Study: Social Security in REALLY bad shape

USA Today has the story Study: Social Security in REALLY bad shape.

“The projections developed by the Office of the Chief Actuary for the Trustees Reports are intended to reflect all aspects of future possible trends in demographic, economic, and programmatic factors, given current Social Security law,” Goss and other SSA officials wrote. King and Soneji’s projections “were within the range of reasonable uncertainty as specified in the Trustees Report, and therefore should cause no alarm.”
“Fair, transparent and accurate forecasts give Congress more of a chance to consider of all the policy proposals to preserve the solvency of Social Security,” King said. “And it’s easier to make changes to Social Security now than in the future.”

The other unmentioned assumption has to do with the wealth and income distribution. Since income has been shifted from the middle class to the wealthy in the last 30 years or so, the level of social security contributions from the middle class has declined below previous expectations.

If the SSA actuaries disclosed the impact of income distribution on their calculations, then I would be all for increased transparency. The Republicans would ignore that issue, but one can only hope that at least one politician who was looking out for the middle class would keep harping on it. Who is going to be the politician to do it after Bernie Sanders finishes his term as President?

I have put this story in the category of Greenberg’s Law of the Media.

If a news item has a number in it, then it is probably misleading.

In this case, there are several things that are misleading.

  • The numbers they give you are intended to lead you to one of the solutions. If they had put in the numbers that they left out, it might lead you to think of other solutions.
  • When the article talk about using fiscal gap accounting methods they say, “Under this accounting system, SSA’s projected unfunded liabilities would be $24.9 trillion (instead of the $10.6 trillion projected in 2088).” They don’t explain that you cannot draw the same type of conclusions from a larger number calculated by a different method, than you would if that same larger number had been calculated by the traditional method. In fact the implication is that the larger number is more “truthful” in a sense. It makes no sense to imply that.

If I didn’t make clear the reasoning behind my judgment, tell me why you think I am wrong, and I will try to tell you what I left out of my explanation. I can’t guess all the things that were going through your mind when you read this compared to all the things that were going through my mind when I wrote it.

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