Does that mean we should ignore the Trustees’ annual projections? Of course not. But that really is the point here...these are estimates and projections that should be used in a responsible way to ensure the long-term solvency of Social Security, which millions of Americans and their families depend on.
While much has been written about this year’s Social Security and Medicare Trustees Report (we’ve already highlighted some of the coverage here ) there is another piece of recommended reading. This commentary highlights a constantly overlooked aspect of the “entitlement” debate...the fact that regardless of the “sky-is-falling” certainty expressed by those opposed to Social Social Security, the Trustees’ actuaries know solvency and the economic issues underlying the 2017/2041 dates are moving targets, especially in a 75-year or infinite window. Marketwatch economist Dr. Irwin Kellner writes:“I would like to point out that this year, as has been the case every year in the past, the actuaries have made and released not one but three projections. They call them low cost, intermediate and high cost. The projection that has provoked these alarms is the intermediate projection. This reflects the trustees' consensus views regarding such inputs as economic growth, productivity, inflation, earnings, employment and interest rates.”
He continues:“The intermediate projection assumes that the economy will grow by an annual rate of 2.3% per year between now and 2085. This may be higher than the 1.9% per year that was projected as recently as three years ago, but it is still well below the 3.4% that the economy grew on average between 1960 and 2005. The actuaries' own low cost projection assumes an average annual growth rate of 2.9% between now and 2085. This is higher than the 2.3% pace embodied in the intermediate projection, but it is still well below the 3.4% average of the past. Guess what? Under the actuaries' low cost projection, the Social Security system never runs out of money!”
Wednesday, April 9, 2008
Social Security False Alarm
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