by Bruce Webb
(My God, can we get any more jargony and wonkish? Well “Si, Si, Puede!”)
When the Greenspan Commission was convened back in 1982 Social Security scoring started and stopped with the SSA Office of the Chief Actuary who are also tasked with researching, compiling and presenting the Annual Report for review and signing by the Trustees, many of whom may not have any relevant training. OACT is by statute and tradition a professional and non-partisan group of technocrats. Sometime after 1983 the role of scoring Social Security started being shared with the Congressional Budget Office, also by statute and tradition a professional and non-partisan group of technocrats. What is more CBO formally agrees to accept OACT demographic projections. So you would expect the top line numbers of both to come in pretty close alignment in regards to Trust Fund Depletion. Well you would be wrong, CBO and OACT have in the past seen pretty wide variations in dates of TF depletion and total actuarial gap. Now in the past decade or so this didn’t matter much because even the Bush push for Social Security reform never made it as far as the legislative process, to my knowledge no bills were submitted, meaning no official CBO scoring. Moreover in the normal course of events there was enough lag between the reporting by SSA and CBO that the divergence between them could go unnoticed since neither stayed in the news past a news cycle or two anyway.
Well this year is different. We have a presidential Deficit Commission which has already announced a focus on ‘Entitlements’, including Social Security, and are prepared to make a recommendation in December, which recommendation if passed through the Senate was last week guaranteed a vote by the House. Meaning that this year the question of scoring is going to come to the fore, in selecting a package of SS ‘reforms’ whose score is going to have the final say? I put this question to a panel of experts with decades of experience and while some gave me pretty definitive answers the consensus was “Bruce, that is an awfully good question.”
Report geekery below the fold.
The two main sources of Social Security scoring are the Annual Reports of the Trustees of Social Security, normally released on March 31st and available here, and CBOs Long Term Projection for Social Security, normally released in August and available here. This five month gap normally results in SSA numbers being internalized in the MSM, with few reporters or columnists noting the difference, with a major exception of Dean Baker, who for a variety of reasons tends to go with CBO numbers.
Well a funny thing happened this year, the Social Security Report did not come out on March 31st, it didn’t even come out on the semi-official revised date of June 30th, and Treasury refuses to commit to a firm date even now, with the best guesses on Capitol Hill suggesting sometime in August. Now there is no reason to suggest that CBO will experience a similar delay they came out with their Long Term Budget Outlook (which has a Social Security component) on time and also released a scoring of thirty different Social Security Policy Options on July 1st. So best available information as of this minute is that we will have two dueling Reports coming out head to head right in time to inform the decision making of the Deficit Commission.
So which one rules? Well we got an interesting hint in an article (interesting in itself) detailing some internal strife in SSA between Commissioner Astrue and Chief Actuary Steve Goss published in the NYT on July 11: Lawmakers Defend Social Security’s Chief Actuary in Clash With Commissioner. The following two sentences jumped out at me (bolding mine):
Mr. Goss’s responsibilities have suddenly increased. Leaders of a presidential commission seeking ways to reduce the federal budget deficit said they would rely exclusively on his estimates to measure the financial effects of proposals to overhaul Social Security
Which suggests that for the Commission’s purposes when it comes to Social Security and Medicare CBO is locked out. But can they equally lock out CBO when it comes time to other spending and tax suggestions? Can they just agree to look at one part of a data table while ignoring another that mentions Social Security?
And whatever the Commission decides what happens when the package hits Congress? In 1983 there was no CBO long term scoring of Social Security, and a Congressional staffer who worked on the legislative package confirmed to me that at least House Ways and Means and probably Senate Finance relied exclusively on OACT. Then again they didn’t have a lot of choice. But in 2010 we know from observation of the Stimulus and HCR legislative process that budget bills BY RULE live or die based on CBO scoring.
To which some people will suggest that it doesn’t matter much, after all the 2009 Social Security Report put the long-term gap at 0.7% of GDP while the most recent CBO scoring puts it at 0.6% of GDP. On the other hand the gap between the 2009 SS Report and the 2010 looks to have stretched out by 15 months (May 13th to mid-August) and performance of Social Security, particularly on the Disability Insurance side, was MUCH more miserable than expected, we can expect OACT to bump that 0.7% up a bit. Moreover each 0.1% of GDP represents maybe 0.3% of covered payroll, no one should be surprised to see CBO scoring the 75 year gap at 1.6% of payroll and OACT at 2.2%, this would simply mirror the similar gaps we saw in the respective 2008 and 2009 reporting.
Why is this gap important? Because a lot of the options on the table score right in that .2 of GDP/.6% of payroll gap between CBO and probable SSA, a package of three fixes designed to meet SSA scoring could be revised to two fixes and still meet the requirements of CBO, a seemingly balanced package coming out of the Commission could be transferred to an unbalanced, and based on history even more worker-unfriendly one, by Congress using CBO numbers to say strip out a cap increase proposal in favor of one focusing entirely on benefit cuts.
There may be little in this world more geekish than focusing on the fine points of CBO vs OACT scoring. But that doesn’t mean it is not important. Your future retirement may rest on which way this one leans.