Tuesday, February 22, 2005

Coming Soon - the Trustee's Report!

Within a month or so, the SSA Trustees will release their latest annual report on the health and wealth of the Old-Age, Survivors, and Disability Insurance (OASDI) Trust Funds. Journalists who will be given the unenviable task of sifting through it need to understand that the important question is not actually going to be what the updated report says about the solvency date, but preicsely what inputs into the model changed between 2004 and 2005.

Let's imagine that the report offers no change on the solvency date - currently 2042. The important question will be why is there no change?

For example, a rather important number is assumed productivity growth. Last year they assumed productivity growth in 2004 would be 2.7%. It was, in fact, 4.1%. All else equal, that would presumably push the solvency date out a bit. With such a number, probably all of the "new information" - that is the actual numbers from 2004 - will also push in the direction of a later solvency date, though not necessarily.

So, if the solvency date is either not pushed out farther, or if it remains the same, there's going to be a pretty good chance that the reason is that they've tweaked some of their assumptions. That's the story...