Comments on Social Security Projections versus Reality by Bruce Webb

Following in Brad de Long’s noble tradition of hoisting from comments, what follows are Bruce Webb’s comments to a PGL post from earlier today.

The Bureau of Public Dept just released Nov 30 balances in the OAS and DI Trust Funds

OAS (Survivor/Old Age)
up just under $9 billion for the month.
DI (Disability)
down about $200 million for the month.

How does that compare with year end projections from the 2006 Report?

Intermediate Cost OAS:
$1,833.7 billion
Low Cost OAS:
$1,834.6 billion

Intermediate Cost DI:
$201.6 billion
Low Cost DI:
$203.4 billion

So with a month to go we actually have more in the Trust Funds than either Intermediate Cost or fully funded Low Cost projected for the whole year. Perhaps we should spend less time on CBO projections for 2046 and more time on actual cash flows in the here and now. Social Security is just not broke.

cactus’ note – I’m including the rest of his comment below, though it’s not quite so stand alone, relating more to PGL’s discussion with Dean Baker. Still, it makes some points worth considering. Bruce webb continues:

We have two economic models. One has a Social Security Trust Fund turning negative in 2017 and going to zero in 2041. The other has the General Fund having to pay a portion of the interest in that Trust Fund starting in 2023 but never driving the Trust Fund to depletion, instead having it rising to $60 trillion dollars in 2080 (Table VI.F8 2006 Report). Gigantic differences in output and yet if you examine projected year end balances between the two models you see less than $3 billion in input. Now in the real world we are on track to having about $10 billion plus in input. Now I don’t know how a continuing performance like this is going to change projected debt/GDP levels or inflection points, but change them they will. But it just seems to me that discussions of debt/GDP that simply build Intermediate Cost assumptions in are kind of ignoring the elephant in the room. Social Security is not an isolable issue, discussions of whether Bush deficits are affordable as a share of GDP or whether the yield curve inversion is a product of Dark Matter which ignore the very real possibility that Social Security will continue to be a net buyer of bonds in 2017 – or not – seem odd to me. Currently we are soundly beating Low Cost. What happens to your Debt/GDP models if we simply build Low Cost or Low Cost Plus in?

Monty Python explained that “Nobody expects the Spanish Inquistion”. On the other hand the Spanish Inquistion did not publish their schedule in detail and back it up with dozens of tables and figures. Assume Low Cost and recalculate your debt/GDP ratio. Is that really too much to ask?