by Bruce Webb
Well some things are coming clear about the Presidents Deficit Commission. One its Chairmen have made it clear that its business starts and stops with Entitlements, the concerns some Republicans had that this would be Obama’s way of boosting taxes on the General Fund side or slashing military spending have been shown to be misplaced. Moreover it is clear from the NYT article cited by Jack yesterday plus many other indications that Social Security is front and center, after all the GOP has used the prospect of cuts to Medicare as a centerpiece to their opposition to HCR.
So the ground in being prepared for a grand debate on Social Security. But the question I want to throw out today is this: Who will be the scorekeeper? And the answer to that has huge implications.
There are three main governmental actors who score Social Security and they are not lined up neatly in either methodology or timing. First and foremost are the Trustees of Social Security. They release their Annual Report typically on March 31st though it can come out, as it did last year, as late as May. When it does come out it will be available here: Trustees’ Reports and of course in short order via a link in a post here at AB.
At that point we will be able to compare its numbers to those of the Congressional Budget Office. The CBO gives ten year numbers for Social Security with its standard Budget Outlooks and updates of its Baseline but its main analysis of Social Security comes each August in the form of a document entitled ‘CBO’s Long-Term Projections for Social Security’. The 2009 version of this is available here: CBO Publications: Social Security and Pensions
A third scorekeeper is the White House Office of Management and Budget which releases its own 10-year numbers on Social Security with its release of the President’s Budget. Normally these numbers would not be front and center in a Social Security discussion, but this is after all a Presidential Commission and moreover the current top two at OMB are themselves authors of prominent Social Security plans: Diamond-Orszag and Liebman-MacGuineas-Samwick (LMS).
So we are faced this year with our own Clash of the Titans. And it matters because the data sets are incongruent, where CBO in August projected a 75 year actuarial gap of 1.3%, SSA put it at 2.01% in May. Whereas SSA tells us that the Trust Fund will likely go to depletion in 2037 based on the best available information they had a year ago, CBO using updated information from last Spring/Summer still would have that date be 2043. And that time gap is very significant, it is the difference between mid-point Boomers being 82 or just crossing the average projected mortality date and 88 when most of that cohort will have shuffled off to Buffalo (and points beyond).
A couple of days ago it was announced that the Executive Director of the President’s Commission would be former top Clinton advisor and DLC Chair Bruce Reed and presumedly Bruce is staffing up as we speak. We don’t know when the Commission will actually hold its first hearings but certainly those will be shaped and informed by the numbers in the soon to be released SSA Trustees Report. But the time-table established would have the Commission issue recommendations in December presumedly to be acted on by the next Congress in Spring 2011. Which means that the Commission and then Congress are going to be dealing with four sets of numbers in succession: 2010 Social Security Report (April), Presidents 2011 Budget (Summer), CBO’s Long-Term Projections (August), and then in all likelihood the 2011 SS Report (April 2011).
So it should be interesting, because the set of policies you need to address a 2% of payroll gap in 2037 are very different from those needed to address a 1.3% gap in 2043. And the reality is that the situation on the ground has moved significantly since even those numbers were produced.
I addressed the question SSA? or CBO? to a big group of policy experts. And one of the biggest, and one with a long resume of top jobs at both SSA and CBO firmly answered ‘CBO’. But some people closer to the current action said essentially ‘Not so fast, that decision has not been made’. Well it makes a huge difference because coincidentally some of the major proposals out there like changes in retirement age and cap increases typically score right at 0.7% of payroll and so very close to the difference between SSA and CBO, if we adopt the former they might have to be included in a proposal, if we adopt the latter they could be scrapped without damage.
By and large the Press reporting in years past and most policy discussion generally has revolved around the Trustees numbers and until the debate over HCR few people even understood the role of CBO is scoring legislation. Now that the focus is turning squarely on Social Security commenters who have been content to deal with issues like Trust Fund Depletion in terms of ‘will run out’ are suddenly going to be confronted with an amount of ambiguity and varying datasets that they just are not prepared for. But at least Angry Bear readers will have had a little heads up.