Upcoming Attractions in Social Security

by Bruce Webb

Well it has been a relatively quiet winter on the Social Security front, but we are fast coming up on what I only half-jokingly call the “Bestest Day of the Year”, the release of the Annual Report of the Trustees of Social Security. The Report has in many recent years come out reliably on the last day of March but can be as late as May (as it was last year, perhaps because the Trustees were not all in place). When it does come out it can be found, viewed and downloaded at SSA: Trustees Reports. The first thing I look at is of course the bottom line, what the number is for the actuarial gap and the date for Trust Fund exhaustion, but the second thing I look at is the magnitude of the change from 2009 and more importantly the reasons for that change. For example a couple of years ago the outlook brightened more than I expected, and a few years before that had darkened more than expected. Well it turned out that changes in assumptions about immigration in the first case and interest rates in the latter accounted for almost all the difference, very little was actually due to short term economic projections. So if there is anyone out there really prepared to dig into the tables it might be worth your time to review the 2009 Report, or at least the 15 page Summary, both available at the link.

The Report takes on some new urgency this year because of the appointment of the President’s Deficit Commission, which really should be called the Entitlements Commission. Because its leadership has made it clear that taxes and military spending will NOT be on the table, this will all be about what Co-chairman Alan Simpson calls the Big Three: Social Security, Medicare, and Medicaid. And the deck has been stacked. For those who haven’t been following the Commission will have 18 members, six appointed by the President, only four of whom can be Democrats, six by the House and six by the Senate. And although there is a requirement for a 14 vote super-majority to advance a recommendation, something that would normally insure gridlock, it appears that Obama is appointing five people favoring ‘reform’ and only one firm defender of Social Security (Andy Stern of SEIU). Since it is a given that all six Republican Congressional members will be in favor of gutting Social Security, and knowing that of the three Senate Dems Durbin, Baucus and Conrad only the first is a lock to support Social Security as currently configured, blocking 14 votes means getting all 3 of Pelosi’s representatives, and we are already seeing reporting of intense pressure to appoint “at least one” Blue Dog. Meaning there is great risk of having ‘reformers’ walk in the door with 14 votes locked down. And the only way supporters are going to be able to fight back is to make sure they are using real numbers, and that their proposals don’t play tricks like applying a 5.2% worker paid fix to a problem scored 1.92% (as has been done before with LMS).

And along with posts dealing with the Report release and the Commission expect some re-caps of the ins and outs of Social Security finance itself. Familiar territory to some here, but necessary for people just entering the fray. But enough for today, the basketball is starting. Arrivederci.