Relevant and even prescient commentary on news, politics and the economy.

Social Security under ‘Sustainable Solvency’: Debt & Deficit Revisited

The current Chief Actuary of Social Security is Stephen Goss and on the occasion of the publication of the 75th Anniversary issue of the Social Security Bulletin he contributed what may be the most valuable single piece you will ever read on Social Security financials. The article carried the title The Future Financial Status of the Social Security Program The abstract/teaser for the article starts out with this:

The concepts of solvency, sustainability, and budget impact are common in discussions of Social Security, but are not well understood.

To which I can only add “Boy Howdy!”
Steve is perhaps best associated with the concept of ‘Sustainable Solvency’ which he describes as follows:

Sustainable solvency requires both that the trust fund be positive throughout the 75-year projection period and that the level of trust fund reserves at the end of the period be stable or rising as a percentage of the annual cost of the program.

Well this requires some unpacking. Under current law the Social Security Trust Funds are considered ‘solvent’ if they have a Trust Fund balance equalling 100% of the next years cost at the end of a given actuarial period. Stronger versions of this would require that the Trust Fund meet this standard in every year of the period and/or that it be trending upwards at the end. That is Steve’s “stable or rising”. Well all that is reasonable enough, but what would it look like under standard budget scoring? Well the answer is either “kind of odd” or “mind-bending”. Which will be explored under the fold.

Tags: , , , Comments (107) | |

Debts, Deficits, and Social Security: Once Again

There are a couple of easy ways to check out current Federal Public Debt to the dollar or even the penny. One you could check out the National Debt Clock which also is conveniently mirrored (in simplified form) in Times Square. In the top left you will find the number for ‘US National Debt’ at $17.1 trillion and counting. If you wanted to cross check that number via official sources you could check the Treasury’s Debt to the Penny website which is updated at the end of the previous business day. This would also show a ‘Total Public Debt Outstanding’ as of the close of business Friday of that same $17.1 trillion. This also is within rounding error the same figure that makes up ‘US Debt Subject to the Limit’. Which is to say if anyone asks anyone with any amount of knowledge what is the total amount of Federal Debt as of today the universal answer is “$17.1 trillion”.

Now if we return to the Treasury version of this we see that ‘Total Public Debt Outstanding’ is simply the sum of two other numbers: ‘Debt Held by the Public’ and ‘Intragovernmental Holdings’. And if you clicked the explanatory link on ‘Intragovernmental Holdings’ you would find that it consisted of a variety of funds and predominantly ones classified as ‘Federal Trust Funds’. And a little further digging would show that the plurality of the $4.9 trillion in ‘Intragovernmental Holdings’ consisted on the $2.8 trillion in the Social Security Trust Funds.

Alright, simple enough. But complications under the fold.

Tags: , , Comments (48) | |