What’s new in Social Security in 2008?
In May, the trustees had their latest report come out. If you read my writeups (1 and 2) on understanding Social Security, you’ll recognize this as the key figure:
This is a model, under three different sets of assumptions, of when the SS surplus runs out. Not when the program doesn’t have any money, but when the surplus we’ve been squirreling away for 30-odd years is gone. You’ll notice that option II intersects at 2041. In other words, everything is perfect for the next 33 years. And after that it’s only mostly perfect. Find me another government program that can say that! You’ll also notice that if the assumptions underlying option I are true, we’re in perfect shape forever. There is good reason to think that the truth is closer to I than to II. The actuaries who do this work have certain biases, and of course it is more important to make sure that the program doesn’t go bankrupt than to hope it delivers a new income stream.
Another way to look at this is that it would take relatively little effort for us to shift the funding from path II to path I. To whatever degree you think 33 years isn’t enough, it takes very little sacrifice to make it permanent.
August 22, 2008: The CBO (Congressional Budget Office) releases it’s latest examination of Social Security: Government report shows that program is healthy for decades to come.
Here, the story is even better. The surplus is projected to last until 2049. That’s 41 years instead of 33. In fact, every time another years passes and we have more data, the date for the surplus running out is pushed further back. This is another reason to think that option I is closer to the truth.
And after 2049, there is still 81% of promised benefits. How much of a change would it take to cover that 19%? Not much.
Whoops, the CBO report is here. The key figure is below, showing what year the surplus will be depleted. The link has some more discussion about it.
Hilzoy said it well:
In 2006, the CBO projected (pdf) that the Social Security trust funds would be exhausted in 2046. Apparently, during the last two years, the date when the Social Security trust funds will be exhausted has been pushed three years further into the future. At this rate, if we keep on doing nothing, that date will never arrive at all.