A report on Social Security projections is not one of those flashy news topics. In fact, other than accountants and budget managers, I dare say the topic might be best enjoyed by insomniacs. However, if a recent study turns out to be true, those of us who are sprouting gray hair – even if just a few strands – had better sit up and take notice. Social Security is tanking!
Social Security cards, cash and stock market chart
In an article for CNBC by Tom Anderson (May 9, 2015) entitled: “Study: Social Security in REALLY bad shape,” we learn that things are much bleaker than we have been led to believe. According to the article (the italics are mine):
“New studies from Harvard and Dartmouth researchers find that the SSA’s actuarial forecasts have been consistently overstating the financial health of the program’s trust funds since 2000.
‘These biases are getting bigger and they are substantial,’ said Gary King, co-author of the studies and director of Harvard’s Institute for Quantitative Social Science. “[Social Security] is going to be insolvent before everyone thinks.’”
Though it’s fairly complicated, those of us who have at least been awake for a part of the debate on the Social Security issue believed that we would make it to about 2033 before Congress had no choice but to act. By 2033, Baby Boomers would be old codgers and surprise, you Gen-X folks would be close to applying for benefits (time doesn’t stop for any of us!).
The studies show that by 2088 (in time for all you Millennials), Social Security from payroll taxes would be cut to three-quarters because of depleted revenues.
Again and according to the article:
“Forecasts from trustee’s reports from 1978 to 2000 were roughly unbiased, researchers found. In that time, the administration made overestimates and underestimates, but the forecast errors appeared to be random in their direction…
After 2000, forecast errors became increasingly biased, and in the same direction. Trustees Reports after 2000 all overestimated the assets in the program and overestimated solvency of the Trust Funds.”
Why bias the numbers?
Numbers should be numbers, right? Why are these forecasts off?
Well we do know that the administration’s Office of the Chief Actuary produces the forecasts – and parenthetically, when the CNBC article we’re quoting from, tried to get a comment from the administrator, no one was available.
We also know that people are living longer. That’s a good thing. However Social Security has apparently failed to account for that. In fact, the accounting system that is in place is failing to account for many inconsistencies.
Gary King, the researcher who has uncovered these failures has said the following:
“Fair, transparent and accurate forecasts give Congress more of a chance to consider all of the policy proposals to preserve the solvency of Social Security and it’s easier to make changes to Social Security now than in the future.”
However, accurate forecasting, realistic assessments and then honest policy changes are not occurring. The auditors and accountants in the Office of the Chief Actuary are adamant that they do not bow to political pressure. I have no doubt that the work-a-day people who sit in their Washington, D.C. cubicles are playing the numbers straight, but I have the suspicious feeling that once the reports go from the cubicles to managers to supervisors that they are bowing to political pressures.
Social Security has become a political football, and woe to the presidential candidate or elected member of congress who has the nerve to say the system must be fixed – and it must be fixed now. In terms of ethical behavior, we must all ask ourselves if it is the politicians who are too afraid to tell us the truth, or if it is the American people across all generations, who are too afraid to hear it.
We are told, “After 2000, forecast errors became increasingly biased.” I must note that in the past 15 years we have had both Republican and Democratic regimes. Each time we hold elections for state or national office, our politicians tell us that Social Security is just fine, and that no one’s benefits will be cut. Are they lying to us or are they lying because we want to hear them lie. In any case, the deception is like a sump-pump in reverse; the lies back up and pressure mounts on the number crunchers to draw smiley faces on the charts.
Social Security is not fine, and ethically we need to accept that fact and do something about it.
