will move on through and kick off. The Boomer phenomenon is often not distinguished from the more-general aging of the population. The long-term effect is that each cohort is tending to live longer than prior cohorts did; the short-term effect is the move of the Boomers through the age structure. And we Boomers will tend to work longer, anyway, as likely will following cohorts -- that is, assuming any jobs are left in the US.

WE average 3.5%, over the last 100 yrs.

There is no problem unless we have a 50 year depression. ANd the least of your worries will be about getting that SS check...

ya know.....

Hand Counted Paper Social Securty Checks!! :thumbsup:

Ahem, yes Hand counted paper is very often a GOOD THING..

could get their hands on our SS money just like they did with the pension money. Unfortunately, the average sheep are so appallingly ignorant of finance, economics, our nation, mathematics, and pretty much everything else except the television schedule, that it gets played over and over and over, until they all start nodding their empty heads and bleating in panic.

Thanks for bringing some truth to expose this ongoing lie.
:kick: & R

Kinda like.... the ENRON model....

from them in the SS fund. It would be the greatest looting in the history of the world, who knows, it might even create the first trillionaire.

Worst case scenario, you might be right.

And I'm not talking worst case scenarios- I'm thinking even in the softest, possible landing....

Americans have a peculiar tendency to think that things will go on just as they always have- that somehow natural laws and basic macroeconomic laws don't apply to their "shining city on the hill."

Mainstream economists in their "ivory silos" make all sorts of far off projections based on assumptions from what they've observed over the past century or so. Things like fossil fuel depletion, degradation of natural capital and the destructive forces of climate change are left out or undervalued in their equations.

Sometime down the line- probably sooner rather than later, this will become abundantly clear to even the thickest headed freeper.

But the money grubbers scare people, and try to intice them with dreams of stocket market riches, etc...

Good going, Foger.

Roxann DAwson. You might remember her from Star Trek Voyager

Thank you for the heads-up on this, FogerRox. Pure gold.